To what extent do trends persist?

The basic assumption about trends in price charts is that they tend to continue, after we’ve detected them, for long enough for us to exploit them. Otherwise, what would be the point? I’m going to explore this assumption and to attempt to quantify the extent to which it’s valid, in some example markets.

“… when you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot measure it, when you cannot express it in numbers, your knowledge is of a meagre and unsatisfactory kind.” Lord Kelvin (1824-1907)

I’ll write this project up as a series of blog posts below. Along the way I’ll build some tools and fit in a couple of digressions to cover some topics that bug me.

But first we need to lay some foundations, starting by what we mean by a trend.
Why bother with this nit-picking detail? Bear with me because most misunderstandings about trend occur when the basics are skipped. The devil is in the detail!

Posts