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A Trend Is Not Over Until It Is Over

By Lawrence  

iStock_000010552687XSmallPart of Art of Chart Reading

One of the beginners’ mistakes in chart reading is seeing top and bottom in the making everywhere. It happens when you learn to read a chart without a proper framework in mind. It is important to read the charts with certain ground rules in mind regarding trends to avoid this pitfall.

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Comments
  • mel December 1, 2013 at 4:25 pm

    Really great article!

    • Lawrence Chan December 4, 2013 at 9:26 am

      This is an actual framework that can be incorporated into your own trading plan.

      It is pretty much my own rules of engagement.

      • mel December 4, 2013 at 10:22 pm

        Yes am putting it into place, it provides a very good structural framework !

  • MidKnight December 4, 2013 at 9:10 pm

    While I would like to move into longer day trading holds, I have real problems moving beyond scalping. My main chart is a 3 minute chart and applying the above guidelines that would put me around a 15m chart as the dominant timeframe. I’m trading the Hang Seng Futures so a 15m is good because they have session start and stop times at 15m intervals as well as a lunch break close at a 15m interval. But take a look at the 15m chart of it – gaps all over the place and to me, the current day is often too chaotic to make sense of at this timeframe.

    Maybe you could take a look and let me know your thoughts?

    Thanks for another thought provoking piece!

    With thanks,
    MK

    • Lawrence Chan December 5, 2013 at 9:27 am

      That’s the kind of markets where day trading still needs daily timeframe as the dominating timeframe no matter what resolution you are using.

      STOPD levels on daily and weekly pretty much dictate the turns.

      Obviously, I monitor HSI too. =)

      • MidKnight December 10, 2013 at 8:44 pm

        What about HHI – Do you monitor that too? Its starting to do more daily volumes than HSI does on many days. Maybe this overtakes HSI as the main futures index for the region….hmmm. I’ve never traded HHI, but I monitor it alongside HSI.

      • Lawrence Chan December 10, 2013 at 11:32 pm

        H-Shares index moves faster because the components are more volatile. And Asians love volatility =)

        So it is a good reason for the index to gain more daily volume.

        The problem I have is that I do not have long enough history to confirm if it “behaves” like other indices.

  • mel December 5, 2013 at 4:10 am

    LC was wondering if it will be possible to post some chart examples of the Main TF and Dominating TF eg. M15 and H1 for trading samples and how would you refine it in the Money Mgmt TF to fine tune it…. Greatly Appreciate ! Am trying to unlearn and do off old habits and start afresh….

    • Lawrence Chan December 5, 2013 at 9:28 am

      Don’t worry. Already planned to. =)

      • mel December 5, 2013 at 8:48 pm

        Delightful !

  • Jeffreyvnlk December 5, 2017 at 11:50 am

    Wow, read a 5th time now got ut, thanks

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