Trading trendlines, how to make it easier?

Trading Discussion
1

Like many people i have had good systems and good runs, and other times which have been diobolical, constantly striving for a better system, every time though i always seem to come back to trendlines. I think the reason for this is because trendlines are the bread and butter of the fx market, and this is the first strategy i learned in the school.

I have been trading now for 8 months, taking a break sometimes for weeks due to myself sometimes becoming disheartened with my lack of skill. I feel like i want to trade trendlines and make money with them but i feel like i have tried everything?

I have taken advice about trading at overbought and oversold zones, and also taken advice about waiting for the bounce to take place, and then entering the trade. The problem with waiting for the bounce to form though, is that i usually end up getting in too late into the trade.

I suppose i wrote this topic just to try and get some tips and tricks on how to trade trendlines succesfully, i just feel like i have exhausted all my options maybe? and just wondering how successful traders do trade trendlines properly.

Here is an example of a recent trade which shows that both methods didn’t work for me this trade. The arrows on the chart are a stochastic cross indicator, showing when the price came up from being oversold. As you can see also the bounce started but then failed, only to fall back and break back down. How do i deal with things like this?


2

A big part of it is picking a pair that “respects” trendlines. Then you have to have patience to allow price to retrace and create peaks (for highs) or valleys (for lows) to connect to draw your line.

3

Thanks for posting, i did look into this on sites, doing a google search for the easiest pairs to trade but i came up with alot of different results, some people saying AUDUSD was good, others then saying EURGBP is better etc;. Is there specific pairs which do respect technical analysis long term?

4

I used to be having a lot of luck with GBP\NZD on 4 hour charts…it trended beautifully. Then the UK started a “lets leave the E.U.” war at the beginning of the year, and now its ranging a lot.

5

Disclaimer: I’m still pretty new to this game. :wink:

I always try to trade “with trend”. This means that to the left of the chart I’d only be looking to go long. After it tops out, I’d only be looking to go short for the right hand part of that chart. I’d buy the troughs of the bull trend and sell the peaks of the bear trend. (Buy low, sell high.)

The only indicator I use is an EMA(14) that acts as dynamic support and resistance. Otherwise, I look for a price action setup. The setup consists of both context and a signal. The signal is useless to me without being in the proper context and the context is useless without a signal.

If it feels most natural to you trading by defining trend lines then you might want to look into price action trading. It’s not for everyone, but then no trading style is. There are as many trading styles as there are traders. The basic philosophy of price action is to get rid of all indicators and read the charts. Every bar in the chart gives you information. Mark in support and resistance areas, trend lines, triangles, wedges and other defining features to form an impression of the context and then look for candlestick signals that occur at important locations. Check out some webinars by Al Brooks if it sounds interesting, I found them very enlightening.

Looking at that chart, I see only four clear price action setups on that chart where I’d consider placing an order.

To the left of the chart, the context is a bull trend that is slightly ranging. There are two setups that I see in this context. The first is the low to the left of the chart. A downward pin bar sticking down below the trend line followed by a bull bar. This signals a failed breakout through the bottom of the trend, a possible low in the trend and may be a decent place to buy. The second signal is the downward pointing two bar reversal next to the low that I just mentioned. This is also a failed test of the bottom trend line and a decent signal that the price is turning upwards. Both of these could give decent opportunities to enter the trend near a low point. The third test of the bottom of the trend line higher up is way too messy for me to make a call on so I’d chill for a bit until it sorts itself out.

The other two signals are to the right. The major trend reversal at the top consisting of the pin bar followed by a two bar reversal is hard to define the context for, as are all major trend reversals. Trend reversals are unlikely events, but if you play them near the high you can sometimes offset your potential losses by exiting with a scalp if the reversal fails. If you draw a trend line above the bullish trend on the left, you can see that this reversal is actually a failed upside breakout of the main trend. Assessing the possibilities of trend reversals is always tricky because you don’t know for certain they’ve happened until the new trend is well established. The other signal is the upwards pointing pin bar that also forms a part of a two bar reversal signal. This second signal is a key part of deciding that the trend has indeed reversed, it is a failed attempt at resuming the bullish trend on the left. These are both decent sell signals in the newly forming bear trend, although trading the reversal is high risk, high reward.

I wish I could read a chart like this as it’s forming, but I still have a ways to go and it seems so easy in hindsight. Sorry for rambling on, but I just finished my first day of live trading and it went pretty well so I’m buzzing a bit. :slight_smile:

6

now AUDUSD like heaven for D1 TF. Always catch when she retrace :stuck_out_tongue: