Do Trendlines work?
- Thread starter duard
- Start date
The problem is that there are individuals that approach there backtesting and trading via trying to research that one variable via some coded system.
However, the markets don't work that way and profitable traders know such.
Yet, whenever someone want's to talk about one tool from their trading plan...
Along comes someone that assumes that this trader is saying its the only thing he/she uses.
For example, I'll list again (from a prior thread on this topic) my most important variables of my trading plan that makes TA useful to me.
* Proper Capitalization
* Money Management
* Position Size Management
* Discpline
* Market Experience
* Proper Trade Management after Entry
* Trader Psychology (understanding how I interact with the market)
However, if I were to post a chart in some thread about something involving TA (e.g. s/r zone)...
I'm not saying that's all you need are s/r zones and nothing else.
Yet, there are some ET members that either assume that such is being said and some will go as far to demand proof via a scientific approach that it really works.
Yet, if I talk about position size management in another thread...
For some odd reason nobody shows up to debate the usefulness of that particular variable in my trading plan. :eek:
Hello folks...wake up.
Profitable real trading doesn't work like that (one variable only) so why bother backtesting trendlines or anything else as stand-alone when that's not how profitable traders are using that particular aspect of TA.
Therefore, next time someone post a chart that represents TA...
Don't fool yourself into thinking that trader is implying that's all he/she uses and nothing else.
Thus, don't get mad, don't ball up your fists, don't be rude, don't start mudslinging at those discussing one particular variable of their trading plan.
Just the same, don't fool yourself into thinking you can backtest that one variable called TA to determine the merits of someone's entire trading plan...
As if reading one chapter only to determine the entire story of a book.
Simply, to properly determine (research) the merits of someone's specific use of TA...
You need to look at everything else that's involved in the trading plan because those other variables DO have impact on each other including TA.
Also, I don't care if the above variables are called voodoo...
They are very useful and I like the results of my magic potion as shown in my brokerage account.
Therefore, if trendlines are useful...
That also states that all the other variables of the trading plan are working well together as in a team effort.
Last of all, trendlines are a useful trading tool and there are many different ways of using them.
I use trendlines to tell me to wake up as an alert mechanism that a trade signal may soon appear.
Thus, they are not suitable as entry signals by themselves in my trading plan.
Mark
As I mentioned in my prior message in this thread...
Trendlines are very useful but I don't use them as an entry signal.
I also stated there are many different ways of useful approaches via trendlines.
Here's an example of another useful trendline method in my trading plan.
The chart attachment below shows using the trendline as a trigger line to tell me that its time to move my initial stop/loss protection into a profitable +1 tick trailing stop.
I don't use trendlines as an entry signal itself.
Just important, a trader must decide what points are important to base the trendline.
I base my trendlines on key changes in supply/demand via volatility analysis instead of randomly choosing swing points or other points of connecting the dots sort'uv speak.
To draw my trendline I need a minimum of 2 points on interest what I call t1 and t2.
Simply, trendlines are very useful as part of my * Trade Management after Entry...
One of those variables mentioned in my prior message that's consider to be voodoo by those still inside the box.
To answer the thread starter question...
Do Trendlines Work?
Yes and there's worst ways or better ways than my approach of using them concerning my trading plan.
I'll put more merits on the useful of TA via the results of my brokerage statement above any system coder that's testing TA differently than how I use it.
Mark
<img src="http://www.elitetrader.com/vb/attachment.php?s=&postid=1772887"/>
I don't know how many charts that I have put up in this thread, and a lot of them real time, that have shown a "line of trend" or "line of support/resistance", which is the same thing, and displayed how useful it is to entering or exiting a trade.
As others have mentioned in this thread, and I think the deer hunting example was getting to (it was too long for my short attention span to read the whole thing) HOW THE TRADER USES THE INFO IS AN ENTIRELY DIFFERENT SET OF INFORMATION / VARIABLES.
As others have mentioned in this thread, and I think the deer hunting example was getting to (it was too long for my short attention span to read the whole thing) HOW THE TRADER USES THE INFO IS AN ENTIRELY DIFFERENT SET OF INFORMATION / VARIABLES.
Very well said mark,I couldnt agree with you more.When I dispute the validity of trendlines,I am soley referring to the penetration/support as Entry signals (or reversals)"in a vacum"
I find it absurd when someone posts a chart and says "when you understand why this trendline break was telling,you will know all"..Or an analogy to guns..Or some other mystical voodoo..Is complete BS.
