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The Ultimate Guide On How To Use Trend Lines
The Ultimate Guide On How To Use Trend Lines
Over the past few months, I’ve shared with you some advanced trend line strategies…
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Maybe all you want is a quick and snappy guide on how to use trend lines – right?
What a trend line is, and how (and why) it works across most markets
How to use trend lines to generate low-risk and high-reward trading ideas
The easy way to enter, manage, and exit your trades using trend lines
A few pointers on what NOT to do when learning how to use trend lines
How to use trend lines: what they are and how they work
Let me share with you something which helped me unlock my studies…
The secret to learning any new trading concepts out there is to first understand WHY things happen.
Instead of asking what the best trend line strategy out there is, you should ask:
Healthy trends…
You don’t predict with them… instead, you use trend lines to react to current market conditions.
Make sense?
So, there will be times when you might plot trend lines the wrong way (and that’s okay!).
Nonetheless, a trend line is valid when there are two swing points in the market.
For example…
Once it made two swing lows then that’s the time when you want to “project” where the next swing low
would be…
…it’s swing highs that are something you’d want to focus on instead (and not the swing lows)…
I’ll give you more tips later about plotting trend lines.
Needless to say, if your plots more or less match my example, then you’re a pro at this already!
Now that you know why the trend line works and what to keep in mind when plotting it…
Trend lines are the most simple and versatile tool to use when trading the markets.
However, even simple tools can have a lot of tricks up their sleeves.
And it’s those tricks that I’ll share with you in this section.
First…
Remember what I told you about using swing highs or lows to plot your trend lines?
Good!
One way to identify if the trend is accelerating to the moon is when its swing lows are sloping higher.
The moment you plot your valid trend line and the market makes a 3rd swing low…
If the trend line is continuously sloping, then this tells you that the trend is accelerating.
Here’s an example…
On the other hand, the opposite can happen when swing lows start sloping lower…
This indicates that the trend is weakening and potentially forming a range market.
Make sense?
Now, before we move on, it’s crucial that you always set your charts to the logarithmic scale…
This deserves a whole new guide for itself, but basically, being on a logarithmic scale helps you look at
the chart more objectively!
And here’s the same one which does use a logarithmic scale…
Swing lows and highs are much more visible, which can be huge when learning how to use trend lines.
Now, another concept on how to use trend lines to analyze the market is…
Yet, one candle alone isn’t enough to reverse the whole trend.
Why?
Well, because false breaks happen all the time in the market!…
So, how should we properly define trend reversals by using trend lines?
That’s right!
Waiting for a bear flag pattern and then a breakout of that pattern is enough to tell us that the market
structure has changed!…
Got it?
Great!
Now that you can understand WHY trend lines FORM, and HOW to use them to ANALYZE the market…
What’s next?
The answer is – how to use trend lines to PROFIT from the market, of course!
How to use trend lines to enter, manage, and exit your trades
What use is any trading concept if it doesn’t help you trade better?
After all, doing analysis is vastly different from the actual churn and flow of real markets!
…in order that you can use them to improve your current strategy.
See it? Ok… but… when exactly do you hit the buy button?
First, wait for the price to close below the trend line…
This is actually a universal way to enter common chart patterns and trend lines.
“But what do we do when the trend is sloping like our previous examples?!” …
In this case, you’d have to learn how to use trend lines on breakout trades…
I’ll teach you how trend lines can also be used to objectively look at pullbacks!
(to keep things simple, I’ll keep calling them trend lines instead of “pullback lines”)
(Mind you, pullbacks can come in different shapes and sizes, as well as trends!)
Again!
Similar to plotting trends, it can take some time to nail down plotting trend lines on pullbacks as pullbacks
can vary….
Nevertheless, mastering this will give you the ability to find opportunities both in pullback and breakout!
Good!
Because, assuming you’re in the trade, we don’t want that flag pattern.
In the last section, I’ll teach you how you can improve on this.
You now know how to use trend lines to help enter and exit your trades!
So, now that you know how versatile trend lines can be in your arsenal…
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It’s crucial you understand how NOT to use trend lines.
Because, as your coach, I’m not here to hype you up with fancy concepts and strategies…
Trading
It’s Guides
my job to help you use these ideas properly!
How
The to use trend
Monster Guide tolines the WRONG
Candlestick Patterns way (avoid doing these)
The
Let’s Price
get Action
straight to Trading Strategy Guide
the point…
The Best Trading Books of All Time
The number one sin in learning how to use trend lines is to plot too much….
The 5 Best Trend Indicators That Work
Plotting too many trend lines:
The 5 Types of Forex Trading Strategies That Work
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So… how many trend lines should you put in your chart?
Why?
Because you’d only want to put trend lines that are relevant to the current price!…
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As you can see, we have one trend line identifying the trend, and another identifying the pullback.
So basically… Careers
You’re free to plot as many trend lines as you like… AS LONG AS:
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It’s relevant to the current price Contact
You can use the information on those trend lines to manage your trades better
Don’t overplot!
Now, the next thing you should not do with trend lines is…
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Treating trend lines as a single line Disclaimer
on your chart
This concept changes everything! Scam Alert
Because the reality of the markets means that everything is an area on your chart.
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