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Trend Lines Don't Work

  • #61
  • Feb 1, 2011 12:22am Feb 1, 2011 12:22am
Quoting newyear498
if 80% don't have any desire to seek and understand the underlying causes and effects of the very methods they trade.
Most people won't care how Ferrari works, they just want to drive it. It is a headache to understand its underlying physics and technologies. People just want to enjoy the ride and leave all those headache to engineers. Seeking truth is a lonely journey, especially when you are against the public.

IMHO unless you can lay down the rules to draw trendlines, else it is hard to say whether it is profitable or not (Profitable is a better word than 'work'), scientifically. If you open a thread and claim that it is not profitable, you need to prove it in order to gain support.
  • #62
  • Feb 1, 2011 12:47am Feb 1, 2011 12:47am
so I must not be drawing correct trend lines? hah.. ok whats a correct trend line my friend.. theres no official definition but ok.. I do draw trend lines as most do.. I have drawn them for many years..


There is only one way to draw classic TL's correctly, there is an "official" definition that most don't know, and no, i won't go into it, i did post examples on one other thread but most still didn't get it.
Btw my favorite TF is 1 hour for drawing TL's, also you do have to allow a bit of poetic license as broker's quotes vary quite a bit.
Ohh, one more thing, cut the sarcasm bud, you're the one asking the questions.....
Biggest joker
  • #63
  • Feb 1, 2011 12:53am Feb 1, 2011 12:53am
heres how i see it

the side tl is just to see,if the price doesnt break it,if it follows it support
(not follow the line,the line is just there to improve our sight the way we see it move,like an obstacle
entered 0n 7195 exited 3.8 pips higher now its about 8 pips higher,but who cares better safe than sorry,
darn now its about 13 higher


observe the volume carefully with the price,and ull see why i got into the trade
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  • #64
  • Feb 1, 2011 1:35am Feb 1, 2011 1:35am
heres another one,the price says with tl ,bounces of it ,so its staying in barriers of support,and its a failed test
see how close to the trendline its ascending,time after time it goes even further
tl is like an imaginary line,to help us see boundaries of the trend

http://i.imgur.com/oVrEZ.gif
  • #65
  • Feb 1, 2011 1:37am Feb 1, 2011 1:37am
Quoting jamjamjam
he emphasized on several occasions that his hit rate was something like 30%, and taking many losses with the occasional home runs (positive net expectation of course) was the catalyst to his success.
In the month (to the day) that I've been reading these forums, that has struck me as the single biggest difference between futures traders and forex traders.

Good futures traders are always in when, and in the direction that, their rules tell them to be, and that means they lose 70% of their trades, and collect it all back several times over in the 30% that the rules let run.

Many forex traders would see 70% losing trades as a badge of shame, and do everything they can to avoid that. And most of what that "everything" entails is wrong, and they slowly bleed to death.
  • #66
  • Feb 1, 2011 1:40am Feb 1, 2011 1:40am
Quoting newyear498
Your absolutely right.. understanding why things work is totally lacking logical value... doing things you don't understand makes logical sense...

your post is so funny because you said I changed my original post and everything.. I believe I edited a few grammatical errors.. but I don't see the point in arguing with someone who sees no value in seeking to understand the world around them and building on the human element that has separated us from the rest of the animal kingdom...

dude you are in for some heat on this thread LOL lots of traders use trendlines and apparently trade them profitably....

but I decided to post here cause i like this topic. but i think what u ask is a very profound question..... what you are really asking is what market theory supports your use of technical indicator of just a line, or set of lines, set(s) of points??(or one might question any technical indicator i guess) but the line to me is the most interesting to discuss) IMO to ask this is to ask what is the essence of the market? lines or something other than lines? perhaps this is where you wanted some intellectual discussion? either way you have opened a can of worms and i feel for ya dude LOL

anyhow, why connect 2 points with a line and use it to trade a broker created graph that doesnt even have weekend data (usually)? what theory supports this methodology? Or perhaps you just observed something useful on trendlines and wanted to share for the benefit of others?

anyway, why would a line be of use? what are you putting a line on? is the chart you see, the graph, a line? or points? sets of lines? sets of points? what is represented by the data u see on your mt4 platform? price and time? is it something else? what is time? LOL crazy can of worms dude! u might get opinions ranging from probabilty theory to fractal dimension to inefficient market theory to astrology etc. depending on the person's opinion....but ultimately why did u start this thread? do u want intellectual discussion? are you offereing an insightful way to use trendlines? i have no answers of course .....just like the topic(s)....and i like topics that make me think personally so thanks but....can of worms for sure...so well..... errr... good luck LOL

PS

  1. "One of humanity's prime drives is to understand and be understood. All other living creatures are designed for highly specialized tasks. Man seems unique as the comprehensive comprehender and co-ordinator of local universe affairs."

