Strength Of Trendlines

Hi,

Can a pro who has been using trendline’s tell me of their experience when usually they are broken or when best to buy or sell of a bounce or when they break? After trading for 1 year I find it breaks usually on the 4th or 5th bounce more on the 5th bounce break and the odd occasion 3rd while the 2nd bounce is the strongest.

Thanks.

I don’t think a pro needs to tell you anything. Sounds like you’ve nailed it. 2nd bounce best, 3rd not so good… by the 5th, i’d rather go to vegas…i’d have better odds and more fun.

I still wonder to this day why the books say “the more times price visits a level, the stronger it gets” This is both fundementally illogical from nearly every persepective, and, as nearly anyone who is a serious trader will say… just wrong.

you show me a full time trader that is MORE excited to go long on the 9th test of a level than the 2nd…and i’ll show you someone who’s lost their marbles.

Jay

P.S. oh ya…forgot. the guys who write the books make money as book authors. Silly me, now it makes sense why they get it so wrong. turns out i’m the fool for thinking a guy who very obviously makes a lot of money selling a lot of books actually knows how to trade. Thats what i get for asking a professional author a question about trading. Might as well ask my doctor for advice on what color shirt would go best with my pants. I mean, heck, he’s got two eyes and a mouth… so I’m SURE he knows…

Trading trendline breakouts are inherently risky and not as profitable as many books would like you to believe.

One of the major problems with it is the high SL.

You will essentially be buying buying high and selling low, increasingly your Stops. As opposed to buying low and selling high.

you are better of looking into the concept of support broken and retested, becomes resistance and resistance broken and retested becomes support.

I have learned to take on a chart 1-4 candles at a time & then reassess the chart.

I may draw a horizontal line in the sand and stay in a trade as long as price does not close lower, but for the most part I am not staying for ice cream & cake.

The advise you did not ask for is to keep your lines horizontal :17: :wink:

Sorry but we can’t have a trendline without a 2nd bounce right?
So technically we can only manage to get in best on the 3rd bounce?

Sorry if this sidetracked a little, but can we say the same for support resistance?

2nd bounce the strongest and subsequently it gets weaker?

A trendline is only a guide, you need to read the price action to see whether in the first place it kind of exists and also whether it will be broken, but also beware of ‘false breakouts’

Yeah, I thought I was round about on the right tracks lol. Yeah your right so many of the text books say the more bounces the stronger I disagree wholly.

I love trendline’s but the stop loss you can use another strategy like support or resistance of 20% of daily ATR which I usually do.

But it’s a sideways market and it’s about connecting the high and low points? A lot of the time support and resistance doesn’t meet up you see wicks and small closes outside major horizontal lines that’s where trendline’s come in handy as you can slant them.

2 bounces = moderate trendline and 3 bounces = strong valid trendline.

This will be interesting I heard someone say that never enter a breakout without it being a fakeout the 2nd breakout like after a pullback previous support becomes new resistance is powerful. However, you may miss a move but go down to the 1 or 5 min timeframes and look for a pullback sometimes you have to let a trade go because there is no pullback.

A guy on another forum who has been trading for 10+ years went through most systems on the net and made his own and came to the conclusion that trendline’s are all you need with good money and risk management.

Yep. I too agree. as for myself… I have JUST STARTED to dabble with some statistical extremes to set up better entries…etc… but, I will say this. I’ve made a living for 2 years now just trading horizontal lines…with the very occassional diagonal line to see if it’s broken or not. And that’s it.

Jay

Really! I knew it was that simple. How do you decide your stop loss placement? I use 20% of daily range. Also, can you tell in a flag formation any side up or down if there will be a reversal or continuation? When price ranges in a box?

I look at the waves Any HH or LL from the current wave would do for me. I tend to pick H1 and above as lower TF has many false signals.

here is a link for ya…i basically do what these guys are talking about:

Trading Currency Futures using Sam Seiden Supply & Demand levels @ Forex Factory

You don’t need bounces to draw trendlines…

If price is making higher highs then price is trending & if price is trending then the trendline must exist.

Long term trendlines run at small angles & short term trends run at larger angles.

The golden rule of guessing the trend angle, before bounces, is to draw an angle at a multiple of 5 degrees.

A long term trend will be an angle of between 15 & 35 degrees where as a short term trend will be between 50 & 70 degrees.

The second rule of a trend is that price: closed higher than something, is making higher highs, is not closing lower than something (horizontal lines) or price would not be trending up.

You wanted pro advise, this is pro advise, what else can I say?

I’ll throw you a chart:

Weekly EU:

If I may offer my 2 cents worth. I use trend lines in trending markets e.g. HH or LL. I however use that in conjunction with support and resistance lines where a confluence of those lines amplify the strength of the set ups.

S&R lines works very good in ranging markets I realised.

Lately though(well for the last month or 2) I have used Nikita’s method(based on Elliot wave theory) where one just refers to the previous wave peak or trough for support and resistance.

I hope I make sense, am still a newbie so if my explanation is wrong I stand corrected.