FoundationsMAD Academy0:44Patterns

The Line You Draw Is a Hypothesis

A trendline is not found on the chart, it is proposed by you — which is why the honest version is drawn before the move, not after.

0:44 · 6 scenes

This lesson is part of a MAD Academy plan.

What the Lesson Covers

  1. 0:00A trendline is not on the chart. You put it there.
  2. 0:05The rule. Two points define a line. The third touch is the first evidence it means anything.
  3. 0:14The trap. Redrawing the line after every break turns it into a description of the past.
  4. 0:23Channels. A parallel line on the other side turns the trendline into a range you can measure.
  5. 0:31The scale problem. The same trendline on a log scale is a different line. Pick one and stay there.
  6. 0:39Write the line down first, then let price judge it.
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Educational content only. MadStockAlerts provides market commentary, research, and educational content. It is not personalized investment advice, and nothing here is a recommendation to buy or sell any security. Trading and investing involve substantial risk, including loss of capital. See the Risk Disclosure and Customer Agreement.
Educational content only. MadStockAlerts provides market commentary, research, and educational content. It is not personalized investment advice, and nothing here is a recommendation to buy or sell any security. Trading and investing involve substantial risk, including loss of capital. See the Risk Disclosure and Customer Agreement.
The Line You Draw Is a Hypothesis — MAD Academy Training Video · MadStockAlerts