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"The situation I was looking for was the ability to draw a trend line in a trending market. When I first started trading, I had no computer. I traded from a set of purchased charts that came out once a week. I had to keep them up to date by hand. I drew in the bars each day showing the open, high, low, and close. I can't draw a straight line with a ruler, so I hated every minute of it.

"Once the daily bars were drawn, I drew in the trend lines. I connected highs to highs in a down trending market, and lows to lows in an uptrending market.

"On a trade such as the one shown above, my job was to trade only when I could draw a clear trend line. This forced me to wait for my first trade until a market corrected so I could connect the previous high to the current correction high. When I could do that, I had an established trend.

"My first duty was to connect the highest high of the latest leg to the first correction high. After that, I was allowed to connect the last correction high to the current correction high only if the angle of the trend line remained in the same overall direction or steepened its angle of descent.

"Once I had established a trend line, I was to try to sell a single contract upon a breakout of the low of each day in which the market moved upward towards the trend line. I was not to trade if prices gapped below my sell point. I was to trade only if prices traded through my sell point. My sell point was always one tick below the low of the previous day, which represented a breakout of yesterday's low.

"When I was in a trade, I was to stay in it as long as prices moved away from the trend line by making a lower high, and/or a close lower than the open. My initial stop was to be 10 ticks away from the price action.

"I was to add to my position as prices moved away from the trend line by selling trade-through breakouts of the low.

"I was to have a resting sell stop one tick below every Ross hook. A Ross hook is a pivot point, created when a market changes direction for even one day. In the case of a down trending market, this would be created just as soon as prices had a day upon which they failed to make a new low. In an up trending market, a Ross hook is established on any day in which prices fail to make a new high.

"At no time was I to allow a correction to go beyond the previous day's high, nor was I to allow a correction to go beyond reducing my profits for the latest leg to an amount greater than 50% of my unrealized paper profits once I had $100 of profits in the trade. Furthermore, once I had $50 of profit in a trade, I was to pull my stops to breakeven by the time of the close.

"I was to be on my guard and to tighten stops on any day in which the market closed higher than it had opened.

"Of course, just the opposite of my criteria for handling opens, closes, and lows was true in an uptrending market. In a market that was moving up, I would be on guard if the close was lower than the open. I would start trying to buy when prices were moving downward against the grain of the upward trend. I would buy trade through breakouts of the high of the previous day. My trend lines would be drawn from low to low. With these simple rules in mind, let's look again at the bean oil chart."

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