Trend Trading Set-Ups: Entering and Exiting Trends for Maximum Profit

CONCLUSION

Unleashing Trade Potential

I remember my first read of Robert D. Edwards and John Magee's classic Technical Analysis of Stock Trends many years ago.1 There were references like “in our experience” and an occasional reference to implied probabilities that this or that pattern should play out as described. In all cases no underlying data was offered. When that classic book was written there were no computers, and thus there was no easy way to systematically compile and present the data behind the assertions presented. It is unreasonable to fault Edwards and Magee with not having provided such underlying data, but in this day and age those limitations are no longer applicable.

As you have seen, a significant effort has been put forth in both identifying and enumerating the various failure probability rates that exist for both trends and trades across the three accepted time frames. A decade of data was systematically analyzed over a period of time that witnessed the end of the Dotcom crash followed by the arrival of another bull market followed by yet another crash and subsequent bull market run. This test bed of data was analyzed based on the concept of qualified trend identification, swing point tests, anchored support and resistance and, of course, trend trading set-ups. The results of this analysis are scattered throughout the book, and the trend and trade failure probability rates are presented in the Appendix for reference purposes.

Although there are no absolutes ...