Does trendline work?
- Thread starter GloriaBrown
- Start date
Maybe THE top, maybe A top...stay tuned kids.
Four paragraphs of rambling tripe when all you had to say was "I was wrong. I have no evidence."
No wonder so few people here are successful traders. Lots of posers, though. Oh well, time for bedtime, princess. You can dream about trendlines and other pseudoscience all you want...
Lookie there! Another cherry-picked trade from the past! Start posting these real-time with precise entries and exits, gather plenty of data and then we'll talk.
Well shit. Was it that easy?
While you're looking for a book on Experimental Design you may want to take a trip to Wikipedia to learn what a Paragraph is.
I never claimed to have evidence. I used "consider..." as a way to sort of involve a way of reasoning where you can't directly observe the truth but you can come up with a good enough idea of it to at least, on the surface, make it seem reasonable.
You're not even a good troll. I remember taking quantitative finance and thinking I was hot shit. I've since grown up, perhaps you should too.
For a while, I have wondered if that is true of all technical indicators. Fibionacci levels really seem like complete B.S. to me. Why would the "golden ratio" show up over and over again on charts? Take a level where price made a pivot, forecast the retracement as being exactly (1 + sqrt(5)) / 2...sure it will go there and then reverse just because that number is special. I'm not claiming that Fib levels do or do not work, but if they do, then it's not because they are magic. It's only because enough people follow them.
I suspect that's probably true. Or...they work because people think that they imply S/R due to supply / demand conditions. That's why I said earlier that if support and resistance levels don't work, then I suspect trendlines would not work either.
I think you're correct about most technical indicators. There aren't many (I cant think of any) actually that are based on the level of mathematical rigor say, statistical arbitrage, is.
I have a very scientific opinion on these things. Often people spend way too much time seeking the "one veritable truth". We are only human. Much of what we take as "fact" is more-or-less a well refined model of our experiences of the universes (for some definition of universe). Take for example almost all of the laws of physics - they are absolute truths now because we have rigorously verified them in all conditions possible but imagine being Newton. You've build a model of celestial travel. How do you know its true in the 1600s? You don't really. You've got some math that checks out but what if your assumptions are wrong? It wouldn't be for 400+ years that these things have become considered absolute truths. Until then everyone was operating on a model! In fact, in quantum physics we see this as the model of the subatomic world starts to break down with continuous discoveries of new things. As scientists, we have to adjust our models to account for these things or trash our models when they are objectively false.
Modeling reality as it is, is not possible. As a result we build approximations. Some of these manifest as something like trendlines. It is simply a model of the reality we are experiencing. Any model is better than no model and the most important thing (scientifically) you can do is adjust your model of reality as you gain new information.
Excuse my rant here. I feel strongly about this.
I agree. It was mostly an example. I feel like S/R on the 1Y and 1M have a decent correlation to price elasticity. It's an interesting phenomenon. I make no claims that it's accurate (in the economic sense) but it does seem to pencil out at least superficially.
Trends are real. Trendlines come from the trader's interpretation of the trend. The first trendline drawn will probably need revision as the trend proceeds. There is no universal objective way to define either the first or subsequent trendlines in a trend.
So as a definition of a point of action they are likely to be misleading. If used as entry/exit points the trade profitability is likely to become random.
A good use of a trendline is to generate label for the chart indicating the direction price has been travelling in, but that should down at the bottom right-hand corner in a notation, not overlaid on price as a "trigger" line.
So as a definition of a point of action they are likely to be misleading. If used as entry/exit points the trade profitability is likely to become random.
A good use of a trendline is to generate label for the chart indicating the direction price has been travelling in, but that should down at the bottom right-hand corner in a notation, not overlaid on price as a "trigger" line.
even though you stabbed at my popularity yesterday, this actually kinda makes sense lol.
one can trade with naked chart - it will work by itself... then you can slap on a trendline and go - look, I went short here when it broke the trendline..... but the true reason was you would make the same trade on a naked chart, except the trendline gives a better visual.
so the answer is still NO - NOTHING WORKS... you have to be able to win with naked chart, there lies the fundamental EDGE that you read the market better than others
Of course trend lines work! Can they effectively be used to trigger profitable signals, i.e., continuation signals or reversal signals? Now, that's an entirely different question. 
The short answer for me is that I like to use trend lines when they can be drawn perfectly and ideally if I have some confluence with other parts of my analysis.
As for subjectivity - well, see above. Also, one can work out rules for how to draw trend lines. I'd say that's a requirement if you are to use them. Do you draw trend lines on wicks? Or just whole body trend lines ignoring the wicks?
That's entirely up to you and what you find in your studies...
The short answer for me is that I like to use trend lines when they can be drawn perfectly and ideally if I have some confluence with other parts of my analysis.
As for subjectivity - well, see above. Also, one can work out rules for how to draw trend lines. I'd say that's a requirement if you are to use them. Do you draw trend lines on wicks? Or just whole body trend lines ignoring the wicks?
That's entirely up to you and what you find in your studies...