Trading Trendlines

[Mathew30]

Hello,

i have found an very interesting thread about trendlines. Can someone please tell me how good they work, thanks. The description looks very detailed.
http://www.tradingbasis.com/forum/index.php?topic=13.0

Rgds

Mathew

[ezekiel]

Hi Matthew,

Trendlines are just one tool that can be used in trading FX. When the market is trending, trendlines can be a good spot when considering to buy/sell (hence the name 'trendline'). However, when the market is ranging, depending on your time frame, price is less likely to respect them.

All in all, it's up to the trader in determining when to use them and when to not...

here's a good primer on trendlines, hope this helps

Ezekiel

[Mathew30]

Hello Ezekiel,

thanks for your reply. i have checked out my charts now and indeed, i am sure this strategy works very well. However as the author noted, it works better on EOD charts or at least with a better risk reward ratio and the third point works best, it's really amazing.

I have not known this stuff. In my books i have not found such informations. Maybe this is some secret of the large players.

On friday i have made my first trade based on this strategy on the USDJPY weekly trendline. My weekly trendline was at 115.77, so i have entered a long position here. The pair dropped down to 115.71 and thereafter started a very fast move up to 116.34 which was more then 50 pips, so i have taken this quick profit. I have also seen that the weekly support is very close to the daily support and thought it is better to enter at the weekly support and bingo, it worked. On monday i will follow the usdjpy again and if it starts to move i will enter again for a large profit, i hope.

Unfortunately on EOD this entries are not available every day, but i will test it out further. My idea is that if i make such trades and do not need a lot of time for it, why not ? And as long as i have a good risk reward ration i like it.
If it works good i will increase the lotsize.
Now i hope the next trade works also well.

[ezekiel]

Good job on your trade ...

One thing I've learned, the longer the time frame the more value the trendline holds. However, if it breaks at these longer term charts, the move can be more violent and quick, so be careful.

If you dont want to trade just once a day, move to a smaller time frame chart, trendlines work there as well ...

Ezekiel

[Mathew30]

Originally Posted by ezekiel

Good job on your trade ...

One thing I've learned, the longer the time frame the more value the trendline holds. However, if it breaks at these longer term charts, the move can be more violent and quick, so be careful.

If you dont want to trade just once a day, move to a smaller time frame chart, trendlines work there as well ...

Ezekiel

Hi,

thanks. yes, i agree. therefore i use only 30 pips at my beginning and a take profit of 50 pips. I try to move the stop.
I have also compared it with the smaller time frame, however as smaller the time frame as more noise is available and depending of the time also more choppy markets, so more failure signals.
I will compare it further.