I am experimenting with Trendline bouncing and horizontal lines bouncing.
I am wondering which one is safer to trade.
I am wondering which one is safer to trade.
Poll
- From your experience which is safer to trade?
- #2
- Feb 14, 2009 3:52pm Feb 14, 2009 3:52pm
- Joined Nov 2005 | Status: EURUSD Quant FREAK | 3,197 Posts
- #16
- Edited 6:04am Mar 15, 2009 5:54am | Edited 6:04am
- | Joined Feb 2008 | Status: Live long and have fun :) | 1,386 Posts
Personally, trendlines could provide better and more reliable opportunities for bounces. It probably has to do with the lesser amount of people having them on their charts compared to horizontal lines. But, I suppose it evens out because trendlines must ussualy be caught "early" before the whole market sees them, and that leads occasionaly to wrong predictions about their whereabouts.
Anyway, I hardly ever do breakouts as they're ussualy unreliable in my opinion and most bounces I take are from trendlines or something else - not horizontal lines. Mostly also, I find it's a good idea to take a bounce when the channel inclination is in your favour - in the direction of the trade and not the opposite.
More importantly though, it's HOW you trade them that matters. You could play a small bounce with 1:1 to 1:2 max r:r but good win to loss - if you're good at reading the market and being carefull. In that case you're also likely to have more trading opportunities, because you don't have to count on the trendline actually holding beyond a rather small bounce. Or, you could try to capture the big r:r move back near the other line and then you'll score big on your wins but abviously have fewer of them. Or something in between maybe. It comes down to what kind of a trader you are, what tf you use and your personality in general, except of course you should excel in whatever fits you to make something out of it, so demo it or trade it with small amounts for a while first.
I personally use the first approach because I trade on small tfs (1m ussualy)and have niether the patience nor the faith in longer term or larger moves, it's also much easier for me psychologicly to trade a set r:r rather than guess what price will do next when already in a trade , in my opinion the small bounce is the most predictable part of the move if you did your ta right. On the other hand, many people here will probably tell you to have a small sl and a large tp or "let your profits run" as well as trade larger tfs. Like I said, it's a personality matter and should fit you to work for you.
Good luck
Anyway, I hardly ever do breakouts as they're ussualy unreliable in my opinion and most bounces I take are from trendlines or something else - not horizontal lines. Mostly also, I find it's a good idea to take a bounce when the channel inclination is in your favour - in the direction of the trade and not the opposite.
More importantly though, it's HOW you trade them that matters. You could play a small bounce with 1:1 to 1:2 max r:r but good win to loss - if you're good at reading the market and being carefull. In that case you're also likely to have more trading opportunities, because you don't have to count on the trendline actually holding beyond a rather small bounce. Or, you could try to capture the big r:r move back near the other line and then you'll score big on your wins but abviously have fewer of them. Or something in between maybe. It comes down to what kind of a trader you are, what tf you use and your personality in general, except of course you should excel in whatever fits you to make something out of it, so demo it or trade it with small amounts for a while first.
I personally use the first approach because I trade on small tfs (1m ussualy)and have niether the patience nor the faith in longer term or larger moves, it's also much easier for me psychologicly to trade a set r:r rather than guess what price will do next when already in a trade , in my opinion the small bounce is the most predictable part of the move if you did your ta right. On the other hand, many people here will probably tell you to have a small sl and a large tp or "let your profits run" as well as trade larger tfs. Like I said, it's a personality matter and should fit you to work for you.
Good luck
On the path to Enrichment.
