Set Trap Trendlines

[2George]

Set Trap Trendlines are those that are drawn using the body of a candle and not the spike.
Spikes are useless when it comes to assessing a trend.
So, if you use the open price of a bull candle and draw a set trap trendline under it, then this is the correct place to start the support trendline.
If you draw a set trap over the body of a bear candle, the open price, then this is a resistance set trap trendline.
Set Trap Trendlines are key to safe trading.
Regards
George

 

[bcc9274]

Could you please explain why?

Open/Close is nothing more than just ticks that happened to occur when the clock hit 0 seconds.
Nothing special about them.

Am I missing something?

 

[2George]

The principal of a set trap trendline is that is is setting a trap. The open price of any candle is the most important.
The open price is where the market at any one time believes the price should be and then the buyers and sellers move it around and then the market adjusts the price again. This process goes on all the time.
If you think of gaps then this may help.
Regards.
George

Could you please explain why?

Open/Close is nothing more than just ticks that happened to occur when the clock hit 0 seconds.
Nothing special about them.

Am I missing something?

 

[wallstreettrading]

why the hell should trap trendlines be of any value?...its the same principle as ma's or people who use ob/os. every cycle is different and does not care less about a trendline, ok they may look great on backtested charts but thats curve fitting of course. You run them in real time and you will see how bs they are.

i cannot beleive people really beleive this kind of stuff, no wonder us retail traders get such a bad name

 

[2George]

If it helps you to believe they are of no help then so be it.
If you have a bad name then look elsewhere to see where it eminates.
Regards
George

why the hell should trap trendlines be of any value?...its the same principle as ma's or people who use ob/os. every cycle is different and does not care less about a trendline, ok they may look great on backtested charts but thats curve fitting of course. You run them in real time and you will see how bs they are.

i cannot beleive people really beleive this kind of stuff, no wonder us retail traders get such a bad name

 

[timsk]

Open/Close is nothing more than just ticks that happened to occur when the clock hit 0 seconds.
Nothing special about them.
Am I missing something?

I think not bcc9274 - I'm with you on this.
In the days when dbphoenix was a regular here, he commented frequently that the markets are a movie and not a collection of stills - or something to that effect. The OHLC are of significance on a daily and weekly bar / candle only - because the market opening hours are dictated by these. But any intraday timeframe is pure artifice. Look at a 10 min' chart in conjunction with a 1, 2, 3, 4 or 5 min charts. The lower timeframes are lost within the 10 min candles. Of course, what does emerge through the fog of any timeframe are key zones of support and resistance. George, as much as I'd like to accept your assertion (because I believe you're a good trader), on this issue I think you're seeing something that isn't really there. Naturally, if it works for you, then great, but that doesn't make it real; just as Father Christmas isn't real, no matter how much children want to believe in him.
Tim.

 

[2George]

I feel sad that they are not obvious to everyone but each has his own view on a chart but the open price is the king, always.
Each trader must have a system that they regularly trade and my comments are for those who use trendlines as a guide to their trading.
If you don't use them then I have no problem with that but I personally consider them CRUCIAL to safe trading.
Going beyond what I have written, true set trap trendlines have correct starting points and they are based on fulcrums that are recognised only after the event unless you have specific indicators.
Divergence, set trap tendlines along with S&R are probably the most important of all the indicators - in that order.
But each to their own. If yours works for you then do not fix it.
George

I think not bcc9274 - I'm with you on this.
In the days when dbphoenix was a regular here, he commented frequently that the markets are a movie and not a collection of stills - or something to that effect. The OHLC are of significance on a daily and weekly bar / candle only - because the market opening hours are dictated by these. But any intraday timeframe is pure artifice. Look at a 10 min' chart in conjunction with a 1, 2, 3, 4 or 5 min charts. The lower timeframes are lost within the 10 min candles. Of course, what does emerge through the fog of any timeframe are key zones of support and resistance. George, as much as I'd like to accept your assertion (because I believe you're a good trader), on this issue I think you're seeing something that isn't really there. Naturally, if it works for you, then great, but that doesn't make it real; just as Father Christmas isn't real, no matter how much children want to believe in him.
Tim.

 

[timsk]

Hi George,

I feel sad that they are not obvious to everyone but each has his own view on a chart but the open price is the king, always.

Please provide some evidence to support your view or, failing that, point out the flaws in my thinking. I'm very open minded and, if you can pursuade me you're right, I'm more than happy to admit it!

But each to their own. If yours works for you then do not fix it.

