The Golden Ratio This figure — 1. Once a trading bias is established, chartists will wait for a correction when prices cross the Base Line red line. Set the T-Line up on your charts and watch for yourself. Take the Reins Wondering how T-Line trading will work with your investment strategies?
I have found that it works best when trading the slower time frames like the daily, weekly, and monthly charts for the longer-term trader. The T-Line can work on minute, minute, and minute charts as well especially for the wing trader on the Daily , but it is not as reliable on the 1- or 5-minute charts. Keeping all that in mind, T-Line trading is most beneficial to the swing trader. Wondering how T-Line trading will work with your investment strategies? Set the T-Line up on your charts and watch for yourself.
Also, remember this basic rule: The opposite is true with short trading—you want to stay short if the stock closes below the T-Line. Give T-Line trading a try! Second, price moves below the Base Line to signal a pullback and improve the risk-reward ratio for new long positions.
Third, a bullish signal triggers when prices reverse and move above the Conversion Line. As you can see, the three criteria will not be met in just one day.
There is a pecking order to the process. First, the trend is bullish as defined by the cloud. Second, the stock pulls back with a move below the Base Line. Third, the stock turns back up with a move above the Conversion Line.
There are also three criteria for a bearish signal. First, the trading bias is bearish when prices are below the highest line of the cloud.
This means price is either below the cloud or has yet to break above cloud resistance. Second, price moves above the Base Line to signal a bounce within a bigger downtrend. Third, a bearish signal triggers when prices reverse and move below the Conversion Line. Even though the stock declined from January until August , the trading bias shifted three times from January to June blue box.
Signals 1 and 2 resulted in whipsaws because the SNDK did not hold the cloud. The trading bias can change often for volatile stocks because the cloud is based on lagging indicators. A relatively strong trend is required to sustain a trading bias. Prices remain above the lower cloud line during a strong uptrend and below the upper cloud line during a strong downtrend. The trading bias shifted to bearish in early June and remained bearish as a strong decline unfolded.
There were two sell signals during this period. Signal 3 resulted in a whipsaw, but Signal 4 preceded a sharp decline. It is important to have a plan when you are trading the markets and we make sure we cover every market with these live trade set up ideas. We have wide variety of trading indicators, training courses, and robots, for traders at all experience levels.
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