Let's examine five visual aids to speed up your stock scanning. Train your eyes to look at charts in this way the next time you sit down to do your market homework.

 

You don't want to ski on the Bunny Slopes. There's little profit for traders when price rises or falls in a very gentle pattern. Real opportunity comes when strong tension between conflicting forces gets released in a big move. Bunny slopes never build that tension and should be avoided if you're looking for short-term gains. The good news is it takes only a second to see this flaw on a price chart.

 

Border Disputes happen between price bars and intermediate moving averages. These conflict levels define important setups because so many players react to these zones. Keep your eye on the interplay between price, the 50-day and 200-day moving averages as you flip through your charts. No single pattern defines these disputes, so stop and investigate when you see something interesting.

 

Davy and Goliath traps many traders. This trend-relativity error happens when you see a great pattern, but miss the support or resistance that's going to screw it up. Avoiding this error is simple. Look above and below the breakout price for the setup that's catching your eye. Then do the math. How far will it travel before it runs into the mean ogre?

 

Trend Mirrors tell you to look to your left before taking a trade. Mirrors show all the past stuff that's going to affect price movement right now. One of the great trading secrets is that price reacts a lot more than it acts. In other words, old debris in the charting landscape generates most price swings. So look for all the past highs/lows, gaps, volume spikes and candle shadows when you see an interesting setup in the present.

 

If you have to look, it isn't there. The Bad Hair Day refers to a price chart that makes absolutely no sense when you first look at it. So what do you do when an oddball pattern catches your eye? You waste more time and try to figure it out. When a chart doesn't slap you across the face at first glance, move on and find one that does.