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[phy]

Originally Posted by DaveB

May I ask a question about trend lines, you obviously need two points to draw the liine so if using for example, a smaller time frame, say the 5min, I presume you would take the second candle as your second point and then draw it. Would this be correct.

Here are trendlines drawn using one point, each marked with X.

[phy]

Originally Posted by phy

Here are trendlines drawn using one point, each marked with X.

Sorry, the attachment became detached...

[phy]

Originally Posted by initialsBB

That's exactly what my starting idea was. I don't know if you know that trendlines can also be curvilinear . Moving averages automatically plot curvilinear trendlines and anticipate support/resistance levels. I use another lagging average to calculate the percent of penetration needed in order to initiate position. In this way it's much easier to code and check the credibility of the idea

Here is an example of true curvilinear trendlines, "X" marks the reference points for the trends (two points each). "R" and "S" mark the predictive support and resistance hits. The right side of each curve is predictive. Note
that the second curve continues into the future.

I have never considered moving averages to be trendlines, I'll have to ponder that a bit...

[walt8880]

Originally Posted by phy

Sorry, the attachment became detached...

I may be a little slow here on Sunday afternoon, but I cannot figure out how you draw the trend lines through only one point.

How do you know if the line is going up or down or what the slope is without a second point to define the line?

I don't mean to be difficult, I just don't understand.

Thanks and Happy New Year!

[phy]

Originally Posted by walt8880

I

How do you know if the line is going up or down or what the slope is without a second point to define the line?

I don't mean to be difficult, I just don't understand.

When a turn occurs, creating pivot, I'll extend a new trendline at a standard slope, based on historical price action for the pair. Draw down from highs, up from lows.

This provides future calculated targets (projection), rather than waiting for a second turn to draw a line (which would very often be the line I already drew). The new line will serve as my reference for support, resistance, or a breakout/continuation.

[DaveB]

Thanks for that Phy, but at the risk of sounding totally stupid I am still a bit confused over how to draw a trend line from one point. What is a standard slope and do you look back at past candles for your reference points of historical price action?

Regards
Dave

[atholh]

Fwiw, extract from an academic study (btw there are numerous such studies), the same applies to fx data. They looked at ma's, s/r, channels, etc. "A further purpose of our study is to address this issue by constructing a universe of nearly 8,000 parameterizations of trading rules which are applied to the Dow Jones Industrial Average over a 100-year period from 1897 to 1996. We use the same data set as Brock, Lakonishok and LeBaron (BLL) to investigate the potential effects of data-snooping in their experiment. Our results show that, during the sample originally investigated by BLL, 1897-1986, certain trading rules did indeed outperform the benchmark, even after adjustment is made for data-snooping. We base our evaluation both on mean returns and on a version of the Sharpe ratio which adjusts for total risk. Since BLL's study finished in 1986, we benefit from having access to another 10 years of data on the Dow Jones portfolio. We use this data to test whether their results hold out of-sample. Interestingly, we find that this is not the case: the probability that the best performing trading rule did not outperform the benchmark during this period is nearly 12 percent, suggesting that, at conventional levels of significance, there is scant evidence that technical trading rules were of any economic value during the period 1987-1996."

[demag]

DaveB

Check your mail I've p.m'd you.

Cheers,

Dave.