E-mini Trading: Where Have The Trend Lines Gone?

As I look over the myriad of e-mini trading charts I receive from past students, friends and interest bystanders I have noticed that the diminutive trend line is often missing from the chart. I am not sure when the decline of the trend line began, but I have noticed that other trading indicators seem to have become more in vogue for traders than the simple trendline.

In my formative years of trading, which are far enough in the past to become a bit embarrassing, the trendline was a key component of any chart. They were (and still are) one of the primary means employed in deciphering the meaning of the price action of any chart. While there are still a large number of traders who still use trend lines, it seems to me that the trend (no pun intended) toward indicators and oscillators for interpreting e-mini charts has relegated a valuable tool in trading from the forefront to a less important role in trading, especially when trading e-mini contracts.

I cannot offer any particular insight into why the current generation of e-mini traders seem to put less stock in trend lines than past traders; but I suspect that the proliferation of new and ever more accurate algorithm based trading tools hold more allure than trend lines.

Why?

Modern indicator and oscillator based trading provide specific entry points for trade entry and exits. Trend lines, on the other hand, require interpretation and some specific techniques (which are subject to individual traders interpretation) to implement effectively. It takes time and practice to trade trend lines effectively, and I suspect that the perception that algorithm based trading is a more simple, though not necessarily more effective, method to trade. In a nutshell, easier methods of trading may have reduced the novice traders workload when trading.

Oddly enough, I am often asked, What is the current trend? This question bears out the notion that trading with the trend is still an important component of most trading methodologies. That being said, many of the explanations that traders offer are based upon Fibonacci techniques, active highs and lows, multiple time frames, and other mathematically based techniques. Oddly enough, I seldom hear trend lines mentioned in the context of determining the trend. When determining the trend, what could be more useful than drawing a simple trend line? The answer to that question perplexes me, and I intend to devote a series of articles, in succession, explaining my understanding and technique in determining trends, drawing of trend lines, and techniques for interpreting and trading trend lines.

In summary, I have noted my perception that the use of trend lines seems to have declined. It is my opinion that other e-mini trading methodologies have led to this decline by virtue of ease of use and the tendency of algorithm based trading systems to indicate specific entry and exit points on a trading chart. Further, trendline trading is subject to interpretation and implementation of specific methodology, which can be time consuming and increases the workload of trading.