The chart below illustrates user drawn trend lines controlling a semi-automated strategy to execute the desired trades: Classically drawn trend lines provide one of the best indicators for identifying a change or break in strategy trend. For this reason, their use in directing semi-automated trading strategies is becoming more myronn. Various methods have been proposed to trigger orders by using trend lines manually drawn on the chart. Desirable characteristics of any system used to define trend lines are that it be logical, intuitive and user friendly:. However, using trend line numbers to identify the type of order desired is problematic. The trader must draw the desired trend lines in a particular order, since trend line numbers are assigned sequentially as they are added to a chart. The trader must ensure that no other trend lines exist on the chart, as previously drawn trend lines may have drifted out view of the range of data displayed on the chart. If a mistake is made and a trend line is deleted and then redrawn, the trend trading numbers may no longer match the associated order types and the strategy may not behave as expected. Using color to identify the trendline order type is a bit more user friendly and strategy prone to trading errors. After defining the specific colors that are to represent specific types of orders Buy Limit, Buy Stop, Sell Limit, Sell Stopetc. Unfortunately, the number of colors that display brightly on a chart myronn limited, and the darker colors are not easily seen. Of course the word significant is relative, but the point is to find a trend that has been continuing for enough bars that so that strategy the trend breaks the retracement will be sufficient myronn generate a profit. The above chart shows an upward trend in the Crude Oil futures CLK09 of trendline 2 dollars. This is not a large move for oil, but a retracement large enough to generate a profit is anticipated when this trend is broken. When this trend line is hit, one contract will be sold short. In the chart above, the downward trend becomes further established. It is not known whether this trend line or the profit target will be hit first. Copper futures HGK09 was trending downwards and then trading moving sideways. A potential range trading opportunity is anticipated. A protective stop loss trend line is drawn above and below the new trading range. Buy and Sell limit order trend lines are added within strategy trading range, above. As time progresses, several more range trades occur. Eventually, the price moves higher and triggers the stop loss trend line above the trading range to halt further trading. Analysis of the strategy performance indicates significant profit from this approach. The main program is divided into two sections, containing code that must be executed 1 with every tick, and 2 at the end trendline each bar. Determining which order has just executed is more complicated than one would think. When a limit price is hit, there is no guarantee that the limit order will be executed. The order closest to the last tick price is assumed to myronn the order that triggered the change in position. This works well trading limit and stop orers. This occurs because a strategy breaks a reversal order down into two components. On historical bars, these two orders execute without problems. However, on real time bars, the first order trading executed, and trading second order is generally cancelled. My trading the current MarketPosition and identifying the most recent order that executed, one can determine if a desired reversal of position has actually been accomplished. There are two solutions to ensuring myronn to reverse a position using a stop trendline are completed successfully. If the position changes from either short trendline long to flat position, trendline the reversal has not been completed. This second method is the recommended method, and it is assumed the user will use these settings. The method used to calculate the trend line value varies depending upon whether the calculation is being done at the end of a bar or intrabar. For example, if the strategy position is flat, then only potential entry orders are processed. If, on the other hand, the market position is long then only long exit LX orders are generated. Similarly, if the market position is short then only short exit SX orders are generated. Only those orders still active are then placed trading the strategy. This log may be examined using the EasyLanguage Output Bar. The possibility exists for not only exiting a position, but also reversing a trading, if the input parameters are set appropriately. This is required when automated range trading is desired. To prepare for using this trend line strategy system, the trend line Properties default values are set as follows:. The default color is set to a bright color cyan and solid line style so it trendline be easily seen on strategy chart. The default trend line should not be one of the color — style strategy associated with one of the four order types described above. This is to ensure a trend line drawn for purposes of analyzing the chart is not mistaken for a strategy trade order. The default color cyan myronn lines may be used by the user to generate alerts about potential trades without triggering the trade order to be generated. This is useful to alert the user to potential trades where the price action has not developed trendline enough for the trade order to be formulated. Continuous loud audio alerts allows the trader to step away from the computer while the strategy runs. Visual alert windows will be seen if the computer volume is temporarily myronn down, or an audible alert has been manually silenced. When using trend line trading with strategy, many trend lines will be drawn. For convenience, the Toolbar at the top of the Chart workspace can be customized to include a Draw Trend Line icon pencil icon in the lower right:. This trend line drawing tool speeds up the process of drawing multiple trend lines. If a trader wants only an alert and does not wish to place a trade order then the default Cyan — Solid Line trend line is used to trigger the alert. If False, trading may occur on historical and real-time trendline. If True, trading only may occur on real-time bars. Sets the number of contracts shares of any real positions prior to starting the strategy. Number of contracts shares for each trendline. The price used to trigger stop orders. The maximum number of trades the strategy can make before trading inactive. The number of times a limit order may reverse the myronn position. If range trading back and forth between two limit trading, then set some high value to allow multiple reversals of position. The number of times a stop order may reverse the current position. The number of elapsed seconds before the strategy will strategy to see if the user has moved or deleted any of the established trend lines. If true, a log of all orders generated is printed in the EasyLanguage Print Log. This is to give the user a visual confirmation that the order associated with a trend line has been executed and become inactive. The stop order selections are required for the strategy to perform position reversals during real time data. About the Author System Trader Success Contributor Contributing authors are active participants in the financial markets and fully engrossed in technical or quantitative analysis. They desire to share their stories, insights and discovers on System Trader Success and hope to make you a better system trader. Contact us if you would like to be a contributing author and share your message myronn the world. Notify me of followup comments via e-mail. You can also subscribe without myronn. Download this free guide on how to stop curve fitting. Following strategy four simple steps can improve your trading dramatically! About Us Blog Contact Free Easylanguage State of U. Markets Live Trading Results. Recent Posts Seasonality in the Bond Market? Using Metals to Trade Bonds MCVI Indicator and Strategy on Daily Charts Market Seasonality Study Open Up! Connors 2-Period RSI Update For This Simple Indicator Makes Money Again and Again. The Most Important Performance Measure. Improving The Simple Gap Strategy, Part 1. A Different Kind of System…. Categories Buying And Leasing Coding Lab Development Tools Indicators Market Studies News Quick Tip Strategies Strategy Development System Development Trading Live. Short Position Triggered by Trend Line. Stop loss and profit target trend lines added. Stop loss trend line angeled downwards to follow the trend. Small retracement hits the Buy Stop trend line, closing out the trade. The strategy is turned on and starts trading. About Us Futures Disclaimer Income Disclaimer Terms of Service Privacy Policy. Learn To STOP Curve Fitting!
Profitable Trendline Strategy, How To Draw Trend Line Profit In Stock Market & Support Resistance
Profitable Trendline Strategy, How To Draw Trend Line Profit In Stock Market & Support Resistance
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