Do Trendlines work?

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Quote from ljyoung:

1. It would be very helpful if at least once during their post(s), the trader would describe HOW they drew the trendline and if possible, WHAT their "trendline strategy" is.
2. Do you or anybody think that channels are different from what most people think of when talking about trendlines and therefore should be considered as being something other than trendlines?


TIA

lj
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1. It is definitely useful to explain how one draws their trendline. There is some good info in this thread on the 'how'. It probably has to be pieced together but I have laid out how I draw my trendlines in this thread and joepepper2001 is laying out some good info too. Sure, it would be much more communicative to write every rule in one concise post of the exact method how one draws the line AND enters and exits AND moves stops ( or not) AND takes partials, etc. but that's where GOOD individual trading strategies are built. Taking many pieces of information and putting them together they work for you. I am certainly open to any questions on my technique.
2. To me, channels are just types of trendlines that happen to be parallel. I don't use them personally, but I am sure that they can be 'worked' to provide profits for a trader.
 
Here's what I'm going to watch today.

The angled lines are drawn from 2 major swing points. The more respect of a line (touches) the better. The more prevalent the swing the better. In other words, in general, the more the better.

The horizontal lines are plain and simple Support and Resistance.
Again, want to see that price has respected (bounced) an area at least twice and, yep, the more the better.

In this chart most touches so far are from two points. The all time high area though has 3 touches.
 

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With all respect to trendlines (and i would like to refer to the Tom DeMark trendline construction methods and everything derived from that) i couldn't use trendlines for trading as i prefer something much more objective. Different people can draw different trendlines on the same chart.

For me a 26EMA defines trend and the zone between the 13 and the 26EMA should provide support/resistance in a helathy trend, on just about any instrument and timeframe out there.

Trendlines are interesting as they keep you in the game. You don't have to only watch, you also have to draw and that makes you more active... but because of subjectivity, i passed on trendlines....
 
Of course, if you look at all the trades I post, they are rollouts from low volume midday consolidations MINUTES before the rollout occurs. Try backtesting that! [/B][/QUOTE]


Just do avoid any misunderstanding:

what do you mean by "rollout" in this
case- before I start thinking about how it could be backtested.

Thank you.
Charly
 
Here's what I'm going to watch today.

The angled lines are drawn from 2 major swing points. The more respect of a line (touches) the better. The more prevalent the swing the better. In other words, in general, the more the better.
More...

Thanks trader savvy for sharing your methodology. Although I do not use trendlines, were I to do so it would be in a manner similar to what you have illustrated. I have used the "Trader Vic" protocol in the past and have found it to be helpful but not singularly so. By that I mean, IMO, there are other ways to set things up for a trade which are more timely.

I really do think that "double trendline = channel" trading is quite different from "single trendline" trading but agree that both methods can be worked by a practitioner in a useful (+ cash flow) manner.

With respect to strategy considerations when using the "single trendline" method, there would seem to me to be a limited number of options and more importantly, the need for rather strict guidelines (which of course will vary from trader to trader), e.g., if price touches my trendline X number of times, then I will do such and such. Or if my trendline is pierced by a certain amount in a certain fashion, then I will do such and such.

Indeed it should be possible to construct a protocol and then go ahead and test it. If it works - cool. You get to make some money. If it doesn't work, you can change your protocol.

Is the single trendline method the best way to make money in the market? I don't know but my guess is that it isn't. That notion is based on my experience and nothing more. I attach no particular importance to that opinion and am always open to changing an opinion if there's ample reason to do so.

lj
 
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