Creating Trendline Break Strategy

[zekelogan]

After having some good success with the NickB method, which I love by the way, I couldn't help but notice that if one ****s their head slightly, the trendlines which develop also provide similar & great opportunities.

I like the 4hr charts used by him, but would also consider moving to a slightly higher timeframe.

My main concern is this:

I'd like to try to come up with some sort of algorithm which calculates target, and thus stop for 1:1 r/r that is based upon a percentage of the prior trend distance & length of time elapsed during trend. This would anticipate the distance of future moves, and also filter out bad trades based on insignificant moves.

If anyone has experience with this sort of thing input would be greatly appreciated. I'm not looking for someone to do the work for me, just a nudge in the right direction. Stories that involve the creation of algorithms with completely unrelated factors to mine are welcomed as well, as it would help my perspective.

Thanks & happy trading!

[zekelogan]

hahahaha "tilts" can be substituted for "****s" in the post above...

[Blaiserboy]

From what I have seen in my brief exposure, it is very risky to try to anticipate the action of price.............

The information we have is what has occurred already and what is occurring in the present......

and we can not predict with any degree of accuracy......


I have an idea that to spend a lot of time on prediction as to distance to be traveled may prove to be other than beneficial.

The most important algorithm will be the one that determines trend, that is, after the one that protects the traders account.

Just my opinion


dave

[mastergunner99]

Originally Posted by Blaiserboy

From what I have seen in my brief exposure, it is very risky to try to anticipate the action of price.............

All we do is try to anticipate the future action of price.

[zekelogan]

Originally Posted by mastergunner99

All we do is try to anticipate the future action of price.

...my thoughts exactly.

[cas]

Originally Posted by mastergunner99

All we do is try to anticipate the future action of price.

The study of charts is the study of past price.
Chart technicians examine their charts to look for reasons to enter and exit their trades based on past performance of price.

Based on this knowledge through technical analysis we increase the likelihood of profitable trades.

Technical analysis is the study of price unlike fundamental analysis which is the study of economic conditions.

[mastergunner99]

Originally Posted by cas

The study of charts is the study of past price.
Chart technicians examine their charts to look for reasons to enter and exit their trades based on past performance of price.

Based on this knowledge through technical analysis we increase the likelihood of profitable trades.

Technical analysis is the study of price unlike fundamental analysis which is the study of economic conditions.

Exactly.

So to summarize... All we do is try to anticipate the future action of price.

[zekelogan]

Please criticize in spirits to improve this idea!




15m trendline break (wick extremes considered)

target = some approximation of the prior H4 candle

R/R = 1:1

risk can be reduced by target reduction to taste. a greed-check if you will.

1st trade successful

Would like to create a rubric for trend/countertrend behavior to possibly exploit price action runs which would otherwise have this strategy on the sidelines @ market neutral.

[zekelogan]

I was thinking along the lines of 'the bigger the base, the bigger the breakout," but then applying it to a trendline rather than support.

The idea would be that in FX, a move say 15% over 6 days would provide a more probable & tradeable correction when the trend has been broken then say a move of 3% over 3 days.

I wouldn't be trying to predict price, just probability. And of course, I'm assuming proper position sizing would be undertaken for the stops as well. Should have mentioned that...

By all means if there's more reasons this idea has no merit, I'll scrap the idea & move on.

[Blaiserboy]

Originally Posted by zekelogan

I was thinking along the lines of 'the bigger the base, the bigger the breakout," but then applying it to a trendline rather than support.

The idea would be that in FX, a move say 15% over 6 days would provide a more probable & tradeable correction when the trend has been broken then say a move of 3% over 3 days.

I wouldn't be trying to predict price, just probability. And of course, I'm assuming proper position sizing would be undertaken for the stops as well. Should have mentioned that...

By all means if there's more reasons this idea has no merit, I'll scrap the idea & move on.

I think this approach would make sense... I am thinking that a point and figure chartist uses a very similar approach... and they are often accurate.

Thanks for clarifying. I will be interested to see how you approach this.