Quadrant Lines for Price Movement Inspection
Quadrant lines are a set of horizontal lines which are plotted over price charts. The only purpose of these lines is to aid in the visual interpretation of trends - highest, lowest and average prices, for a specified time period. They do not help in any technical analysis and thus are advocated only for beginner traders, who want to investigate about price movements to get familiar with market.
Plotting quadrant lines is easy. First the highest high and lowest low points of a price movement are figured out. The top quadrant line horizontally pass through the highest high and bottom quadrant line horizontally pass though lowest low of that period. The other three lines are plotted in a way that they divide the area between top and bottom lines into four equal sectors (at 25%, 50% and 75%). Usually the middle line (mean) is represented as a dotted line. You can plot multiple quadrant lines on a price chart.
When investigating quadrant lines things to note is the height and width of a quadrant set. Quadrant height shows the range of price movement and width shows the time taken for that price movement. Quadrant lines can be applied to both short-term and long-term price trends. Many use quadrant lines in conjunction with linear regression trend line for better analysis.
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Plotting quadrant lines is easy. First the highest high and lowest low points of a price movement are figured out. The top quadrant line horizontally pass through the highest high and bottom quadrant line horizontally pass though lowest low of that period. The other three lines are plotted in a way that they divide the area between top and bottom lines into four equal sectors (at 25%, 50% and 75%). Usually the middle line (mean) is represented as a dotted line. You can plot multiple quadrant lines on a price chart.
When investigating quadrant lines things to note is the height and width of a quadrant set. Quadrant height shows the range of price movement and width shows the time taken for that price movement. Quadrant lines can be applied to both short-term and long-term price trends. Many use quadrant lines in conjunction with linear regression trend line for better analysis.
NobleTrading.com Offers Online Stock Trading, Online Options Trading
Online Futures Trading, Online Forex Trading
Worldwide Brokerage Service, Day Trading Brokerage
posted by Daniel Pipitone at
6:04 AM
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