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Trend Lines Don't Work

  • #81
  • Feb 1, 2011 4:27am Feb 1, 2011 4:27am
Quoting EmeraldEyes
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.
Emerald, TL's needn't be complicated. They just make sense of price in time. If the market is buying over all, you could draw a TL from the starting low to the most recent low and have some idea of the speed of the market. Institutions sometimes take WEEKS to execute huge orders. Using a TL you could get a sense of the pace of the buying. I think I'm repeating myself already, it's a market speed thing.

For example, the market is keeping a minimum pace of 7.5 pips per hour over a few days. Once the market sells through that minimum rate of appriciation, you may have a decent indication that the buyers are all done, taking a break, or that the trend has actually changed.

Like you said, it's a probability tool, but every indicator has it's probabilities. The trick is KNOWING what those probabilities are and to know requires a bunch of boring homework i.e. stat studies.
  • #82
  • Feb 1, 2011 4:44am Feb 1, 2011 4:44am
Thank you for your explanation Scotty. So can we state that trendlines are indications of informative prices since the institutions (in ur example) are trading at a constant rate of price and time (seen in the angle of TL)?


Im not trying complicate it. Its these damn professor's papers Ive been reading
  • #83
  • Feb 1, 2011 5:44am Feb 1, 2011 5:44am
Quoting EmeraldEyes
Thank you for your explanation Scotty. So can we state that trendlines are indications of informative prices since the institutions (in ur example) are trading at a constant rate of price and time (seen in the angle of TL)?


Im not trying complicate it. Its these damn professor's papers Ive been reading
I can't necessarily say that the institutional liquidity consumption is constant, I couldn't know that unless I saw their programs. I believe that they will most likely hit large asking prices along the ride up and leave a trail of bids behind them to catch price as it tries to sell into them. Because they fully intend to execute their full order, they will be filling lots of orders for the sellers. By buying at the bid they are not paying the spread and thereby getting a better average price. They can't just expose tons of size though in the price ladder, once the market sees it, and see's that it is actually printing it will scare the market off and the institution will get a worse average price. So what happens is that the order is split into tiny pieces and several small bids are streamed into the buy side, this is all done with a program. Over time, of course you are going to see an uptrend whose slope can be measured in several different ways.

One thing to keep in mind about the trend line is the benefit of briefly trading through it to gather the discounted liquidity via stops. I'm sure you've heard the term "buy a little to sell a lot." If you can find areas where lots of traders are buying, maybe in a consolidation, you could press the market into them to squeeze them out and fill their stops with your bid. Some traders call this a squeeze others might call it a "washout," or "wash and repeat." Try pretending while looking at the market like you're the guy or group who actually cares about liquidity. Look at the market and ask how you are going to get filled at a decent average price. I digress...

As trihop said, orders can have a tendency to form along TLs whether it is technical interest or what have you. Liquidity is the name of the game in the REAL trading world. You have to think in those terms. Either the bids will catch the market at a certain appreciation level (TL), it won't because the pros are now looking to sell, or the pros will break the TL to fill stops and the market will then continue onward and upward.

My purpose is not to glorify TL's, just to share some ideas behind them. The same can be said for many technical studies. Think of all the orders at
key S/R levels. The same ideas hold true.

It's fine and dandy for me to say these things, but as a small guy, you need to do the homework required to see what will likely happen in whatever instance you are considering.

One last note about "informed traders/ prices." To me it's all a shtick, a joke, whatever. The trades of the "informed," are inherently profitable because of the weight they have in the market. If I'm big daddy trader Joe, and I think Euro should be worth 1.5 (like Goldman Sachs), I'm going to take my monumental capital and begin flowing it into the Euro, others of hefty size will likely help me and we will compete for liquidity supplied by "dumb money" i.e. little guys and corporate users of the fx market. Voila, I have a profitable position. Trading itself isn't really a system where every vote counts. Certain players votes most certainly count more than others. In my opinion, price is rather subjective and it's going to be where the "big boys" haha, push it.

Were we talking about trend lines?
  • #84
  • Feb 1, 2011 5:46am Feb 1, 2011 5:46am
Quoting CindyXXXX
ah i dunno... I think I'm still in a shit after having all my V's taken away
lol why did they take ur vouches away
  • #85
  • Feb 1, 2011 7:18am Feb 1, 2011 7:18am
Quoting dragan53
lol why did they take ur vouches away
I guess you're only meant to vouch for people who do the best job at convincing everyone else they know what they're talking about.

