Do Trendlines work?

[Goinglite]

Floor Traders use basically a slow stochastics, and they draw trendlines on price.

Most Top Traders that Im aware of use Trendlines.

The legendary Trader Marty Schwartz uses trendlines extensively. (as mentioned in his "Pit Bull" trading book)

Yoohoo has posted some fine examples of trendlines under "Interesting Charts".

I even posted a few CCI trendline concepts under "Interesting Charts".

Im not sure why the Trendline concept is under "question".

There is one secret: If you don't want trendlines to work, they won't

That goes for anything in trading.


Goinglite

 

[kiwi_trader]

Quote from Spydertrader:

I have to agree with kiwi on this.

LOL. Its a tough old world Spyder

Quote from taowave:

I have no interest in debating the obvious,but

LOL. None at all

Quote from kiwi_trader:

LOL. I've also analysed trend lines in the manner suggested and guess what? Trendlines work.

Some say that trends don't work. Some say that trendlines don't work. Some surround their prejudices in warm words that just suggest that anyone who believes something else is a moron.

"and to think otherwise would be foolish"
"sheer folly and is analogous to traders beleiving that"
"There are people who can be profitable in games with negative exectations,I just choose not to be one of them."

Run a spell check. Funny world isn't it. I love ET !!!

I never expected to see you "budging" any time tao; I just couldn't pass such a clearly incorrect statement without putting it to the sword.

Quote from Goinglite:

There is one secret: If you don't want trendlines to work, they won't

Goinglite

And from Goinglite, as always, another gem of wisdom. Cheers Goinglite
____________________________

The things people believe in are usually just what they instinctively feel is right; the justifications and arguments are the least important part of the belief.
That's why you can win the argument, prove them wrong, and still they believe what they did in the first place. You've attacked the wrong thing.
So what do you do? Agree to disagree. Or fight. - C. Zakalwe.

 

[VSTscalper]

This thread started out with the question....Do Trendlines Work....not whether they have....Predictive Powers. So....for me....I would say....yes....Trendlines do work....and they are a Major part of my trading. Every trader is different....Trendlines may work for some....may not work for others.

I use Trendlines to follow the Trend....and for Support & Resistance. Everyday....I see Price....bounce off a Trendline. If that is not Support or Resistance....then what is?

I use....Nearby Pivots....for Support & Resistance....that is where I add a Horizontal Line. I also use Trendline Breaks....as an Indication on whether to Enter or Exit a trade. So....for me....a Trendline....is also an Indicator....and a damn good one.

Trendlines also help me to see when a Range is about to start.

The problem with threads like this....is they usually end up with traders knocking each other....rather than helping each other out.

On page 167....I showed a couple of pictures....with and without Trendlines. What is funny....is nobody has made comments on what I showed....but two or three pages later....the tread turned into BS. Really....it is too bad! This thread started well....and I think it is important. Trendlines can be a great Tool.

Good trading to all.

VSTscalper

 

[taowave]

Quote from acronym:

Maybe its not the right description .

Maybe "speculative" powers would be more appropriate, their just a line on the chart, your doing the speculating. You have to decide the odds of any particular resistance, real or imagined, actually holding, and if trendlines help you do that, then they "work".

stating the obvious, again

Thank you....Perhaps the Kiwis have a different definition of Predictive...

Contrary to what Kiwitrader beleives,I am a believer in pattern recognition and greatly respect the work of Tom Bulkowski.But you will see,that trendlines and formations are a piece to the puzzle and there are many other factors involved.Trendlines in isolation are hardly predictive,just like any other tool....

 

[taowave]

Quote from Spydertrader:

I have to agree with kiwi on this.

I posted this chart during the morning session. In addition, I posted this analysis explaining how to properly use trendlines. Both the Purple Down Trend Channel, as well as the Dark Blue Up Trend Channel were drawn in prior to the market open - using points from the previous day. In fact, I drew in the trendlines yesterday. Recreate the same trendlines on your own charts and see where price heads next. Feel free to claim coincidence, or that I really drew in the trendlines using hindsight. However, as someone who sees the same phenomenon repeat (day after day) in both equities and futures, I know trendlines work.
- Spydertrader

Spydie,I have much respect for your work,but there is no chance I will ever sign off on trendlines having PREDICTIVE powers.In fact,the wording predictave powers makes my eyes roll back in my head.