-R. Buckmister Fuller

  • #67
  • Feb 1, 2011 2:00am Feb 1, 2011 2:00am
I'm surprised to see no statistical argument here, OP. I thought you were the resident charity statistician. Surely you can define some rules for the trend line methods you are shooting down and run the numbers. You seem a bit out of character. Is it really that hard to ask a program to measure a slope between two points on a chart, (rate of appreciation/ depreciation of an asset), and to then find the nature of the reaction of the market to the price projection? You can define a failure/success however you want when you are running the numbers, I’d suggest padding the price projection (trend line). For example, maybe you’d define a break of the trend line as a .5% difference between where the trend line puts the price and where price actually is. Plug any numbers in you want, I’d run an array of them to see which conditions were the most favorable and which were not.

As far as the trend line itself, why not start out testing one day at a time looking at a 15min chart? Start with something simple that you can keep consistent for the sake of testing. Define your trend line as the slope of the low to the low of the highest bar for the 1st ¼ of the day if the high at that time is > the low and vice verse if the low at the ¼ day mark is < the high. This test could very well turn out useless as far as finding signals, but at least you’d have an argument and nobody would find any reason to argue with you unless someone wanted to take issue with the data you were using or something along those lines. Right now you have no argument (evidence), just insubstantial fluffy candy. Lets see some numbers and then maybe you’d be better received.
  • #68
  • Edited 2:36am Feb 1, 2011 2:10am | Edited 2:36am
Quoting dragan53
heres another one,the price says with tl ,bounces of it ,so its staying in barriers of support,and its a failed test
see how close to the trendline its ascending,time after time it goes even further
tl is like an imaginary line,to help us see boundaries of the trend

http://i.imgur.com/oVrEZ.gif
reading the volume: High volume up and low volume down means trend is up
the demand is on the buy side...??

the trend line is the point at which no more sellers are willing to sell.
the sellers are done but the demand to buy is still there and the prices get pushed higher and higher until the buyers do not want to buy at that high price.
This happens over and over again as long as there is demand. These are big players that need to move the currency. We're looking at millions at stake.

A kind of diagonal trend line appears as this porcess gets repeated again and again, pushing prices higher and higher until the market quiets down and sellers and buyers have gone somewhere else for a while because buyers are done and sellers are gone.
The sideways consolidation we see.
Some event may have triggered the action. Or a data release..

vice versa sell...
No???

like here a short trade would be good??
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  • #69
  • Feb 1, 2011 2:14am Feb 1, 2011 2:14am
we need the master ,dark star to put the icing on the cake,
trend lines work or dont work?
  • #70
  • Feb 1, 2011 2:19am Feb 1, 2011 2:19am
Quoting jiva34
reading the volume: High volume up and low volume down means trend is up
the demand is on the buy side...??

the trend line is the point at which no more sellers are willing to sell.
the sellers are done but the demand to buy is still there and the prices get pushed higher and higher until the buyers do not want to buy at that high price.
This happens over and over again as long as there is demand. These are big players that need to move the currency. We're looking at millions at stake.

A kind of diagonal trend line appears as this porcess...
it falls much quicker than it rises up,as we see now
it must have been a big order of euro today
maybe positive euro expectations driving the pair up

http://www.forexlive.com/163532/all/...ng-asian-trade

who knows
  • #71
  • Edited 2:40am Feb 1, 2011 2:25am | Edited 2:40am
Quoting OldQuant
In the month (to the day) that I've been reading these forums, that has struck me as the single biggest difference between futures traders and forex traders.

Good futures traders are always in when, and in the direction that, their rules tell them to be, and that means they lose 70% of their trades, and collect it all back several times over in the 30% that the rules let run.

Many forex traders would see 70% losing trades as a badge of shame, and do everything they can to avoid that. And most of what that "everything" entails is wrong,...
I want to add a footnote to your post, OQ. When you talk about a trader following his rules, you are talking about a trader who is exploiting a known edge. I only add in the obvious because it's not so obvious to some. Many come from the land of babypips.com and are somewhat naive about what exactly a system is/should be. For instance, babypips shows examples of MA crosses as trade signals, along with Fibonacci lines ect. When a new trader see's this on his chart, he gets excited and places a trade, only to lose and find himself frustrated.

