When drawing a trend line, it’s ok to not include fake outs?
For example, if I’m going to draw a trend line on EUR/USD, and in the middle of the trendline it was broken and then returned to the right place… Should I forget about that fake out, or should I include it in the trend?
You should include any data points that existed. I personally draw through whatever the previous 2 or 3 swing points were. This type of thing is very subjective, so your just going to have to get experience doing it.
your personal preference should prevail.
i see people draw trendlines across fakeouts. others are purists and want to draw trendlines based on price extremes. still, others draw trendlines across prices.
Ask 5 experienced traders how to draw trendlines and you will get 100 different answers.
Demark’s TD Trendlines are the only objective way I have found to consistently draw them the same every time but they are definitely short term in nature (using only the last two fractals). As such, I feel they are of limited value but they are, if nothing else, objective and consistent. You will draw them the same way, using the same criteria every time.