Recognizing the formation of trend: A standard deviation approach

In financial market, trend is one of the most important elements to consider, yet it has never been an easy task in defining it ever since financial market first existed. Despite the popularity of technical analysis through charting software catalyzed by the advancement in computer and information technology, identifying a trend remains one of the biggest myths in financial market, still rummaging for a clear and scientific definition. This study intends to study and measure the perceptions of market participants on trend formation through a standard deviation approach. An experiment had been conducted to assess the competency of standard deviation in measuring the perception of trend by an individual while interacting with price chart. This paper presents a new way and interesting findings on trend recognition by quantifying how market participants perceive trend based on their interactions with the movement of price on a price chart.