i'm rediscovering trendlines

[Shikamaroo]

I have just started revisiting trend lines on the 5 and 15 min chart with a view to adding them to my trading toolbox. The trades i record here are not ready to be live and will mostly be placed in a demo account. (reason is that i caught more pips with trend lines than with my live strategy this week as well as in backtests through November (through simulator).

it recently occurred to me that i had overlooked trendlines and support resistance (4 hr 1 hr with limit order) out of fear of not knowing where the market would go. That was early in my (still young) career. As i progress i realize that in trading you never know. i currently use dips to the 50 ema as my trading strategy after adapting it recently (3 months) and occasionally take morning breakouts when they are coming off a bounce that i recognize (mostly if i miss the 50 dip).

i will be identifying the setups that i draw as trend lines since i heard that for them to work they must be obvious and i am hoping others can confirm that i have drawn them correctly and not prematurely. if a trade occurs it will follow my 5 min exit strategy which encompasses a time based exit and a target which i find reduces my stress and thinking during a trade. i will try to avoid trades through high impact FA's however this is a major hole in my trading plan as i often forget about FA's after waiting a while for a setup (especially if it is at an odd time like 1 hr before US open)

p.s. My ulterior motive is to gain Legendary status here at T2W heheheh

 

[Shikamaroo]

well this morning i woke up too late for the entry on the gbp/usd. I did not wake up this morning since apparently vacation is in the air. the long entry would have been at approx 161.47 with stop at 1.6132 and target exit at 1.6241

now exits are very important and probably the most important for any system so i will elaborate on it now. Firstly there is the time. i dont want to be in a trade for more than 2 hours so after 2 hours all trades are closed. Secondly the target should hit a parallel line drawn to the trendline at the last high created. Thirdly if i have 30 pips on an entry i do not want to see the market come back to give me a loss so move your stop to BE after a close with 30 pips profit.

putting these 3 together you have your exit system. (i.e. target is the point where the market should cross the parallel trend line in 2 hours) i will post a pic with the exit on the GBP/USD entry i took thursday after the FOMC (asia session, again this was a demo trade!) Again i am a crappy trader with an equity curve that is in a solid down trend!

This week was also terrible for me as i tried to traverse the minefield called a trading environment with my strategy. meanwhile the 15 min trend lines made about 4 or so trades and have gone to the north pole to get their christmas gifts early

 

[Shikamaroo]

http://www.maoxian.com/archive/20030711.html

"Trend lines, to me, are drawn arbitrarily. I just use them as a sort of "comfort line".

There is nothing to be learned from trend lines, IMO anyway, except to help keep the ship on course. Go inside it and you are entering into shallow water."


BY

Split

thanks for your opinion. i understand where u come from. i am keeping this journal (away from my real one) and trading trend lines away from my real account since it is times like these (finding a new strategy) that actually keep me unprofitable since i become tempted to trade them alongside my strategy and it almost always ends with me leaving out some good signals but i do also recognize their usefulness.

Also it is because people have different methods of drawing trend lines that i am suspicious of weather my trendlines are accurate. My intention is to connect 2 lows once a new high is made. i am trying to keep my reservations till i prove that this week was an anomoly

with regards to the target, i think i will look into that (using a low instead of a parallel line) but i like time combined with targets. i feel it is the best way
happy trading

 

[Shikamaroo]

ok so i did not trade yesterday and have no intention of trading this week in my real account so i can focus on these demo trades till new year. (i am addicted to staring at the screen) Now i put these two trend lines up. the major and confirmed one is line one. Line 2 i am not so sure about. i am not sure if i should wait till the high is broken to confirm the trend line (i think i should wait but the low created does seem to be significant).

If the market gets to line 2 for a retest would any of you guys trade it? (i.e before it breaks the high) i think it would be safe to assume that line 2 should probably not be traded. it is demo funds so i will enter if i see it set up. (the setup is a swing low at line 2, or a swing high at line 1)

i use the definition of a swing low which says it is a 3 bar combination in which the middle bar has lower lows than the two bars next to it.

 

[Shikamaroo]

ok. i have the first live trade. it dosent look like it is going to be profitable right now. the earlier bounce was not taken off of trend line 2. ok ist loss 2 pips.
entry was 1.6018 exit 1.6020
i closed early since a full candle closed above the trend line and a new high was created

 

[Shikamaroo]

i was hasty and entered too early (at the 50 EMA) instead of after the swing was created but there was confluence at the 50 and the trendline.
i will not let that affect my trade even in a demo account! well not again

 

[Shikamaroo]

stupesssssssssssssssssssss. what a way to start with a strategy. taking a loss when the market misses the target by 6 pips at (1.5918 that is using the trend line to project a target.no visible resistance can be seen on the 5 to 60 min charts)
hmmm maybe i should use fib targets like in my current strategy (though i want something different in case the fib is too small. yes, i know i'm being greedy :cheesy:

i done for today. hopefully i wont face any more like that tomorrow.

anybody know about a good thread talking about using 2 profit targets so you can keep from turning winners to losers without worrying about not letting your profits run

 

[shadowninja]

So you're going to change your tested strategy because of one loss on your live account?

 

[Shikamaroo]

no this strategy here has not yet been tested (*at least not by me* the trend line trades are on a demo account). this is the current testing process and optimization procedure.

on an earlier post which seems to be missing (very odd) tenbotrader recommended a strategy of using coming resistance as the target instead of channeling price. i recognised this had the benefit of allowing the market room to shoot off if there were shallow retracements.

 

[Shikamaroo]

"Learn the art of patience. Apply discipline to your thoughts when they become anxious over the outcome of a goal. Impatience breeds anxiety, fear, discouragement and failure. Patience creates confidence, decisiveness, and a rational outlook, which eventually leads to success." Brian Adams

i found this quote and i think it is quite interesting and something to think about when you have entered a trade and it seems to be going a little against you at first or when the market approaches your profit target and stalls. i just need to figure out how to add discipline to my taughts

 

[Shikamaroo]

:drunk:is rum, rum, rum til i die first thing is christmas season and then is carnival time. For this reason i have yet to take a trade. i am either too drunk or too sleepy but it's a merry christmas. Neighbor Neighbor, bring drinks!

 

[Shikamaroo]

ok this is my first post for 2010. the entry is on the EU around lunch which is either quiet or a good time for the market to reverse. i am wondering weather it is a trend line or more of a resistance line since it is very flat but that is just semantics. Regardless it is my first trend line trade for 2010.

immediate loss. :-0

 

[Shikamaroo]

i think that trend line labelled one suffered from the greed factor since it did not actually start at a low like line 2. i will wait to see if the market can get to line 2

 

[Shikamaroo]

i instead drew a third line and entered short off the bounce back in the original direction. i think that should be the last line for the day on EU

 

[Shikamaroo]

ok we have a possible channel forming one the EU pair. i'll post it if i take an entry. i connected the tops formed on the 5 min chart.

it seems to me that trend lines and patterns only occur in ranging markets. The entire market is in a range just on different time frames. Any 1 think the same?

 

[Shikamaroo]

sell EU 1.4515. 15 pip stop 44 target