Drawing Trend Lines
Even if this is your first chart, you can’t go wrong with a trend line. This is a beginner-friendly way to model price movement and one of the most commonly used chart patterns for action and swing trading.
- To start training, select the “Lines” tool on the left toolbar.
- You may also like the magnet mode. In this case, your lines will be attached to the nearest OHLC points for greater accuracy.
- For a downtrend before a price drop, known as a swing maximum, start the line from the local maximum (point 1). Click at the desired starting point of the line and try to draw the line through as many highs as possible. Click on the chart again to complete the line.
Points 1, 2 and 3 are resistance points. It is always better to have at least three points checking the trend line, as two can be random. Point 4 shows a trend break: it is best to draw a new trend line from this point.
If you are seeing a downtrend, one possible strategy is to sell when the price tests your line. If you decide to display an uptrend, make sure you start the line at a low price so that the line is below your candle.
We will draw the forks by choosing three points at the beginning and the end of the trends.
In the example below, you can see that we started with point 1, the low of the downward swinging trend. Then we choose point 2, the maximum of the upward swinging trend, and then point 3, the minimum of the next downtrend.
These points form a fork pattern, where the upper line, coming from point 2, shows the resistance level, and the lower line, coming from point 3, shows the support level. The middle line is the supposed value, to which the price will tend.
As in the trend line example, the support line shows possible buy areas and the resistance line shows possible sell areas. You can place a stop loss just below the bottom trend line to manage your risk. Please note: just like any other indicator, the pitchfork does not always work exactly as expected. To reduce the risks it is recommended to use this tool simultaneously with other tools and strategies.
Strengths and weaknesses of TradingView
In terms of asset monitoring tools, TradingView is just one of many options. Most offer a similar set of charting and trading tools, but let’s look at the main aspects. Some features are of course very well implemented in TradingView, but there’s still room for improvement.
Advantages
Graphical HTML5 tools. TradingView can run on any device with a browser. There’s no need to install any software, and you can view your charts anywhere.
Free registration. Anyone can access most of the site’s features for free.
Server-side alert system. If you set alerts, TradingView monitors them on its servers. You do not need to open TradingView to receive alerts.
Script. More advanced users can create their own indicators, which will be stored on the
TradingView servers. This function works using Pine Script, TradingView’s simple custom programming language.
Asset Selection. A large number of stocks, securities, commodities, and Forex assets are available for charting. We are not limited to cryptocurrencies only!
Backtest. Once you have developed a strategy, you can easily backtest it with the built-in feature.
Disadvantages
Community Suggestions. While the design of the Broadcasts and Ideas tabs is interesting, the quality of the material posted there varies markedly. Many of the tips are quite speculative and not very useful for new users. There is also occasional trolling in the comments section.
Customer Support. The TradingView community often reports problems with TradingView support. Only customers with a paid subscription can contact technical support, no support is provided for users with a free account.
Integration of brokerage services. Some brokers and trading platforms are integrated in TradingView, but their capabilities are still very limited.
Cboe BZX data. TradingView’s prices for U.S. stocks do not come directly from the relevant stock markets. For example, the source of NASDAQ stock prices is the Cboe BZX exchange, where prices may differ slightly from real prices. Real-time stock exchange data is available for an additional fee.
Conclusion
TradingView is a great option for those looking for a free solution with a wide range of tools. The platform’s tutorials are also free, and they cover the basics of charting and technical indicators. However, the social side is not as strong. The chats often give speculative advice that should be avoided. For beginners, the platform’s social features are less useful because it is important to be able to distinguish good analytics from bad.
Nevertheless, TradingView is worth trying at least for the sake of the graphical tools. Besides, it’s also a great place to backtest trading strategies. Technical analysis is a deep subject, and this free account will be more than enough to learn it.