But you're not meant to vouch for decent people who have a good attitude regardless of their trading abilities

By this criteria Jacko qualifies as an eligible vouchee but the new guy with 59 posts who started in 2010 but makes positive contributions to the forum doesn't.

Oh well if I thought they meant anything I'd actually give a fk. I'd rather have 0 to be honest. Just the people I vouched for all got theirs taken as well so that sux


Back on topic... Scotty good post, its funny becasue if you want to get into the whole "why does this work" about any technical tool you're no longer talking about TA you're talking about order flow I feel.
Time hides Nothing
  • #86
  • Feb 1, 2011 7:24am Feb 1, 2011 7:24am
Thank you again for that post Scotty & Trihop. The subject of liquidity eluded me in my thinking about the creation of trendlines or TA for that matter. This thinking can branch off to explain why a member on here says with confidence that TA traders lose overall. Makes great sense now. And yes I agree the big traders need not be so 'informative' per se as they are always informative with the sheer size of their orders.

Off to study more abt this.
  • #87
  • Feb 1, 2011 7:50am Feb 1, 2011 7:50am
Quoting CindyXXXX
I guess you're only meant to vouch for people who do the best job at convincing everyone else they know what they're talking about.

But you're not meant to vouch for decent people who have a good attitude regardless of their trading abilities

By this criteria Jacko qualifies as an eligible vouchee but the new guy with 59 posts who started in 2010 but makes positive contributions to the forum doesn't.

Oh well if I thought they meant anything I'd actually give a fk. I'd rather have...
Cindy

sorry about your V's but yeah getting caught up in forum status rather than your actual trading status is pointless and you clearly as able to overcome this mindset which is hard for many to do

your wise IMHO
  • #88
  • Edited 8:35am Feb 1, 2011 8:19am | Edited 8:35am
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
Huh. I would've taken something like the trade in the picture below. A, B and C form a series of ellipses that act to turn price. The horizontal boxed area at D would've been my exit.
I probably would've missed E, which is a slight turn in angle for the price-time line and which accounts for the extra run above. (C's ellipse's axis's angle is only slightly opposite of A's, perhaps due to E's influence.) Also, there's not alot of candles in the picture, so I may've missed trendline F sloping down to the right that support the severe drop in price in your next chart.
This one's rather a safe trade, and missing so much would be dangerous in other trades. Just wanted to contribute.

Attached Image (click to enlarge)
Click to Enlarge Name: oVrEZ dragan53 another version.gif Size: 19 KB


Nice to see another trendline user on 1'TF.
  • #89
  • Feb 1, 2011 8:50am Feb 1, 2011 8:50am
Look my fellow friends,

its important to understand if I say "trend lines don't work" I am on the most opinionated topic and possibly forum in the world.

So please accept that statement as my view and not a factual claim.. getting caught up in opinion over fact and dictionary definitions is the same old kiddy internet arguments taking place on myspace etc... I am reluctant to follow down those road.

the definition of "work" when in relation to a trend line is a reference to how traders collectively use them for the most part...


So now you say I present no logical information, but I think it is much more logical for me to ask you some thought provoking questions before saying "open wide here comes the airplane"

but if you want some real thought provoking questions.. ask yourself why when I say "trend lines don't work" you get so defensive.. or even fail to consider "well he never said they work"

because something can work and also not work.. a Philips screw driver can work and also fail to work.. you can make the connection on when its application is needed

but this is more logical considerations for most to acknowledge.. and yes you would rather do the secret formula for making money with not understanding.. rather then understand if success is pre-built into the application before using it... that is what an edge is... knowing ahead of time that you will win..

because going to a roulette table and doing a pattern of betting may show to work here and there.. you say "oh it worked for martingale" but without understanding the underlying reason your system works or does not work is financial suicide

Who would open a casino without knowing ahead of time the roulette table has an edge of 5.26% .. knowledge of this underlying cause leads to success..


its frustrating to see such resistance to this approach of thinking.. because it makes me feel I am living in a world of de-evolution..


