Do Trendlines work?

[tradersaavy]

Look at this chart.

One could look at this chart and if his trading methodology utilizes support/resistance areas, there is a very clear support/resistance area on this chart that may be used.

Putting in a trendline or other indicator just helps us visually.


See the next chart. (next post)

 

[tradersaavy]

The trendline is there, or the support area is there, whether you draw it or not and I wouldn't say it is subjective because it is out "there" on the chart/price action.

 

[tradersaavy]

by the way here is an update from yesterdays 'trendline trade'

 

[dac8555]

anyone who says trednslineas are BS and "in the eye of the beholder..."doesnt know how to use them

They should be used as an integral piece of any methodology. to ignore them is ignorance.

dont use them alone, but use them as one of the tools.

 

[Qu|cksilver]

Do you know that when we draw a trendline must be from the right to the left acording to Tom Demark method.

 

[Thom Hartle]

Tom DeMark's trend line work is interesting. He has rules for plotting trend lines including rules to fade a break of a trend line.

 

[aus_SPIder]

Heres how my system draws trendlines (objective):

Plots Keltner channels at X ATR above and below the price action

Runs linear regression on keltner points. The resulting linear regression is my trendline, and its followed religiously.

Its not a "valid" trendline in the sense of traditional technical analysis (in that it rarely hits the price) but its extremely useful in a choppy/sideways market as a point of S/R as keltner channels during this time are usually flat and so the resulting linear regression line is flat, forming a good S/R region.

I think traditional technical analysis does work, S/R, trendlines/ channels (to a certain degree), volume divergence and peak-trough progression. The problem with TA is that is so far gone from its original purpose today that not many people even understand why it was developed: to understand and profit from market psychology. Technical Analysis is not statistics, it is the study of psychology, psychology is subjective but there are great psychologists (freud) and poor ones (my local shrink). So yes TA does work, and i have no doubt that trendlines do work for good traders, just not for me.

The problem with people is that they always look for a statistical answer in TA. But they forget that TA is essentially a study in psychology, its an art form. Looking for that magic indicator may have worked in the 1970s and 1980s if you developed say on balance volume but today its all useless.

When i was a discretionary trader i used to only use indicators when S/R was broken, or peak to trough analysis yielded troughs lower than previous trough (in bull market) and vice versa. Indicators should be used as confirmation of break or reversal and not as the sole indicator of one. RSI is a perfect example virtually every dumb trader i know thinks it can be used to identify overbrought/oversold and then they complain that its useless when it fails. They misunderstand that RSI was initially meant to confirm a SWING FAILURE and not as a standalone overbrought/oversold indicator.

 

[VSTscalper]

The following charts are what I look at everyday. This shows how I use Trendlines to help make a decision on Entry and Exit of a trade.

This first chart shows....Candlesticks and my Indicators. I do not use Moving Averages....Bands....Channels....Volume....etc. I like to keep my charts....Simple and Uncluttered.

The second chart....in the next post....shows Trendlines....a Range Box....Arrows....and a brief explanation.

I would add both charts to this post....but I am not sure how to do it....I tried but couldn't....so....here is the first chart.

VSTscalper

 

[VSTscalper]

I find Trendlines to be a very important Tool in my trading. Most of the time....I don't actually draw the Trendlines for myself....just to show others.

This chart is my Trending Tick Chart....a 610 tick chart. I use a much faster Tick Chart for Scalping....usually 10 to 55 tick chart. The only Trendlines I draw....would be on my Trend chart....don't have time on my Scalping chart....just have to see where the Trendline would be.

There are other factors I consider....but I won't get into that at this time.

I did not add the Support & Resistance to this chart....but....basically....I use....Nearby Pivots....no Floor Pivots. I don't use Fib Retracements either.

Most of the time....I Scalp....if the Price is in a Range....or there is a Trend....but the Trend is kind of Stair Stepping. I will Ride a Trend....but only if my Indicators convince me to do so. I consider a Trendline....as an Indicator.

I draw Trendlines....on the Open only....not the High or Low. Also....I use the Top Right Corner of the Candlestick for my Shorting Trendlines....and the Bottom Right Corner of the Candlestick for my Buying Trendlines. I try to draw them....Accurately....don't like sloppy drawing. You can also see where I....Walk the Trendlines....which help me get better Entries and Exits.

Good trading to all.

VSTscalper

 

[Qu|cksilver]

Quote from aus_SPIder:

Heres how my system draws trendlines (objective):

Plots Keltner channels at X ATR above and below the price action

Runs linear regression on keltner points. The resulting linear regression is my trendline, and its followed religiously.

Its not a "valid" trendline in the sense of traditional technical analysis (in that it rarely hits the price) but its extremely useful in a choppy/sideways market as a point of S/R as keltner channels during this time are usually flat and so the resulting linear regression line is flat, forming a good S/R region.

I think traditional technical analysis does work, S/R, trendlines/ channels (to a certain degree), volume divergence and peak-trough progression. The problem with TA is that is so far gone from its original purpose today that not many people even understand why it was developed: to understand and profit from market psychology. Technical Analysis is not statistics, it is the study of psychology, psychology is subjective but there are great psychologists (freud) and poor ones (my local shrink). So yes TA does work, and i have no doubt that trendlines do work for good traders, just not for me.

The problem with people is that they always look for a statistical answer in TA. But they forget that TA is essentially a study in psychology, its an art form. Looking for that magic indicator may have worked in the 1970s and 1980s if you developed say on balance volume but today its all useless.

When i was a discretionary trader i used to only use indicators when S/R was broken, or peak to trough analysis yielded troughs lower than previous trough (in bull market) and vice versa. Indicators should be used as confirmation of break or reversal and not as the sole indicator of one. RSI is a perfect example virtually every dumb trader i know thinks it can be used to identify overbrought/oversold and then they complain that its useless when it fails. They misunderstand that RSI was initially meant to confirm a SWING FAILURE and not as a standalone overbrought/oversold indicator.

Hi,
Can you show how you draw the trendlines?
Thanks in advance.

QS