Trendlines are probably the TA tool
I have seen most in my life. They have that weird ability to so
accurately show you what has happened but so difficult to trust when it
is actually on the hard right edge of the chart.
I will still have to see that a trendline provide a probability higher than 50% of either holding or breaking when price reach it. Some people say a trendline must have 3 touchpoints before it becomes reliable...why? Has it been proven statistically that the fourth time it reaches that trendline it bounces off it with a reliable probability of more than 51%? If so then all of us should be millionaires within a year. With a 1% edge you can make a lot of money. You just find enough "3-touches" and make sure you make more than you lose on each trade. There you go holy grail of long term success. Unfortunately the market surpass your stoploss and then bounce back inside the trendline, in hindsight it looks great in reality it was a loss. In hindsight it looks like that trendline was there from the start, in reality when the market got there at that time the trendline was slightly higher than now because you did not know that it was going to first dip before honouring the trendline you are going to use months from now in the future.
Unfortunately our eyes are trained to see in history only the times that a trendline did work and not the times it failed.
I think seekinglight has shown a chart earlier in this thread with trendlines on it...if you look at the top line coming down then I can't help but wonder why he discarded all the spikes over the line on (I think) the second touch of that trendline...was it perhaps that if he drew the trendline including those points then the dropoff occuring most recently (from about 0.6790) would not have fallen on the trendline? I like to call these lines pschycotic trendlines drawn by a madman...No offence seekinglight. Would you have known that the trendline should have been where you drew it if the market did not bounce there? I think this trendline is a perfect example of hindsight.
I will still have to see that a trendline provide a probability higher than 50% of either holding or breaking when price reach it. Some people say a trendline must have 3 touchpoints before it becomes reliable...why? Has it been proven statistically that the fourth time it reaches that trendline it bounces off it with a reliable probability of more than 51%? If so then all of us should be millionaires within a year. With a 1% edge you can make a lot of money. You just find enough "3-touches" and make sure you make more than you lose on each trade. There you go holy grail of long term success. Unfortunately the market surpass your stoploss and then bounce back inside the trendline, in hindsight it looks great in reality it was a loss. In hindsight it looks like that trendline was there from the start, in reality when the market got there at that time the trendline was slightly higher than now because you did not know that it was going to first dip before honouring the trendline you are going to use months from now in the future.
Unfortunately our eyes are trained to see in history only the times that a trendline did work and not the times it failed.
I think seekinglight has shown a chart earlier in this thread with trendlines on it...if you look at the top line coming down then I can't help but wonder why he discarded all the spikes over the line on (I think) the second touch of that trendline...was it perhaps that if he drew the trendline including those points then the dropoff occuring most recently (from about 0.6790) would not have fallen on the trendline? I like to call these lines pschycotic trendlines drawn by a madman...No offence seekinglight. Would you have known that the trendline should have been where you drew it if the market did not bounce there? I think this trendline is a perfect example of hindsight.
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