So I know many are upset with me because I have yet to provide a factual reason why trend lines don't work... but thats because you forgot your in the most opinionated business... and to forget (or just not know) your in an opinionated business venture is something thought provoking in itself

I cannot provide you with solid factual evidence that trend lines don't work.. in fact they do work to some degree IMO, but I see some underlying reason in why they exist or are created, and consider them more then magical... which is more to say then the majority of traders who plot them on there chart blank minded...

really the conclusion of all I say is just my fascination that most could care less to understand why they are reacting the way they do... and I'm not genius in my own mind.. so I always try to stay aware that I may be wrong at any given moment.. but its pretty hard to convince myself that I am wrong here
  • #90
  • Feb 1, 2011 9:27am Feb 1, 2011 9:27am
A couple things come to mind...

Inserted Video

Inserted Video
  • #91
  • Feb 1, 2011 10:05am Feb 1, 2011 10:05am
Quoting newyear498
Look my fellow friends,

its important to understand if I say "trend lines don't work" I am on the most opinionated topic and possibly forum in the world.

So please accept that statement as my view and not a factual claim.. getting caught up in opinion over fact and dictionary definitions is the same old kiddy internet arguments taking place on myspace etc... I am reluctant to follow down those road.

the definition of "work" when in relation to a trend line is a reference to how traders collectively use them for the most part...


So...
OK, I have deleted all of my previous posts to this thread. This is the most convoluted piece on nonsense that I have encountered on FF, and that is saying something.
  • #92
  • Feb 1, 2011 10:11am Feb 1, 2011 10:11am
Quoting GEfx
OK, I have deleted all of my previous posts to this thread. This is the most convoluted piece on nonsense that I have encountered on FF, and that is saying something.
I cannot believe you don't care to understand why things in life work.. and called it nonsense to top it off

amazing findings IMO
  • #93
  • Feb 1, 2011 10:17am Feb 1, 2011 10:17am
Quoting newyear498
Look my fellow friends,

its important to understand if I say "trend lines don't work" I am on the most opinionated topic and possibly forum in the world.

So please accept that statement as my view and not a factual claim.. getting caught up in opinion over fact and dictionary definitions is the same old kiddy internet arguments taking place on myspace etc... I am reluctant to follow down those road.

the definition of "work" when in relation to a trend line is a reference to how traders collectively use them for the most part...


So...
Dude, I'm totally with you. The entire chart area's underlying motion is what I want.

In the search for this, the first thing I did a few years ago when drawing lines on charts was to reject the traditional definition of trendlines, that of aligning a bunch of pivots.
At first, I went for exotic devices, such as a 3D Fibonacci spiral, or for labelling 2-3 items (run, aftermath, congestion, maybe) over months and then recalling which one the current chart's most resembled. Then, I got hooked on balance areas, one-pip candles and spinning tops, sometimes doing MTF to get the best. Next, I used line segments with a midpoint and anchored a bunch of lines on several similar shapes. Finally, I used the polygon (and other) drawing devices extensively (from experience years before) to represent temporary patterns' features.

In all these, I drew trendlines in nontraditional ways, and only allowed in the regular definition of them maybe half a year ago.
Thus, I found it worked to subtly reject the usual way of doing things in trading, in order to discover why, how and where normal trendlines work.
  • #94
  • Feb 1, 2011 10:35am Feb 1, 2011 10:35am
Quoting ha-pattern
Dude, I'm totally with you. The entire chart area's underlying motion is what I want.

In the search for this, the first thing I did a few years ago when drawing lines on charts was to reject the traditional definition of trendlines, that of aligning a bunch of pivots.
At first, I went for exotic devices, such as a 3D Fibonacci spiral, or for labelling 2-3 items (run, aftermath, congestion, maybe) over months and then recalling which one the current chart's most resembled....
Hey ha-pattern,

Thanks for your insights.. sounds like you've been on a heck of a journey 3D fibs sounds intense!

But what you've said is interesting.. I have been on a similar journey but I think its important to note that my conclusion has led me to a similar discovery.. but I personally feel the idea of a linear trend line has been left behind.. while linear at times, and it is when the trend is linear such trend lines appear to many traders
  • #95
  • Feb 1, 2011 10:39am Feb 1, 2011 10:39am
Quoting newyear498
I cannot believe you don't care to understand why things in life work.. and called it nonsense to top it off

amazing findings IMO
You are sticking with the same 'hook' to keep people interested in your thread.

