For daytrading purposes, whendrawing trendlinesw on a 5 minute chart am I better off connecting the closing prices or the low prices for an uptrend and the high prices for a downtrend?
Drawing trendlines is an art, not a science. Rarely will 2 people draw them the exact same way. With that in mind, the essence is to draw one that gives you an accurate feel for that stock (i.e., market direction, support, resistance, etc). Some people use the extremes (highs and lows of the day), some people use the main candle body (open and close), some people mix them up according to their experience. Author Tom DeMark tried to offer a "scientific" approach so that 2 people would always draw the same trendline, but his methodology is not generally accepted, so it remains an art.
In my personal opinion (and from lots of experience) I have to agree with Magna on this. Trendlines are drawn subjectively and vary from person to person ... as such, they are an artform. You should reserve your creativity for stock selection and use an objective moving average rather than a subjective trendline (imo)
Heythereya, I read somewhere that Highs and Lows should be used as they are also part of the stocks price "action" Anyway, just my .5c
On using the high's and lows they are easily manipulated with size. I've sold the low numberous times when trying to get out of a freefall and buying the high has had my account # on the times and sales for the high prints. rtharp
ANOTHER TRENDLINE QUESTION: I have tried to follow candletrader's advice and replace trendline drawing (old fashioned work) with a moving average for 5 min charts. I have tried many combinations and have not been able to find a computer generated MA THAT WORKS AS WELL AS trendlines combined with candlesticks. Any suggestions for MA parameters on a 5 min chart??? thanks