Do Trendlines work?

Quote from Epiphany:

Trendlines work if you are prepared to use a wide stop
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It just depends how you use them, I have developed several trendlines based methods for intraday trading, using very tight stops . They must be used in fractal mode. Much more work though and that is why almost nobody is doing it.
 
I am not an experienced trader and have just recently joined this site. However I did a research on trendline action on CME E-mini’s over 2-3-5 min charts.

All I can say about the result of my research is briefly as below, which I am sure the other guys have already mentioned most of it

Trendlines work BETTER when
1- are visible on more than 1 timeframe ( 2-3-5 )
2- you can confirm it with some other indicator such as MACD or RSI
3- you have a decent harmonic channel ( for example : all retracements are from the upper BB to 20 MA )

the interesting part to me ( on CME E-mini ) was even though some time breaking the trendline does not stay for a long time, but it still does make you some money

the bad thing is you can not automated in tradestation .

overall TRENDLINE IS A GOOD SIGN for reversal but needs a good skill, expertise and knowledge of market behavior and they are different depending what you trade.


:confused:
 
You can always find some trendlines to explain what happened afterward, but you neevr know which trendlines you should use beforehand.
 
I do agree with kaihui
however for this reason I did research in real time and I did wait till the trend has been confirmed.

I must mention again that trend line by itself is not enough to enter the trade, I personaly like to confirm it with Volume, MACD , stochs and RSI.
 
Quote from MAESTRO:

Difficulties of the trend lines back testing is obviously related to their "fuzzy" definition. I haven't met two traders yet that would have exactly the same trend line definition or the same algorithm to produce them on the chart. It often happens that 10 traders would draw 10 different sets of trend lines on the same chart. I did this experiment in our office. That is why I at least suggested to draw trend lines using pivot points that could be defined more precisely.
Cheers.
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Hi Maestro,

could you please post, a fairly brief description of the way you'd construct the pivot points you'd use to draw trendlines? Plus, how many bars after the pivot point would you need to confirm the existence of such an entity.

Would it be something like 2 higher highs (bars) after a bunch of lower lows constitutes, say, an intraday pivot point? (And vice versa). Hence in this case requiring at least 2 bars after the fact before confirming the pivot.

Thanks a lot.
 
Quote from kaihui:

You can always find some trendlines to explain what happened afterward, but you neevr know which trendlines you should use beforehand.
More...

I always know which trendline to use beforehand .
 
Quote from Equalizer:

Hi Maestro,

could you please post, a fairly brief description of the way you'd construct the pivot points you'd use to draw trendlines? Plus, how many bars after the pivot point would you need to confirm the existence of such an entity.

Would it be something like 2 higher highs (bars) after a bunch of lower lows constitutes, say, an intraday pivot point? (And vice versa). Hence in this case requiring at least 2 bars after the fact before confirming the pivot.

Thanks a lot.
More...

I use a very conventional definition of pivot points. Something like 3/3 meaning that I'm looking for the highest high of 3 bars before the point and 3 bars after the point. The same thing goes for low points. Below is an illustration of that.
 

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Quote from MAESTRO:

I use a very conventional definition of pivot points. Something like 3/3 meaning that I'm looking for the highest high of 3 bars before the point and 3 bars after the point. The same thing goes for low points. Below is an illustration of that.
More...

Thanks Maestro.
 
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