If anyone is looking for a deeper understanding about how things work in the forex, I am totally convinced that you will not find it here. There are some very good threads on FF (eg, fti's TAF thread) that can provide you with deep understanding about the forex and the proper use of TA and tools in trading. Playing games with people who claim to have advanced knowledge but offer no proof is a fools game and a waste of time.

If someone from FF happens to read this, I suggest a "red flag" button be made available so we can flag the BS threads before too many people get involved and waste their time. Jeez!
  • #96
  • Feb 1, 2011 10:44am Feb 1, 2011 10:44am
Quoting newyear498
Look my fellow friends,
Well, I for one, wish you the best in your trading and I hope you take as many pips as you possibly can in the future using your anti-trend line methodology!!!!!!
  • #97
  • Feb 1, 2011 10:52am Feb 1, 2011 10:52am
It seems to me if one person strikes up a convo with NY about the actual topic of the thread another 3 or 4 move in to bag it out. If you don't like it move on. Why bother wasting your time writing a 10 page essay about how you don't like it?

If you let it, it may develop in to something interesting, if not the thread will sink to the bottom of the pile, either way its not hurting you or your trading so why care>?

just my 2 cents
Time hides Nothing
  • #98
  • Feb 1, 2011 10:55am Feb 1, 2011 10:55am
Quoting GEfx
You are sticking with the same 'hook' to keep people interested in your thread.

If anyone is looking for a deeper understanding about how things work in the forex, I am totally convinced that you will not find it here. There are some very good threads on FF (eg, fti's TAF thread) that can provide you with deep understanding about the forex and the proper use of TA and tools in trading. Playing games with people who claim to have advanced knowledge but offer no proof is a fools game and a waste of time.

If someone from FF happens to read...

I could care less to "hook" people into this thread.. and if you want to push some red flags and ban me thats fine..

everything you say is so irrational however.. yet you fail to acknowledge what you yourself say

I understand that I will never get 10 fancy vouches unless I start repeating the same nonsense as everyone else but I could care less about that

but honestly its so funny you mention..

"Playing games with people who claim to have advanced knowledge but offer no proof is a fools game and a waste of time."

right after you say "There are some very good threads on FF (eg, fti's TAF thread) that can provide you with deep understanding about the forex and the proper use of TA"

but yet of all those threads you have read none have considered the underlying reason why or why not a trend line works.. and most not consider how other indicators work.. I use trend lines as an example because they offer less evidence as to why they work


so you say "This is the most convoluted piece on nonsense that I have encountered on FF", I'm sure you feel the same way about your charts sense you care not to understand


but to go on and insult me on this thread and try to banish it from your sights so you can keep convincing yourself that your right and I'm wrong?

interesting to say the least
  • #99
  • Feb 1, 2011 11:02am Feb 1, 2011 11:02am
There are lines and there are lines.

A line on a plane is flat.
A line on a sphere is curved.

A line on a candle chart using 5 min candles is not the same as a line on a deseasonalized quote stream.

Or to put it another way: what if time does not flow at a constant rate in the market? What if times flows faster during the London open and slower before the Tokyo session? What effect will this have on a trend line?

And what can you do about it?
  • #100
  • Feb 1, 2011 11:05am Feb 1, 2011 11:05am
Quoting Troikaone1
Well, I for one, wish you the best in your trading and I hope you take as many pips as you possibly can in the future using your anti-trend line methodology!!!!!!
Theres no anti-trend line method here

I think I said before.. but if not.. I do use trend lines!


I use them to sum up marco and micro events to save time over analyzing information

when I do place trades however I try to consult the point in time/price institutional buying will begin.. of course you never know which direction it will go for sure.. thats not the point.. simply saying I don't use trend lines for entry and exit points.. because most often they will not be trend lines until after the fact.. because I have understanding that trend lines are not the point large money is moving the market.. the best price tends to do that.. and trend lines don't always offer you this feature

but I wanted to clarify I do use trend lines in some aspects.. but not with expectations of price to bounce and break trend lines


and hey if this is a confusing thread to you then too bad.. because trend lines are not so clear cut as to what is define as working and such.. but I'm not going to let that stop me from exploring the topic but hey.. guess thats why there trying to ban me right :-p

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