On any trading day you will always know each method’s trend state. One way to determine trade entry is to require two of the trend indicators to agree.
For example, look at the early February low. As noted earlier, the three-period trend state went long on Feb. 10 at 1.2815. However, at this point both the three-price break and 13-period forward-adjusted EMA were short, so no position would be taken.
However, when the market closed above the forward-adjusted EMA on Feb. 14, the other two trend indicators were already long, so this close became the basis for a new (or additional) long-side entry.
This step-wise relation of trend state should appeal to different types of traders. Momentum traders will appreciate the early warning trend change of the three-period break, particularly when a reversal is indicated after a move to an upper or lower Bollinger Band (using a 13- period moving average and 2.618 standard deviations for the Bollinger Band settings). Highly aggressive traders may wish to act on a single indicator’s trend-change signal and use the subsequent signals to build positions. The more conservative trader can wait for the second trend change to confirm entry.
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