If You Can Draw A Straight Line . . .

[dbphoenix]

I'm not trying to beat people up over this line thing. After all, I started it. But I can't help but wonder if using these lines focuses the trader's attention on the lines instead of price. Would the hinge be more obvious if there were no lines at all? When one sees a lower high and a higher low, can there not be an automatic Ah, Let's See If This Becomes A Hinge without drawing or having drawn a single line?

Try this (and this is to no one in particular; there are after all dozens if not hundreds of people following this thread even though only a handful post charts): when you open up your charts to review what's happened and hypothesize what might happen, look at them as nothing but OHLC or HLC bars. No lines, no VAP, no shadings, no nothing. Just a series of bars -- or a line -- in a blank frame. Nothing. Zero. Nada. Zip. What do you see? (This is, you'll recall, exactly what you did -- or were supposed to do -- when you began your backtesting.) Are there ranges? Where? How wide are they? How long are they? Where are what might be important support/resistance levels (and let's get serious about "important" and not include every little swing point)? Are there any trends? What is their extent? What is their duration? How "busy" are they? What are buyers trying to do? What's stopping them? Ditto for sellers. What might they try to accomplish during the upcoming session? And so on. And all of this can be done without drawing a single line.

 

[Redneck]

Quote from bmwhendrix:

What would you consider them to be?

Trade what you see (iow what price is doing)

While always protecting your ass


RN

 

[dbphoenix]

Quote from bmwhendrix:

Possible top for today?

Take care when drawing conclusions from CVBs. They can provide a different perspective, but price moves by trades across time. If you refer back to my weekly chart, you'll note that we're at the midpoint of the long-term trend. If we move above that midpoint to the same extent that we were below it the last week of June, we'll get to around 3250. This is not to say that we actually will. But it's worth keeping in mind.

Trends change, of course, and so do, necessarily, their means. But we've exceeded the 2012 highs and appear to be on course. So I'd stick with the long-term trend until faced with compelling evidence to do otherwise.

 

[igotcash]

a line will subconsciously place a bias on the chart, or that is the intent of the line. if you see an uptrend, trust me, everyone sees it. and more lines means the trader is that much smarter to draw those lines. my point is, with 99% of traders losing, use the lines to fade. do exactly opposite of what a beginner would do with those lines. or figure out where the trader would put their stop from that line and enter there. something to think about when trading futures. trading stocks is different, so maybe go back and see if the lines worked in hind sight.

 

[yertleturtle]

Sitting on the 50% retrace level and forming a potential hinge. We'll see. This is also the old top from 7/17.

 

[dbphoenix]

Quote from yertleturtle:

Sitting on the 50% retrace level and forming a potential hinge. We'll see. This is also the old top from 7/17.

If you're referring to the one that began 20m ago, yes. But it's so narrow and so brief that I wouldn't expect much. They may just be pulling over for a beer. The retracement level probably matters more.

 

[dbphoenix]

Quote from igotcash:

a line will subconsciously place a bias on the chart, or that is the intent of the line. if you see an uptrend, trust me, everyone sees it. and more lines means the trader is that much smarter to draw those lines. my point is, with 99% of traders losing, use the lines to fade. do exactly opposite of what a beginner would do with those lines. or figure out where the trader would put their stop from that line and enter there. something to think about when trading futures. trading stocks is different, so maybe go back and see if the lines worked in hind sight.

Actually, the intent of the line is to track demand and supply, not to track trend per se. The line is drawn according to what price is doing, not vice versa. And it's highly unlikely that "everyone" will see it since few people know how to draw one. And given all the arguing over whether or not such a thing as "trend" even exists, much less what direction it's taking, much less how to trade it, I wouldn't be too concerned over what other traders see (other than new highs and new lows).

As to concerning oneself with what other traders are doing, one is more likely to be successful focusing on what price is doing, i.e., what the market itself as a composite of traders is doing. Perhaps entering on the basis of where other traders might have their stops is worth a thorough manual backtest, but I wouldn't bet any money on it without one.

 

[dbphoenix]

Given the abundance of hinges recently, some of you may be interested in something I wrote several years ago:

• Hinges are a type of springboard, like trading ranges. But they are not "boxes", like the typical trading range.
  
  Perhaps the most attractive feature of the hinge is that it's so easy to recognize in real time. As soon as you note a higher low and a lower high (or vice-versa), be on the lookout. A hinge may be on the horizon.
  
  Genuine hinges share common characteristics and can therefore be traded in much the same way. If buying what appears in real time to be an upside breakout through the supply line, keep a tight stop. If it doesn't go, you're out at breakeven. If price returns to the midpoint, one can place a buystop above this activity so that one can be stopped in on a second attempt at an advance [Note: as with yesterday's open]. Otherwise, one can sell a break of the demand line, again with a tight stop. If he is again stopped out but the return to the midpoint turns out to be a test, he can place a sellstop below this test and be stopped in on a second attempt at a decline {Note: as with today after lunch].
  
  The dynamics of this endgame are not difficult to understand. The hinge, after all, is created because of differences of opinion. That this testing should continue once one side or the other pushes price out of the hinge should not come as a surprise. But clearly one has to be quick on one's feet to avoid getting trampled.
  
  Those who are intrigued by hinges will benefit from the 20-post arc beginning here.

 

[niko]

Quote from dbphoenix:

I'm not trying to beat people up over this line thing. After all, I started it. But I can't help but wonder if using these lines focuses the trader's attention on the lines instead of price. Would the hinge be more obvious if there were no lines at all? When one sees a lower high and a higher low, can there not be an automatic Ah, Let's See If This Becomes A Hinge without drawing or having drawn a single line?

Try this (and this is to no one in particular; there are after all dozens if not hundreds of people following this thread even though only a handful post charts): when you open up your charts to review what's happened and hypothesize what might happen, look at them as nothing but OHLC or HLC bars. No lines, no VAP, no shadings, no nothing. Just a series of bars -- or a line -- in a blank frame. Nothing. Zero. Nada. Zip. What do you see? (This is, you'll recall, exactly what you did -- or were supposed to do -- when you began your backtesting.) Are there ranges? Where? How wide are they? How long are they? Where are what might be important support/resistance levels (and let's get serious about "important" and not include every little swing point)? Are there any trends? What is their extent? What is their duration? How "busy" are they? What are buyers trying to do? What's stopping them? Ditto for sellers. What might they try to accomplish during the upcoming session? And so on. And all of this can be done without drawing a single line.

Hehe, will give it a try, sorta like a new step, It has been a long trip from MA and Stochastic Ville, but the ride has been a lot of fun. Thanks.

 

[fortydraws]

Quote from dbphoenix:

Those who are intrigued by hinges will benefit from the 20-post arc beginning here.[/list]

Thanks for that reference dbphoenix. I've used the search fiunction over there hundreds of times, and I do not recall ever landing on that particular segment of that thread.