What is better. Having more points touch the line even if it means going through the line rather than bounce off. Or having less touches but more precise?
Perhaps they are both valid as price never closed passed the line…
As you can see in this picture, changing the trend line can change a flat resistance level into a triangle.
I really want to get this right as it is crucial to my trading system. I will be trading off breakout pull backs to the res line so if my lines are wrong then i’m doomed.
I would have thought either ok so long as you are consistent and always draw in the same way.
The advantage of the right hand method is that it would ignore a lot of micro second spikes and whip saws, so may be a better reflection of the true trend
The years have taught me that there’s no objective “correct” about where and how people draw straight lines on charts.
For me, in so far as it’s possible to say without any labels or a timescale on the charts, the first one is strongly preferable.
Highs and lows in the market are [I][U]objective reality[/U][/I]; opens and closes are subjective and depend on whereabouts on a timescale the bars/candles have been set by the trader to begin/end.
If you used H1 charts but started them off at half-past the hour (or if, using the old Joe Ross daytrading technique, you traded from M9 bars instead of from M10 bars), your opens and closes would be completely different from anyone else’s, but the highs and lows would still be in the same places, because they represent [I]what actually happened in the market as a result of the balances/imbalances between buying pressure and selling pressure[/I]. To me, that signifies [U]much[/U] more.
(That’s also why I prefer trading from bars rather than from candles: both give exactly the same information but bars visually emphasise objective highs and lows while candles visually emphasise more arbitrary opens and closes.)
I think the first one is correct - trend lines should unite the lows and the highs. Those are the places where the market has actually gone - why choose a time point (the close) over them ? :33:
The second image or the one on the right hand side is more preferable…the micro breaks are where the currency pair tests the R and S levels…more over, most brokers would opt to use the R and S as given in the right hand image…but then again, its all relative, sorry could not resist that given the other comments…
[QUOTE=“Arbitrager on Acid;721888”]Victor Sperandeo has a great methodology for drawing trend lines in his Method of a Wall Street Master Book: <img src=“301 Moved Permanently”/> <img src=“301 Moved Permanently”/> <img src=“301 Moved Permanently”/> <img src=“301 Moved Permanently”/> <img src=“301 Moved Permanently”/> That method would not put lines through candle wicks and defines a continuation of a trend as a new high in an uptrend or a new low in a downtrend. -Adrian[/QUOTE]
You may have just revolutionised my trend lines, Adrian. Great post!
[I]“Victor Sperandeo is gifted with one of the finest minds I know. No wonder he’s compiled such an amazing record of success as a money manager.”[/I] -Paul Tudor Jones
Seems there is no one way to do it. I think I will stick with highs and lows. As someone mentioned the highs and lows are likely to stay the same on different time frames but the close will not. So more people will see them