My direct quote which Kiwi called rubbish was...

"Do trendlines work,as in predictive value????

Absolutely not,and to think otherwise would be foolish...

But does that mean they have no value??

Absolutely not,and to think otherwise would be foolish"

I have a feeling we are "arguing" over the term PREDICTIVE,and i have become a firm believer that there are no Predictive tools in the purest sense of the word.

If you truly believe "trendlines" work,than it should not be difficult to code up a system and produce simulations that back up your belief.I have spent time and resources on this project,and have not come up with anything that would lead me to believe that trendlines are predictive.

The counter response that it doesnt work for me,is a strong indication that it is the trader who supplies the edge,and not the tool.

I have this very same discussion with traders who employ candlestick pattern analysis.They are very profitable trading candlestick patterns but openly admit if you run backtests the patterns do not perform well...

 

[kiwi_trader]

Quote from taowave:

Trendlines in isolation are hardly predictive

Still rubbish. And in the last post you claim that I called the entire quote rubbish. Check it; it was only the first part. If your spelling or accuracy here is predictive of your statistical capability its no wonder that you couldn't find predictive value in trendlines.

"From WordNet (r) 2.0 : predictive adj : having value for making predictions"

If you can draw a trendline with a given set of drawing rules and when price reaches it there is a predictable reaction then trendlines have predictive value. In trading, every prediction is a statistical prediction, e.g., if a happens then there is a x% chance that b will happen before c happens.

So, if you can say that, for a trendline that has been touched 3x there is an X% chance that on the 4th approach it will bounce within Y% of the trendline giving a move of Z% or more then it has predictive value.

Most of us can do the tests and say that (or equivalent things about breaks) so a trendline has predictive value. If a trendline had no predictive value why would anyone who believed that put it on their chart?

As noted by a large number of other competent traders trendlines also work

 

[taowave]

Quote from kiwi_trader:

Still rubbish. And in the last post you claim that I called the entire quote rubbish. Check it; it was only the first part. If your spelling or accuracy here is predictive of your statistical capability its no wonder that you couldn't find predictive value in trendlines.

"From WordNet (r) 2.0 : predictive adj : having value for making predictions"

If you can draw a trendline with a given set of drawing rules and when price reaches it there is a predictable reaction then trendlines have predictive value. In trading, every prediction is a statistical prediction, e.g., if a happens then there is a x% chance that b will happen before c happens.

So, if you can say that, for a trendline that has been touched 3x there is an X% chance that on the 4th approach it will bounce within Y% of the trendline giving a move of Z% or more then it has predictive value.

Most of us can do the tests and say that (or equivalent things about breaks) so a trendline has predictive value. If a trendline had no predictive value why would anyone who believed that put it on their chart?

As noted by a large number of other competent traders trendlines also work

Kiwi,it is true that you only thought the first part of my statement was rubbish.

My question to you is have you ever run backtests or simulations on TRENDLINES and if so,would you please share some of the code.That would go a long way in substantiating your claim.

While I do agree that you can run EQUIVALANT tests about breaks,that does not equate to trendlines being predictive.Coding a MA cross or N bar breakout has a very definitive set of rules,and can be easily coded.Until you can send me a snippet of your code,I think you are "relating" apples to oranges...

Perhaps I should say that if a tool has predictive value,I think it should be able to be coded.Then, it is indisputable..

That is not to say that Elliot,Andrews or Gann have no value.There are traders who make a ton of money employing those techniques,but once again i would argue against the fibonacci sequence being the key to the underlying patterens of the market...

The fact that you bring up spelling and only talk about hypothetical trendline scenarios may lead one to believe you are a poser. If the best answer you can give is successful traders use trendlines,or people put them on their charts so they must work,then I would suggest you pass the torch over to Spyder.

