Trendline Tips And Tricks

by Sylvain Vervoort

How do you capture those medium- to longer-term moves when trying to enter and exit trades quickly?

Daydreaming about trading? Get in a trade early and close to the low point; stay in as long as needed and get out fast at the top! The problem, of course, seems to be the middle part. Getting in and out quickly at turning points is not that difficult. But how do you stay in a trade to capture those medium- to longer-term moves while acting quickly to enter or exit at the same time? Let me show you some tips and tricks using trendlines that can help you achieve this.

It is important that you always use the same number of horizontal and vertical pixels for your chart with preferably the same number of price bars. That way, you will develop the experience of looking at the slope of a trendline with respect to the time period you want to trade in.

In Figure 1 you can see how the slope of the trendline can go from very sharp for the short term to moderate for the medium term and rather flat for the long term within the same long-term time period. The longer the time period to look at, the more reaction in price must be allowed, and hence the flatter the trendline.

Image 1

Figure 1:The character of trendlines. Here you see short-, medium-, and long-term trendlines. The short-term trendline has a steep slope, the medium-term trendline has a moderate slope, and the long-term trendline has a less steep slope.

Tips and tricks
When there is a nice move up from bottom to top, you may not need any special tricks, but there are still some useful tips that we can discuss.

...Continued in the August issue of Technical Analysis of Stocks & Commodities

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