Do Trendlines work?

[taowave]

Quote from aus_SPIder:

1)


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 a profitable discretionary TA trader ull understand what i mean,

Aus,I think everything works in the hands of a skilled discretionary trader,and thise very same tools fail miserably in the hands of those who do not commit themselves to their craft..That is really my contention.I have seen very profitable traders employ Gann,Andrews and even Elliot.With that said,they also had a very good intuitive feel for reversal patterns,breakout type trades and most importantly money management/position sizing.They also did a ton of backtesting and coding on breakout systems as well as reversal.

You and i may agree that wave counting is absurd and has no predictive value,but for many,it is the "confirming" indicator which enables them to pull the trigger.One of my closest friends is probably one of the best trend traders i know,yet he attributes his success to Elliot. I can assure you,if he ran his systems on autopilot,his returns would not suffer one penny.But unless he believes he is catching an impulse wave,he simply wont pull the trigger..

Let me ask you and anyone else one simple question.Do you consider trend following(N bar breakouts) to be predictive in nature????

This should cut to the chase

 

[taowave]

Quote from mparkernys:

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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 !

can you backtest the lines on your software??

mp

 

[mparkernys]

Quote from taowave:

can you backtest the trend lines ?

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now we run into a difference of "method" here and one that will raise eyebrows perhaps, but no matter !

I backtested in the stock market four times, then gave it up as non - productive BECAUSE the trend lines, on any chart you want, are drawn because the "backtest" already agrees !

put it this way, if a symbol consistently reaches "xx" resistance and reverses, and consistently reaches "yy" support and reverses, what would the backtesting prove ?

backtesting is nothing more than going back in history to see how something would work --- if the trendlines simply show you that they work, thats all the backtesting i need know !

I KNOW this will offend those who believe in testing, but simply looking at a chart will pretty much tell you the symbols behavior (given NO extraneous outside information to alter its behaviors)

To illustrate my feelings, take a look at IBM's relatively orderly movements from the $70 to the $ 95 area, or look at the trend lines on PSUN in september when it broke trend to the upside, or even look at lowly little GTEM with its once a year phenominal moves -- look at the forex pairs or the Q's ---- there is absolutely no need to backtest, as the trend lines contain all that information already --- put an LRC on any of them and watch where a symbol reverses !

trend lines work because PEOPLE make up the market and people write down and remember where the last support or resistance was, and react when the symbol reaches that point again (once again, given no outside influences that NO system or lines or stochastic will ever reveal !)

imo, anyway !

mp

 

[kiwi_trader]

Ahhh taowave, you keep slipping into that pattern of labelling anyone who doesn't believe what you believe with disparaging names and misspelling everything along the way.

Two questions:

1) How do you define predictive (note that I have defined them above as having value for making predictions and further clarified that as statistical in nature as is every prediction in trading)?

2) If you believe trendlines are not predictive then why do you use them (what would the point be)?

 

[taowave]

Quote from mparkernys:

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now we run into a difference of "method" here and one that will raise eyebrows perhaps, but no matter !

I backtested in the stock market four times, then gave it up as non - productive BECAUSE the trend lines, on any chart you want, are drawn because the "backtest" already agrees !

put it this way, if a symbol consistently reaches "xx" resistance and reverses, and consistently reaches "yy" support and reverses, what would the backtesting prove ?

backtesting is nothing more than going back in history to see how something would work --- if the trendlines simply show you that they work, thats all the backtesting i need know !

I KNOW this will offend those who believe in testing, but simply looking at a chart will pretty much tell you the symbols behavior (given NO extraneous outside information to alter its behaviors)

To illustrate my feelings, take a look at IBM's relatively orderly movements from the $70 to the $ 95 area, or look at the trend lines on PSUN in september when it broke trend to the upside, or even look at lowly little GTEM with its once a year phenominal moves -- look at the forex pairs or the Q's ---- there is absolutely no need to backtest, as the trend lines contain all that information already --- put an LRC on any of them and watch where a symbol reverses !

trend lines work because PEOPLE make up the market and people write down and remember where the last support or resistance was, and react when the symbol reaches that point again (once again, given no outside influences that NO system or lines or stochastic will ever reveal !)

imo, anyway !

mp

That was a valiant effort on your part

 

[taowave]

Quote from kiwi_trader:

Ahhh taowave, you keep slipping into that pattern of labelling anyone who doesn't believe what you believe with disparaging names and misspelling everything along the way.

Two questions:

1) How do you define predictive (note that I have defined them above as having value for making predictions and further clarified that as statistical in nature as is every prediction in trading)?

2) If you believe trendlines are not predictive then why do you use them (what would the point be)?

My good friend Kiwi,
If I was to label anyone in this thread with a disparaging name,you can sleep well tonight knowing you would be at the top,middle and bottom of the list..If I have been disparaging to anyone other than you,I humbly aplogise....

It would appear that those in the Trendline prediction camp either have not ,or will not post any code solidifying their argument..Isnt that a big suprise....

To answer your questions,I dont believe that one can "predict" the markets.I believe those that enjoy doing so,or attempt to do so are looking for ego fulfillment.Just my opinion.There is nothing sexy about being a "stat arb",dispersion trader, relative value trading or being a "trend follower"..Placing tredlines on a chart,with Andrews forks,Fib retracements and labeling waves does have its appeal.But I have never been able to acheive returns that significantly outperform their relative benchmarks with any of those techniques,and that is what I am paid to do...

I do place value on fundamental anaysis,on measuring historical vol vs implied(implied correlations),trend following and employing derivatives.

I do believe that there are talented traders who can employ trendlines,Elliot,Fib levels,candlepatterns and do very well.IMHO,their approach is more art than science,and success comes from individual talent as opposed to predictive tools.

