Posted on April 12th, 2010 by navstock

A study was undertaken to understand the relationship between time frame and chart formation with the aim of developing methods that would lead to new ways of visually looking at charts. This would then hopefully lead to more reliable trading strategies. What was developed was a simple chart overlay which allowed information to be extracted from the chart. This information would include, trend direction, change in direction and strength of chart movement. All of this information was related to the chart itself so there is no lag.

Another thing was added to aid in understanding. A new type of momentum indicator was developed to help in locating where more probable turning points would be located. Combining these two things as well as some rules on price action a trading system was developed that could be applied to must liquid instruments. Gold, Oil, Stocks, Futures all work more or less the same way with the same rules.

What was also noticed was time frames. If we start with a 10 min time frame we can then see that evolve into 1/2 hr then hourly, daily, weekly etc. As a change in direction is forming it can be measured, monitored and of course traded. Depending on your time frame of interest, trading opportunities abound.


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