How to Trade the T-Line

Years ago (over a decade now), Rick Saddler, the creator of this very website, developed a swing trading strategy based around what he decided to call the “T-Line.” The T-Line is essentially the 8-day exponential moving average, or the 8 EMA. Although Saddler wasn’t the first trader to make good use of the 8 EMA, he did come up with a clever trading strategy to employ the 8 EMA for support (if there is buying pressure) and resistance (if there is selling pressure). Learning how to trade the T-Line is simpler than you might think, especially if you use the helpful tips we’ve compiled below.

How to Trade the T-Line

How to Trade the T-Line
  1. Use the T-Line as a trigger line. If a stock closes above the T-Line, expect it to continue to rise. If a stock closes below the T-Line, you can bet that it will continue on in a downtrend. React accordingly. When the chart is in an uptrend, trade long, and when the chart is in a downtrend, trade short.
  2. Always watch for confirmation. Check the position at the close and the following day’s close to confirm that you’re making a good decision. You should also look for other signs and patterns, considering all of the components of the chart and watching for movements that confirm or contradict your findings.
  3. Identify patterns. There are many different chart patterns available for you to peruse, use, or ignore. Study these patterns and try to identify them in your charts. If you can combine chart patterns with some other indicators, you’re probably headed in the right direction.
  4. Watch for T-Line runs. When the price action of a stock is trading above the T-line and the lows of a time frame never close below the T-Line (they just tap along it), a bullish T-Line run forms. When the price action of a stock is trading below the T-Line and the highs of the time frame never close above the T-Line (but just tap along it) a bearish T-Line run forms.
  5. Focus on slower time frames. Daily, weekly, and monthly charts are preferred for T-Line trading. The method can also be used on 15-minute, 30-minute, and 60-minute charts, but we don’t recommend that you use it on 1- or 5-minute charts.
  6. Don’t expect the T-Line to be your Holy Grail. Use the T-Line method as a guide and improve your technique with practice, patience, and some studying. You can be very successful with the T-Line, but it will require some hard work and (of course) some luck as well!

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Use these tips if you’re just beginning to trade the T-Line, but remember that true mastery and success will take time. Be patient, perceptive, and persistent. Good luck!

If you’re interested in mastering some simple but effective swing trading strategies, including the T-Line method, check out Hit & Run Candlesticks. Our methods are simple, yet powerful. We look for stocks positioned to make an unusually large percentage move, using high percentage profit patterns as well as powerful Japanese Candlesticks. Click here to sign up for a FREE 2-week trial membership.

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