Rules for Drawing Trendlines
- Thread starter dklepak
- Start date
Which do you feel is best, and why?
Question 1...
I look at the chart "as a whole" to judge.
(One minute chart will do)
Question 2...
It is range. Not trend.
I apply commonsense. Not trend lines.
Charts clearly reflect the general market psychology and one need commonsense, not a degree in psychology, to understand and predict.
Most traders and specifically new comers think that there is some secret in trading. Trend lines (or any other TA or Indicators) cannot reveal any secret because there isn't any.
I look at the chart "as a whole" to judge.
(One minute chart will do)
Question 2...
It is range. Not trend.
I apply commonsense. Not trend lines.
Charts clearly reflect the general market psychology and one need commonsense, not a degree in psychology, to understand and predict.
Most traders and specifically new comers think that there is some secret in trading. Trend lines (or any other TA or Indicators) cannot reveal any secret because there isn't any.
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bunch of baloney
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i dont see any problem with any of those trendlines,DLKepak; most , if they use straight lines, connect highs, just like you connected lows. 7 month trend lines mean more than 70/+ minute trend lines. 3 minute trend lines mean much less..............
BUT a very practical problem, most hourly trend lines dont mean much profit [ irrelevant]; trader Vic draws them off daily data, not hourly.In order for my charts not to look like a ''pick up stick mess'' i use trend lines like 200 day moving average
Good question; i dont trade/invest for fun, even though i mostly enjoy it.Of these three, B is the most correct. However, there are many more trendlines here that you haven't drawn because you're doing all of this in hindsight. The trendline begins with the first swing low, and given the timeframe that you have chosen, you have begun your trendline in the correct place, the lowest swing low. However, if you were to shift your timeframe to the left, there might be a lower low, and you'd begin there.
Price then rises to a point where there are no more buyers. This occurs in three hours. And price drops to the next swing low, the next hour, the level at which buyers are again interested, and this gives you the next point for your trendline. This line is broken around 0800, but when price makes a higher high, you can draw your next trendline. And so on. You're ignoring all of that and focusing on the swing low at about 1240, which is fine, but it is important to you as a trader to understand how you got there.
Your line is then good until about 1420, at which point it's broken. This alerts you to a change, a change in the trend. But what is most useful to you as a trader is not whether or not there has been a change in trend but what traders will do as they approach that last swing low. As you can see, buyers enter the market at almost exactly the same price as you have chosen for your swing point. Now the question becomes whether or not price will make a higher high. It does not. It moves sideways. It then drops again to that same level before bouncing again, failing again to make a higher high, moving instead sideways within a frame, the upper level of which is the highest high and the lower level of which is the lowest low.
"Trend", in other words, serves no purpose once your first trendline "B" is broken. What is important to you after that are the levels at which buyers buy and sellers sell. Those levels are where you will find your trading opportunities until price breaks out of this range and makes either a higher high or a lower low.
You've probably figured out by now that much too much is made of lines. If you can't tell whether price is rising or falling without the aid of some line or other, then your focus should be on acquiring that sensitivity, not on memorizing rules. Remember that any given line is in your head, and no one else may be drawing his line just like you. The point at which price turns, however, is there regardless of you. It's visible to everybody. It is therefore much more important to focus on that level rather than on some line you've drawn.
Unfortunately, there are no concrete rules when it comes to drawing trendlines. Each trader will draw them differently. It is up to the trader to define what is a trendline and how important each one is.
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Good point J21; one of the better ways to draw a trendline -moving average , even more so when its autodrawn. As they say in Chicago; the smarter you are-the longer it takes
GlobalArbTrader is a professional trader. I recall a post of his that was meaningful for me.
See i always viewed these trend lines as something that i could not capture. Wonderful lines stretching across the chart from right to left yet my methods were restricted to fractions of the trendlines length.
His eye opener was that maybe up to 90% of price gains (left to right) could be captured on a smaller timeframe. Remove the drift with a filter or MA and test for a strategy that captures a large fraction of the price gains.
To me, this also reinforces trading in the drifts direction, not counter, and stats and results
May support this IF you are trading some method that benefits from drift. (Maybe HFT , DOM etc... Dont care of higjer timeframe drift)
Scrutinizing minute differences in how these lines are drawn seem to miss the point I a poorly
trying to make here.
See i always viewed these trend lines as something that i could not capture. Wonderful lines stretching across the chart from right to left yet my methods were restricted to fractions of the trendlines length.
His eye opener was that maybe up to 90% of price gains (left to right) could be captured on a smaller timeframe. Remove the drift with a filter or MA and test for a strategy that captures a large fraction of the price gains.
To me, this also reinforces trading in the drifts direction, not counter, and stats and results
May support this IF you are trading some method that benefits from drift. (Maybe HFT , DOM etc... Dont care of higjer timeframe drift)
Scrutinizing minute differences in how these lines are drawn seem to miss the point I a poorly
trying to make here.