Part 5/9:
Incorporating Trend Lines into Trading Strategies
After establishing trend lines, the next step is strategizing their use in trading. Two primary strategies exist: the bounce strategy and the breakout strategy.
The Bounce Strategy
In the bounce strategy, traders anticipate that when a price reaches a trend line, it will bounce off, continuing the prevailing trend.
Setting Up a Trade: For instance, if the price touches a downward trend line, you could open a short position.
Risk Management: A crucial element of this strategy is protecting your investment with a stop-loss. Ideally, set your stop-loss on the opposing side of the trend line.