Trend lines in forex trading anyone?

[clueless-about-forex]

Hello again 

It's me again, back from reading about forex which resulted in my having a whole lot of questions for our gurus here 

Ran into several discussion about trend lines. There seemed to be a lot of traders utilizing them So being clueless and all, here are my questions. :

Exactly what Are trend lines? How useful are they?
I also read that they are used in conjunction with other analysis tools such as support/resistance, candlestick chart patterns and others. How reliable are these methods and is there one set way of interpreting them?

[forex-scribe]

There is actually a great thread on trend lines in this forum which can help get you up to speed about them.

http://www.forextradingsoftwaretraining.com/analysis/forex-trend-lines

Going on to your other concerns, some traders would use several tools together with trend lines but generally they would employ 2 tools and proceed to analyze the situation.

But let’s get a few facts established first:

1.   Charts mean different things to different traders. What looks like a strong buy signal for you may actually be a sell for another buyer and a signal to stay put for others. This variation is due to many factors that include the trading systems used, the goal of the trader among other things.

2.   The plotting of the trend lines themselves is subject to a traders preferences and interpretation. While some traders may opt to draw trend lines through certain points because they see the data points as significant, others may decide not utilize the same period for a trend because of some other factors like several candles crossing the line, etc.

Having said that, trend lines can be accurate up to a certain point. Just don’t lose sight of what they are, just trend lines which indicate the general direction and probable scenarios. I don’t know how you would quantify reliability but I would say that they are much better than random guessing.

Perhaps it would be better to consider them a sort of hypothesis, keeping in mind, that unlike science, trading is not an exact art which is subject to certain laws that will produce an event repeatedly.

The last question you asked was about having just one set way. The answer there is no. Because traders will have so many different ways of interpreting things. For instance, one trader may opt to evaluate the trend line by using purely technical analysis, while another will utilize fundamental analysis as an aid to predicting the trend.

As you can see, this is no exact science and to call trading an art is certainly not too far from the truth.