Projecting Better With Trend Lines
Traditional candlestick charts are full of information that you don't need to trade effectively. This overabundance of data can obscure or completely wipe out the most valuable information on your charts. Trend line charts help you find these moments, such as the key turning points where activity changes direction. You can use these points to follow the development path of any given instrument, without having to look through all the confusing, extraneous data of a candlestick chart.
The best way to make big money is to follow big market movements. These movements begin in "consolidation zones"—where an increasing and decreasing trend line intersect. Using a trend line chart you can locate these zones, giving you a visual analysis of trends as they roll out.
Pivot Points: How Do They Work?
Pivot points are the heart of a trend line chart. They are the literal moments when an instrument changes direction—when the market shifts around it. Once you locate a pivot and pinpoint its cause—whether it's following a trend, or part of a cycle—you can take action about it. Tracking pivot points carefully gives you an unparalleled ability to figure out what your next course of action should be for any given instrument, and the right moment to make that move.
Trend Lines As Predictors
This approach is challenging, but it certainly isn't too difficult for any day trader to use. It can be very useful to use trend lines to examine the history of an instrument on a long-term scale. The larger-scale trend behavior of an asset often influences its behavior as it breaks out of a consolidation zone. That doesn't mean that it always works like that, but by combining trend observations on a variety of levels, along with non-correlated indicators, you can produce a multifaceted picture. Using this rich data combining multiple indicators, you can make much more effective trades.
Good trend lines, however, are an effective indicator on their own and an excellent tool to ad to your charting toolbox. They are applicable on any time scale, and work on steady or fickle instruments equally well, due to the elegance and power of their mathematics. As you use them and learn their idiosyncrasies, you will become a stronger trader.
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