If i have mispelled anything,i do hope it really pisses you off

 

[yoohoo]

Are trendlines predictive? Absolutely! Are visible, repeatable, proven results available for the skilled user? Absolutely! So what about some examples? Ok guys, I've shared a bit of what I do on this forum, but you will need to do a lot of hard work for yourselves to more fully understand and incorporate these techniques into your trading. anyways, examples of predictive trendlines...

(NB: I have shared most of these techniques in the Interesting Charts thread so I'm not posting loads of chart examples here.)

1. In the 10 min Gann Box the angulars are basically preset trendlines. When price opens above an angular (trendline) and closes below the angular, the point where price breaks the trendline gives a future price prediction. It's called a VBT (Vacuum Back Target). Lets say we have gone short, the VBT is saying Price will reverse and come back to this target, even if there's a strong move down. There is around an 80% success rate with this technique. This is a very easy technique to learn and prove quickly.

2. Using the Gann Box, the Price action of the 1st few 10 min bars often predicts a road map for the main intraday trends for the whole of the day ahead. Again in the thread I have given resources to learn and test this technique.

3. The Gann Box is loaded with powerful predictive trendline techniques. One more example is when price is riding up a trendline but has penetrated it, even just once, but the close is above the trendline. Say it bounces a few times on the trendline and them moves away in a steeper move up. The previous break of the trendline says this trend will break today and when it returns to the trendline the prediction is for the trendline support to fail. Other Box techniques often say where price will end up.

4. I gave many examples of using bog standard trendline techniques to predict a price reversal. The reversal simply had to be taken as it was the safest thing to do. Price would have to prove the trendline wrong and that allows for a very tight stop and best returns.

5. A simple combination such as using the Lunar Calander with a trendline can produce no-brainer reversals. In Trading the Moon I explained how to use a pull back in price with the full moon to make big profits. This last full moon was as simple as it gets. The trendline/moon combo predicted a strong reversal exactly.

6. I also gave an example of how to start trendlines from fixed points in time and space that are not even close to price. These trendlines are extremely powerful and often get many, many bounces. Combined with a stochastic that just says price is looking overdone is sufficient to say the trendline predicts a reversal at this exact point.

7. Standard Gann angles - when an angle is broken there's often a prediction in place for an move the next angle. There are numerous techniques to use with this.

So here are 7 predictive techniques to research. 4 are Gann based and 3 are not. I could give many more examples and explain more powerful techniques for prediction but that's going into my black bag. For the reacher there's plenty here to get your teeth into.

Can trendlines predict? No question about it - they can predict a reversal, a price target and even map out the days main trends - all well in advance.

 

[mparkernys]

Quote from taowave:

That was a valiant effort on your part

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well, maybe im used to forumns where people think more than they speak, or maybe its because people know what i do but no matter !

not to argue, but they work for me -- they work for those i have taught to use them (yeah, REALLY HARD TEACHING -- "take that high and draw a line to that high !"---WHERE DO I GET CODE FOR THAT ?????) and now you wish to argue with the Linear Regression Channel also ?

Whats next, Bollinger bands are useless ?

the LRC is nothing but support and resistance lines for THE TIME FRAME YOU CHOOSE TO VIEW THEM IN --- can go for 5 days or 5 years, and if you just lay them on a chart, youll see what we are speaking about !

so whatever, I'll continue to use my useless trend lines and LRC and you use what you wish !

enjoy and trade well

mp

 

[taowave]

Quote from mparkernys:

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well, maybe im used to forumns where people think more than they speak, or maybe its because people know what i do but no matter !

not to argue, but they work for me -- they work for those i have taught to use them (yeah, REALLY HARD TEACHING -- "take that high and draw a line to that high !"---WHERE DO I GET CODE FOR THAT ?????) and now you wish to argue with the Linear Regression Channel also ?

Whats next, Bollinger bands are useless ?

the LRC is nothing but support and resistance lines for THE TIME FRAME YOU CHOOSE TO VIEW THEM IN --- can go for 5 days or 5 years, and if you just lay them on a chart, youll see what we are speaking about !

so whatever, I'll continue to use my useless trend lines and LRC and you use what you wish !

enjoy and trade well

mp

I meant it was a valiant effort to "convert" me....

Dont know if any of you used Advanced Get,but i did for some time.I had asked them over and over to supply a simple simuator.Just a method where you could apply whatever technical criteria one liked,and by clicking you could enter on a particular bar and monitor the P&L.The powers that be liked the idea and told me over and over it would be implemented.

Needless to say,it never was,and i firmly belive the reason it never was is because all the esoteric tools they provide would be found to average,at best,"predictors" of the market...

 

[mparkernys]

Quote from taowave:

I meant it was a valiant effort to "convert" me....

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LOL -- NO, i would never try to convert someone who does not wish to be converted --- its an impossibility because no matter what one may show, the skeptic remains convinced of their side -- just human nature I guess.

Ive been very happy over the years for having what appears to be a "weak" will, because I've changed my personal opinions on many issues when someone would come up with a better mousetrap or arguement, but then again, I happen to be "weak" willed !

funny about "predictive tools" but i dont use advanced GET or any of the other thingies out there --- ive developed my own system of overlapping indicators which present a purely visible pattern, showing tops and bottoms for whatever timeframe you wish and its free and you can get it at http://www.stockhideout.com/mike-parkers-method/7437-mp-simplified-ter-analyzer.html or can get the original version at http://www.stockhideout.com/mike-parkers-method/997-new-rsiwrl-method-picking-stocks.html

as i said, theyre both free -- can be set up on prophet charts or quotetracker, and work remarkably well !

try them -- u might like em !

enjoy and trade well

mp