Using multiple trend-change signals

Regardless of the market, trading approaches should provide unambiguous entry, exit (target), and stop-loss signals. The following discussion illustrates how to use three indicators or signals to determine the trend on any time frame and dictate whether to be long or short.

The three methods outlined here are the three-period trend state, the three price break signal, and the relationship between the most recent close and a 13-period exponential moving average (EMA) adjusted forward three bars into the future.

One aspect of the approaches discussed here is that they are “either-or” methods — that is, they always indicate the trend is either long or short, rather than flat (no trend). Accordingly, each method’s stop-loss point is a signal in the opposite direction.