Here's the ES on a 233 tick chart... anybody who's been trading for more than a week knows trendlines work... But I'll say it again- If you ONLY trade trendlines, you have 0% chance of making money. There's a right way to use them... and then the way most traders use them... which is why most people lose money. http://www.screencast.com/t/XbfIhqD7gx
I was looking thru some old posts by - jem - when I came across this pearl of wisdom! On another note, he has certainly had an interesting journey and clarified a few thoughts I had kicking around! Regards Johno
I also was asking myself the same question... I think the best I can say now is they don't always work. We need to talk probabilities. So I think it is possible to come to a certain kind of analysis that gives you 70% on average. I posted my results here: http://forex-chart-monkey.fxworldchart.com/technical-analysis/
I have been using Trendlines for 28 years, I have found that most trade them the toughest way and with the greatest risk as in breakouts. Cause then the proper place for protective stop is the other side of support. I on the other hand prefer to wait for price to come down to a trendline to buy, this way the amount of risk is minimal and by the time price has gone up to breakout of another trendline as in a triangle, I can get to a breakeven protective stop. There are usually many false breakouts of trendlines cause many traders use them, these are usually feel good trades cause as price is going up--many are buying. Then commercials can come in and slam the price the other way until the stops are hit, vicious cycle. Whereas if I am waiting for price to come to the trendline, I am entering where many are getting stopped out. If price continues to drop, I get out with much smaller loss than those who did breakout trades. Trading is fun.
Some of my trades are like handle123, however need to be very careful because as he stated not all trend lines work, with experience though you can make the probables highly in your favor. Ammo, most trend line trades are with the trend. Have you ever seen an uptrend with a roll back to a trend line over and over 3 or 4 even 5 times in a row? Happens couple times a week on any given commodity ES, NQ, Bobble, CL.
For day trading, I seldom go against the trend. As you can see from the example, when price comes down to trendline, price will either bounce off of them and continue to trend or they can breakout of trendline and form a new trend. When price comes down to trendline area, I can enter and risk but 2-3 tics. However, if I was to do a breakout trade, gold TL, my risk would have to be #1 support area, much bigger risk. I rather risk 2-3 tics and aim for 2-5 points target than to risk 2-3 points to get 2-3 points. So even if you are only hitting 50% winners, so long as risk is much less than targets, you will profit.