Quite so, we agree on this point! My view is that price moves to areas or zones at which point the balance of buying and selling pressure tips over and the price reverses to form a new trend or retraces within an existing trend. The exact price is of little significance and I suspect you'd find that your trend lines worked equally well - drawn at the highs / lows as they do at the open. Attached is a 2 min' and a 15 min' chart of the FTSE from today. Please can you show me why drawing a trendline on the open on either timeframe is so critical? Also, would you not agree that the open on the 2 min' chart is lost within the candle of the 15 min chart? As I say, I'm happy for you to prove me wrong on this George, I just need some solid evidence backed by some equally solid theory before I change my mind.
Tim.

 

[fibonelli]

No. Disagree. Conflicts with Support and Resistance Theory and of Risk Management (ie Placing Your Initial Stop) when looking at high timeframes.

I've always drawn TL using Extreme Points on the Weekly, Daily and 4hr. At these high timeframes, the extreme points, if they are valid prints, are there for a reason.

Sometimes, I'll connect the base/top of the bodies so as to create a TL zone. It depends.

 

[2George]

Hi Tim,
I attach my 15m chart that you sent and I trust you will see the difference.
I use set trap trendlines to get confirmation of when the price wants to correct itself. For example, if I drew resistance set traps using spikes over the highs, I would be using data from those traders who had bought mistakenly.
It may be OK for stops but definitely not for getting the next move.
Hope this helps.
Regards,
George
PS It took me longer to get the attachment to take than it did to do all of this!

Hi George,

Please provide some evidence to support your view or, failing that, point out the flaws in my thinking. I'm very open minded and, if you can pursuade me you're right, I'm more than happy to admit it!


Quite so, we agree on this point! My view is that price moves to areas or zones at which point the balance of buying and selling pressure tips over and the price reverses to form a new trend or retraces within an existing trend. The exact price is of little significance and I suspect you'd find that your trend lines worked equally well - drawn at the highs / lows as they do at the open. Attached is a 2 min' and a 15 min' chart of the FTSE from today. Please can you show me why drawing a trendline on the open on either timeframe is so critical? Also, would you not agree that the open on the 2 min' chart is lost within the candle of the 15 min chart? As I say, I'm happy for you to prove me wrong on this George, I just need some solid evidence backed by some equally solid theory before I change my mind.
Tim.

 

[timsk]

Hi Tim,
I attach my 15m chart that you sent and I trust you will see the difference.

Hi George,
Well, thanks for the reply and taking the trouble to post the chart. However, in answer to your quoted comment, I'm afraid the answer is no. Whatever it is that you're trying to show is completely lost on me; I don't begin to see what you're on about. That's a shame, as i respect your opinion and this is clearly something you believe is important. May be someone else who does 'get' where you're coming from can explain it for those of us that are a little slow on the uptake?
Tim.

 

[dick_dastardly]

May be someone else who does 'get' where you're coming from can explain it for those of us that are a little slow on the uptake?
Tim.

I think I might find it easier to see the chart if he got rid of all those indicators ( I'm not an indicator-phobe BTW ) then the chart wouldn't be squished up against the top of the screen.

Just a suggestion.

dd

 

[2George]

The principle of ignoring spikes on candles for set trap trendlines is -
The bull spike has buyers forcing up the price by mistake.
If the buyers knew (which they can't generally) that the price was going to come back down again very quickly, then they would not buy.
So, if the set trap trendline was drawn over this buyers spike, then the trendline would be accepting that this was a genuine price and as we know, spikes are not genuine. They happen because the market has fooled the buyers.
Regards.
George
PS - to DD
I've tried to get a bigger chart in but not successfully but I hope that the explanation is sufficient. Als regarding the indicators, without divergence and S&R, set trap trendlines are only half the picture.

 

[nine]

I'm sorry but the use of so many indicators always reminds me of magical thinking. And I suspect that ignoring the highs and lows is in the same category.

A few examples where STTLs are superior to conventional TLs would be interesting and might convince otherwise. I will have a play on some daily charts to see if it shows up there because O&C are certainly more meaningful on daily+ than any lower timeframe.


Edit: had a play. Observations OCTLs tend to be closer to the market so the break is earlier (and sometimes thus more wrong on the major indexes I looked at). The HL trendline is probably the more valid one - why? - because after a break the price is more likely to retrace and touch that TL before proceeding than is the case with the OC TL. The touch indicates that more people perceive that break as significant IMO.

 

[timsk]

The bull spike has buyers forcing up the price by mistake.
If the buyers knew (which they can't generally) that the price was going to come back down again very quickly, then they would not buy.
So, if the set trap trendline was drawn over this buyers spike, then the trendline would be accepting that this was a genuine price and as we know, spikes are not genuine. They happen because the market has fooled the buyers.

Hi George,
Thanks for the explanation, now at least I understand the logic, although the jury is still out as to whether or not to adopt it!
Cheers,
Tim.

 

[superfly]

The principle of ignoring spikes http://www.sierrachart.com/userimages/upload_2/1233775785_55_UploadImage.png

on key- and trendlines