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Someone brought up market conditions and that reminded me that one of
the best things about hand charting is how easy it is to tell if a
market is trending or in congestion: If you are drawing lines that are
higher and higher....well, it just filters into your head: Look at
this market go. What a nice up-trend. If you are drawing line after
line and having trouble erasing because the lines are all in the same
general area...that's congestion. I know, this sounds like a great
deal of simplification. But it makes a point: Deciding whether a
market is trending or in a congestion period is usually the first
thing I determine when I look at a market. And of course, part of the
answer to this question is determined by the time frame you are using
to view the given market. For example, the bond market may be in a
four week large pattern of congestion using daily bar charts, but if
you are charting the sixty minute bars of the past five days, it may
be in a very clear up-trend.
Choose your market, choose your time frame, evaluate the market
conditions [trending up, trending down or in congestion] in that time
frame and then choose decide upon your approach to trading this
particular market. I would also add that I try to look at one level of
time frame in each direction as well...for example, if I am trading
off of sixty minute bars in a market, I'll also look at the daily bar
charts to clarify the bigger picture. And when determining my entry
price, I'll usually look at the finer 5 or 15 or 30 minute bar chart
to see fine-tune the entry method I want to use.
Tim Morge
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