What is the rationale behind trendlines?
- Thread starter CyJackX
- Start date
I don't get what's so logically difficult to understand behind why trend lines show a pattern. Sure, they don't always work, but then again neither do all levels. But in a nutshell, if you have a bunch of different levels and one level above the previous level holds - if you connect those reversals with a line you get a trend line.
It's just the diagonal plotting of where levels held and in a way there's some self-fulfilling prophecy at play.
It's just the diagonal plotting of where levels held and in a way there's some self-fulfilling prophecy at play.
I think it's the other way around.
What is subjective about a moving average?
They are influenced by the trend (trend lines), and not trandlines are influenced by them .
And subjective information cannot be tested objectively as it is subjective. Objective means that it would produce each time the same result when repeated.
This is my objective opinion.
Moving averages are a result of mathematical calculations. That's objective. Math is objective. They cannot be discussed about. For every human being a 10 days MA is identical; now, tomorrow and even in 100 years.
Trendlines are not objective. It all depends of what people see. And even when they see it. Even their mood or psychological state can influence where they draw the lines.
MA's will never ever change their value, no matter when or who is making the calculations. The calculations will never change. Trendlines on the other hand...
If I daytrade I have on average 2-3 trades that are clear as a signal is generated.
With trendlines this is not the case. If the trendline holds it is a signal if it does not hold it is not a signal and the next trendline will be (might be) a signal. So trendlines are influenced by the way the trend moves. The trend defines which trendline will eventually hold.
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I believe that a proper trend must be clearly established before a trend line can be drawn correctly. And the mood or psychological state of the trader,as you stated, would/could lead to misreading the price movement and the incorrect drawing of the line.
In an old thread I defined what I thought to be the price movement that would allow the correct drawing of a trend line, and with which you may not agree or be interested. Actually I said in the following post that what I wrote was IMHO.
But it is really just very basic point in TA.
https://www.elitetrader.com/et/thre...e-biggest-lie-ever.295480/page-5#post-4201408
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