a Stupid question

Hi Guys

I know this is a very stupid question. I spinning my head to understand the tearm

Higher Low
Highre high

Lower low
lower high

thanks

These are the terms to identify a trend.
When price movement is such that it forms Higher Highs (HH) & Higher Lows (HL), it is said to be in UPTREND.
The previous HL is supposed to be your trailing stop (exit of trade).

When price movement is such that it forms Lower Highs (LH) & Lower Lows (LL), it is said to be in DOWNTREND.
The previous LH is supposed to be your trailing stop (exit of trade).

HH HL or LH LL formation is typically in form of a step-ladder / staircase.
These levels help in trade entry & exits.


ANOTHER IMPORTANT THING TO CONSIDER IS THE TIMEFRAME OF THE CHART YOU ARE VIEWING.
For example, in 5min chart, the scrip is making LH LL and hence in downtrend.
After some downmove, there is an apparent reversal in the same scrip's 1min chart which starts making HH HL
Depending on your risk appetite & style of trading, you can either reverse your trade or exit your trade, or wait for 5min chart to show a HL HH.

Here is today's Nifty Future's 1min chart. With help of these HH HL & LH LL you can see for yourself the trade entries & exits:

a good illustration to determine trend change using 1min or 5min charts...

also found this website which has some good illustrations in video clip format:

http://www.trading-strategies.info/node/17


will add more to our 1-2-3 setup later
(please note that the numbers in the above chart do not represent 1-2-3 setup.....
the green lines in the lower charts denote the 1-2-3 chart pattern formation
ie 1-2-3 means
1 = break of long holding support/resistance level
2 = retest of that level (possible goodbye kiss)
3 = reversal flow in direction of break)

Sunil
Thank you very much.

vinu

Thanks sunil...