All trendlines are is a way/tool to interpert price action and a proverbial line in the sand.My best guess is you may get some range expansion around "significant trendlines,but that is it..If your approach is somewhat systematic(consistent and disciplined),trendlines are a great tool as is Andrews forks and median lines or any other method...Its a tool that works in the hands of a talented trader.
Take a look at the OP's initial statement.Fundamentals change,price follows a "new path",and a penetration of a trendline reflects the change??And to top it off,the trendline break will reflect a "change in trend" or consolidation??Of course a trendline will reflect that change.So will a MA,a linear regression line,a break of some fib retracement.Why doesnt the OP ask if Breakouts work??Clearly price action must have taken out some range on some time frame..Give me any chart,and I can come up with 50 technical indicators/patterns that validate what the mystical trendline revealed.And I will gain alot more than "a belief" that connecting a set of points has any predictive power.....
That is why I believe trendlines work.
I find it absurd when someone posts a chart and says "when you understand why this trendline break was telling,you will know all"..Or an analogy to guns..Or some other mystical voodoo..Is complete BS.
All trendlines are is a way/tool to interpert price action and a proverbial line in the sand.My best guess is you may get some range expansion around "significant trendlines,but that is it..If your approach is somewhat systematic(consistent and disciplined),trendlines are a great tool as is Andrews forks and median lines or any other method...Its a tool that works in the hands of a talented trader.
Take a look at the OP's initial statement.Fundamentals change,price follows a "new path",and a penetration of a trendline reflects the change??And to top it off,the trendline break will reflect a "change in trend" or consolidation??Of course a trendline will reflect that change.So will a MA,a linear regression line,a break of some fib retracement.Why doesnt the OP ask if Breakouts work??Clearly price action must have taken out some range on some time frame..Give me any chart,and I can come up with 50 technical indicators/patterns that validate what the mystical trendline revealed.And I will gain alot more than "a belief" that connecting a set of points has any predictive power.....
That is why I believe trendlines work.
Quote from NihabaAshi:
As I mentioned in my prior message in this thread...
Trendlines are very useful but I don't use them as an entry signal.
I also stated there are many different ways of useful approaches via trendlines.
Here's an example of another useful trendline method in my trading plan.
The chart attachment below shows using the trendline as a trigger line to tell me that its time to move my initial stop/loss protection into a profitable +1 tick trailing stop.
I don't use trendlines as an entry signal itself.
Just important, a trader must decide what points are important to base the trendline.
I base my trendlines on key changes in supply/demand via volatility analysis instead of randomly choosing swing points or other points of connecting the dots sort'uv speak.
To draw my trendline I need a minimum of 2 points on interest what I call t1 and t2.
Simply, trendlines are very useful as part of my * Trade Management after Entry...
One of those variables mentioned in my prior message that's consider to be voodoo by those still inside the box.
To answer the thread starter question...
Do Trendlines Work?
Yes and there's worst ways or better ways than my approach of using them concerning my trading plan.
I'll put more merits on the useful of TA via the results of my brokerage statement above any system coder that's testing TA differently than how I use it.
Mark
<img src="http://www.elitetrader.com/vb/attachment.php?s=&postid=1772887"/>
Let's see what happens in this real time chart.
The red uptrend line can be useful in many ways. A few examples:
If someone is long, may use it for a stop.
If someone is looking to go long, the line may be a place to buy.
Looking to go short, should price come back to the line, hug it, and then break down; may be a good short.
The red uptrend line can be useful in many ways. A few examples:
If someone is long, may use it for a stop.
If someone is looking to go long, the line may be a place to buy.
Looking to go short, should price come back to the line, hug it, and then break down; may be a good short.
Perhaps redraw the trendline after your 3rd circle to reflect the change?
One could do that. I won't though because it is too steep of a trendline and I feel that the one drawn will have more significance.
thanks.
Here is a scalp from this morning.
The 3rd circle, 3rd pause at the line, with cosolidation of bars at the line told me it is respecting the line. When it broke higher it told me that it may be breaking out.
Took profit based on futures chart at some prior congestion area.
The 3rd circle, 3rd pause at the line, with cosolidation of bars at the line told me it is respecting the line. When it broke higher it told me that it may be breaking out.
Took profit based on futures chart at some prior congestion area.