thanks newdigital....but dont we still need to know if the breakout is fake or not ? thats the question shud we count 1,2 and finally 3(the real) ? Or shud we not accept the breakouts as SELL/BUY signals ?
and here is wat WELLES WILDER says about the ASI indicator... :
"When the Index is plotted on the same chart as the daily bar chart, trend lines drawn on the ASI can be compared to trend lines drawn on the bar chart. For those who know how to draw meaningful trend lines, the ASI can be a good tool to confirm trend-line breakouts. Often erroneous breaking of trend lines drawn on bar charts will not be confirmed by the trend lines drawn on the ASI. Since the ASI is heavily weighted in favor of the close price, a quick run up or down during a day's trading does not adversely affect the index."
and here is the link with a picture and explanation :
Accumulative Swing Index (ASI) | Forex Indicators Guide
as a conclusion...isnt ASI a good tool to eliminate thse "2 fake breakouts" which u mentioned in ur message ? Wouldnt it be useful if there were an indicator which drew trendlines on ASI ? and Wouldnt we be able to compare the trendlines on the real chart and the trendlines on ASI ? I am not telling someone to code an indicator like that...but i just want to point out how useful ASI can be...am i wrong?
If we compare trend following systems (trading inside some channel from one border of the channel from the other one), and breakout systems (anyone) so - it is much more easy to trade trend following systems taking trendlines or support resistance lines just for consideration.
If we are trading breakout so we should know about this "2 times false breaks" (two, not 3, not 5 ...).
Besides, any breakout system is risky to trade: less trades. But breakout systems are much more profitable than any trend following systems.
I think, if it is not related to news events, so any breakout should be confirmed by some other indicator, or oversold/overbought level, or trendlines/support resistance on more higher timeframes or any.
It is very very difficult to trade pure trendlines/support resistance as it is mostly practical knowledge hidden from the most of the trades by some more experiences traders (i am not more experience trader sorry ).
As I remember - bubble tried to disclosed this hidden knowledge 2 times on some threads, but after some times - he deleted all his posts from the forum related to this knowledge (before going to commercial)
So, all that I can do - is to construct this thread from many pieces collected from the forum:
But this thread is just a collection of the indicators and not a knowledge about how to trade trendlines/support resistance lines.
So, this question is still no answered sorry.
I mean: price may have 2 false breakouts (by "default" price movement) before going to real breakout.
It is well-known from long time ago.
thank you very much newdigital for the useful information...
to make this strategy better...plot trendlines only when divergence develops...
great I will try it
thanks selym_co and newdigital, I was overlooking the difference between break outs and trendline following, but now that you mention it makes more sense now.
(quoted from first page in thread)
correct me if I am wrong, but the original Welles Welder ASI strategy would be considered break out strategy, and James The Giants ASI trendline strategy would be considered trendfollowing strategy because we are to wait for a bump in ASI so a strong trendline direction can be built.
and just like newdigital points out, there is big difference between break out, and trendline strategy.
So, I ask the question, what is the significance of the "bump" on the ASI compared to what a "bump" on a linegraph or 1per ma is after a "trendline break" (as described in strategy rules first page of thread)? If there is a difference between the "bump" on the ASI and the "bump" on 1per ma or line graph, then it will be worthwhile to continue trying to further improving this strategy with use of ASI, after all, that is what makes the original ASI strategy great (prevents entering on false breakouts). If there is nosignificant difference between the "bump" on the ASI and the "bump" on 1per ma or line graph, then we can further try and improve this strategy but with the use of line graph or 1per ma either on chart or separate window,,,,, or just trade this strategy in the original way, breakouts.
James maybe you can use this, found this indicator and added my version of ASI to it(if you prefer your version you can go in the code and just remove the -3 from the iCustom call out) anyway it draws divergence and trendline, and channels.By default its Osc=36 to show ASI.
Wow! This will be a great tool to have. I can't wait to see it's potential later today. Will post my findings.