The important piece that babypips leaves out is the odds. There is nothing wrong with including MA crosses, TL's, fibs, ect. in your trading, what's important is knowing the odds, i.e. when those signals will most likely be valid. If you know the odds, then you can be confident even in the midst of trading a system with the numbers you describe.
  • #72
  • Feb 1, 2011 2:48am Feb 1, 2011 2:48am
bounced through,trendline ,passed r1

http://www.forexlive.com/163560/all/...usd-and-audusd
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  • #73
  • Feb 1, 2011 3:07am Feb 1, 2011 3:07am
Wow sensitive people

Sounds like you hit some sorta nerve there NY. I'm going into bat for NY and say that I think all he wanted was a discussion about why a trend line works sometimes and not others?

I guess we would be going into another order flow topic. No one really had a go at answering it and just got all defensive and emotional. Big surprise

Its like when someone listens to a song with lyrics "I ... .... " and they automatically think the singer is singing about him/herself

A lot of the posts here could have been the same poster under a different user name the way I read it.

Whatever... I feel dirty after reading the last few pages. What a bunch of nonsense. Oh well NY at least you can say you tried
Time hides Nothing
  • #74
  • Feb 1, 2011 3:15am Feb 1, 2011 3:15am
ye cindy
....


btw what did we do so wrong except try to help him answer his question and show him a couple of charts?

in the biggening he was agressive and calling trendlines dumm,like a troll
but i think he started getting sense now about trendlines
and being nicer
  • #75
  • Feb 1, 2011 3:21am Feb 1, 2011 3:21am
ah i dunno... I think I'm still in a shit after having all my V's taken away

I haven't read the thread all that closely I just saw a lot of NY bashing and I don't think hes a troll so I'm just sticking up for him.

Anyway I don't think it a question of "if they work or not" I think its more a question of "how effectively people use them" which are 2 different very different things. I'm just gonna leave it at that
Time hides Nothing
  • #76
  • Feb 1, 2011 3:25am Feb 1, 2011 3:25am
Quoting CindyXXXX
Wow sensitive people

I'm going into bat for NY and say that I think all he wanted was a discussion...
I'd say he got his wish. I don't sense any vitriol in the responses in this thread. I certainly don't get emotional because of a forum... NY made a blanket statment, didn't back it up and his statement was challanged. Nothing wrong with that because after all, iron sharpens iron.
  • #77
  • Feb 1, 2011 3:33am Feb 1, 2011 3:33am
I wouldn't go as far as saying they don't work period. But I have made some interesting observations over the years (oh about 10 of them now).

What I find is that price very rarely bounces the third time on a trend line. Sure it does sometimes, but not enough to keep me interested.

So you get 2 points to draw your line (you need these 2 points at minimum right?). By the time price comes back for the third touch, it generally breaks it. That's if it even gets back to the line for a third time. I see many examples in the charts NY posted in post #13.

I use trend lines myself, but for other purposes. It has not proven to me (statistically) that they work for initiating a trade.

Just a mere observation over the years. Not saying they should be disregarded.

As always DYOR, I do.
  • #78
  • Edited 3:36am Feb 1, 2011 3:35am | Edited 3:36am
when I draw trend lines, I allways do so on a line chart,
the reason is if you draw them on a candle stick chart, they will be way off,
it's easy to see if you first draw them on a candle stick chart and then switch to line chart,
you will se they are not very precise, sometimes they can be 10 pips over,
and since the line chart reprecent the closing price, that is what is important and what we should want?
it also for work better for support and resistance lines.
I think they work great though
Bulls are stupid Animals!especially when Im short!
  • #79
  • Feb 1, 2011 3:55am Feb 1, 2011 3:55am
I can see how horizontal s/r lines work but a diagonal line which is a function of price and time? Doesn't make any sense. Can someone explain the underlying market mechanics instead of saying they work 'just because'. I've yet to see a decent arguement for the former...

Personally, I see them only as a tool of probability if anything since they're respected the same way in randomness as on a price chart.
  • #80
  • Feb 1, 2011 4:25am Feb 1, 2011 4:25am
If you were really going to break this down, the question should be do groups of orders exist at regular intervals that form visual trendlines. If so, is it tradeable. If not, why not? And if only on occasion, which occasions?

If that sounds a bit aspergers to break it down like that, it's because as Scotty says - the odds matter.

And as anyone who's been trading long enough will know, yes groups of orders form along trendlines, on lots of different timescales. Why? Because people scale in at progressively better prices as orders beneath get absorbed, because quant strats automatically scale in at a better prices, because traders in a hole are trading out of positions, because TA traders recognise the line and place orders and finally because of price manipulation to draw in TA traders.

Don't think there's any real reason for any more nods and winks is there? no what I mean it's a secret, one day you'll learn grasshopper blah blah.
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