KymarFye: I have spent thousand of hours plotting trend lines and chart patterns every which way but loose. I always established plotting criteria in advance before testing a plot style. This is the only way to properly judge the effectiveness of the plot when back testing and in real time use. I used many techniques with many variations of each. (Actually I did the same thing with indicators using Technifilter Plus back in the mid to late eighties looking at indicators using literally thousand of variables each.)
After thousands of hours of back testing and real time testing I finally decided on what I believe to be the best method. However, I am not going to be so pretentious as to say it is the best method. But it is most assuredly the best method for me…<g>
Assuming some other methods can be just as effective as mine in the hands of someone else, what I am really getting at, is a lot of folks are obviously drawing trend lines with out hard criteria (a discipline) in place. They draw plots someone what randomly. This often leads to drawing your bias or drawing lines after the fact that look great, but have no rational for the plot. Of course, to the uneducated or less experienced they may look impressive. But impressive does not matter, making money is the ultimate score card!
I have seen charts posted by some that have the trend lines shifting with almost every single trading day, sometimes even intraday. (I am not talking about making an experienced or criteria based decision to occasionally adjust a trend line or allow a violation. I think both can be valid when done correctly and that usually requires experience.) In the long run, these folks will find their trend lines and patterns failing them more often than not, because they were not valid in the first place or they were plotted incorrectly or poorly causing timing problems or wrong expectations.
Of course, no trend line or chart pattern is 100 percent. However, if you are having trouble trading your trend lines successfully (making money much more often than not), you are likely drawing them wrong and or using the wrong combination of indicators (or indicator variables) to assist in making buy, sell or do nothing decisions when the price action intersects your trend lines and or chart pattern boundaries.
I have found that when drawing trend lines and chart patterns being exact matters. But to each his own technique, just have a criteria/rules based technique from which to judge your work. I hope that makes my point clear.
EDIT: By the way, the best way I know to define what I mean is via my work. I have been posting my charts on SI for over two years. Anyone really interested could see how I plot trend lines and patterns and pick up on it if they so desire...
Regards,
LG |