 

[taowave]

Quote from taowave:

Kiwi,it is true that you only thought the first part of my statement was rubbish.

My question to you is have you ever run backtests or simulations on TRENDLINES and if so,would you please share some of the code.That would go a long way in substantiating your claim.

While I do agree that you can run EQUIVALANT tests about breaks,that does not equate to trendlines being predictive.Horizontal trendlines are similar in nature,but breaks of upward sloping trendlines are a much different story.Coding a MA cross or N bar breakout has a very definitive set of rules,and can be easily coded.Until you can send me a snippet of your code,I think you are "relating" apples to oranges...

Perhaps I should say that if a tool has predictive value,I think it should be able to be coded.Then, it is indisputable as to the tool being predictive,or the skill of the trader who employs the tool.


The fact that you bring up spelling and only talk about hypothetical trendline scenarios may lead one to believe you are a poser. If the best answer you can give is successful traders use trendlines,or people put them on their charts so they must work,then I would suggest you pass the torch over to Spyder.

 

[aus_SPIder]

1)

Quote from taowave:

That is not to say that Elliot,Andrews or Gann have no value.There are traders who make a ton of money employing those techniques,but once again i would argue against the fibonacci sequence being the key to the underlying patterens of the market...
[/B]

i have NEVER and i repeat NEVER seen someone profit from gann. Not even GANN could profit from GANN.

As for elliot all ill say is stick 5 elliot technicians into a room and the only thing theyll agree on is the date and time and the amount of lollies theyve consumed. Put 5 elliot technicians in a room with 5 chaos theorists and the answer theyll come up with would be: "we COULD be in the 3rd wave but most likely in the 4th but cant discount being in the 1st, however after complex and ardous mathematical reasoning and computer simulation i can say that where 33% sure where in teh 1st, 33% sure where in teh 4th and 33% sure where in the 3rd"

it could be that u've been a system trader all your life and so your fixed into the quant thing.

From what ive concluded kiwi trader is probably part discretionary.

Theres one thing u never understand when your a system trader and that is how well the human mind can tune into the market when its trading. Ive met discretionary traders who've traded the markets for 15 years and they can draw a perfect trend line in every sense of the word, no system ever could come close to it.

Having been a discretionary trader for a few years and been much more successful as a discretionary trader than using a system (i system trade now mainly cause its easier, less work, money isnt that important to me now) i can definitely tell you that trend lines do work. If your ever there in the presence of a trader whos traded a market for 10,15 years ull see how the price respects his trendline perfectly. Its something u dont see when system trading. U dont see how the price hits teh trendline, waits for a few minutes then makes its way back up, then comes down, hits trendline, goes back up, again and again.

as i posted earlier that you can't define a gradient, length etc of the trendline by a systematic method. trendlines, s/r reversal patters are all in the arsenal of discretionary traders. For a system trader i can see why u don't think trendlines work due to the fact that they cant be defined. But if youve ever been or met a profitable discretionary TA trader ull understand what i kiwi and spydertrader mean when they say trendlines work.

 

[mparkernys]

Quote from aus_SPIder:

1)i can definitely tell you that trend lines do work. If your ever there in the presence of a trader whos traded a market for 10,15 years ull see how the price respects his trendline perfectly. Its something u dont see when system trading. U dont see how the price hits teh trendline, waits for a few minutes then makes its way back up, then comes down, hits trendline, goes back up, again and again.

====================================

as is said by "them" -- "if you want an arguement you had better change the subject !"

its an absolute joy to watch the price move under the support trendline, pause and then come back up, as it does with pivots, s+r and all the other "lines" that work so well but are being poo-pooed by others !

long term, intermediate or minute by minute, they are just wonderful things to have. Now my software draws them (although with a bit more accuracy with stocks) and i manually draw them myself, but i wouldnt trade ANYTHING without them.

youve said it well -- it works and in the hands of one with experience they work almost magically !

mp