Forum Archive Index - October 2001

[Phaedrus <Phaedrus@techemail.com>]

Jared,
       Attached is a chart of FRU showing how a medium-term trend trader such 
as myself uses trendline breaks to time entries and exits. The next exit will 
be when FRU closes below the current trendline.
 <<<< I am greatly intrigued about the nonlinear scale on the plots that I have 
seen in your posts. I do know a bit of stats, and about logarithmic scales, but 
these plots do not seem to be that either. >>>> The scale I normally use is 
semi-log. This simply means that the X axis (Time) is linear, and the Y axis 
(Price) is logarithmic. Most of the time a simple linear scale gives an almost 
identical graph, but if the Price range covered is high, a log price scale 
preserves the linear relationship between price changes of the same percentage.
 <<<< No two (plots) seem the same. Is it a feature of the program that you 
use? >>>> The program I use is MetaStock, which gives 9 standard charting 
options, and the choice of linear or semi-log scales. My personal preference is 
for Candlesticks and semi-log scaling. Many people use Bars. The chart here is 
a semi-log Line graph of the Closing prices. This gives a very simple, clear 
and uncluttered chart. 
<<<< ...does it actually create things that are not there? >>>> No.  Like what, 
anyway? These are just price charts, after all. Draw your own using graph 
paper, print them from a charting website, enter the data into a spreadsheet 
and draw a chart from that - they will all be the same. 
 <<<< Do you fit the trend lines manually or does the program do this as well? 
>>>>>  The trendlines are all drawn manually, although there are programs that 
can do this automatically. Decide what timeframe you wish to trade in, and draw 
your own. Up trendlines should link swing Lows, Down trendlines should link 
swing Highs. 
    Regards,
             Phaedrus.

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