The “T-Line”

The “T-Line is nothing more than the 8 Day Exponential Moving Average (EMA). The term “T-Line” was coined by Rick Saddler in 2004. Rick has a blog/website called “Hit & Run Candlesticks.” His site has an interactive online Trading Room and Rick is the moderator. I know nothing about the site except that it will cost you some money. From what I read, Rick is a pretty good moderator.

On a candlestick chart you can set a Moving Average (MA) line on any time frame. Traders set their MA anywhere from 1 or 5 day MA all the way up to 500, 600 day MA, or higher; and anything in between. The MA line is the line going across the candlestick chart. See Moving Average (MA). You can also set your individual candlesticks on any time frame. You can have candlesticks as low as 1 minute candles, 5 minute candles or hourly candles, all the way up to monthly candles. A 1 minute means you will have a new candle on your chart every minute. A monthly candle means you will have 1 candle added to your chart every month. The most common time frame is the daily candle. You will have a new candle every day. However, you can watch the candle move up and down during the trading day. A new candle as frequent as every minute might be used by day traders. A monthly candle might be used to look at the past year or 2 to see how a stock did each month.

The “T-Line” which is the 8 day EMA is a line that gives you the average of the previous 8 day’s closing price as a point each day. As on all graphs, when you connect the points you get a line, which is kind of like a train laying down it’s own tracts. Please read my page Moving Average (MA) for a full explanation.

When Rick had his chart set on the 8 Day MA, which he called the Trigger Line, “T-Line for short, he noticed something. Rick Saddler writes:

” After a long stretch of poor trading decisions and a decidedly losing strategy, I knew that I had to change something. That’s when I noticed that the T-Line connected the lows of a given time frame in an uptrend as well as the highs in a downtrend. I also realized that it acted as a trigger line or a trade line for entries and exits of a trade. After plotting the T-Line on my charts, I noticed that if a long stock closes above the T-Line, there was a high probability of a continued rise . The same is true in a downtrend—if a stock closes below the T-Line and remains below the T-Line, it will continue in the current downtrend. Thus, the T-Line was born!”

On using “T-Line trading, Rick continues:

“The T-Line can be applied to all trading plans and investment strategies, and it operates in all time frames. I have found that it works best when trading the slower time frames (like the daily, weekly, and monthly charts) for the longer-term trader. The T-Line can work on 15-minute, 30-minute, and 60-minute charts as well (especially for the swing trader on the Daily), but it is not as reliable on the 1- or 5-minute charts.

Keeping all that in mind, T-Line trading is most beneficial to the swing trader. Long-term investors can use the T-Line, but investors typically aren’t getting in and out of trades as the price action goes up and down within a trend.”