Advanced Graph Reading

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Advanced Graph Reading

Post by [ADMIN] Billious on 4/1/2014, 9:01 am



Advanced Graph Reading


There are two advanced methods of graph reading presented to you here: swing trading and converging/diverging trends.


Swing Trading

Swing trading is a real world technique taught to me by Mypet Troll. It is great for fast investments and can be used as a regular source of income. It makes use of bouncing graphs and can be used to make money even from items on a downward trend. Although not the most profitable of techniques, it's steadiness and predictability make it useful, specially during times of item stability (unlike periods of multiple updates).

Once you find a nice bouncing graph with well defined support and resistance levels you can use the graphs predictability to invest a number of times in a row. The more the pattern of going up and down is repeated, the more likely it is to do the same thing again. But even this is not guaranteed, which is why you should draw a line halfway between the support and resistance levels to use as your "safest" selling point.

Like I mentioned earlier this technique can be used on falling trend graphs. Here it is best to use items that can be bought in bulk since the margins are smaller and you will have less buying time before you need to sell safely. Unlike a rising graph where you can make a great profit from a 10 limit item like SGS's, it is important to weigh the margin against the limit so you can make the most from the cash invested.




Diverging/Converging Trends

When the resistance level and the support level get further and further apart we call this a diverging trend. Eventually the 2 levels get so far apart that the price fluctuation can't reach these lines and a sudden shift in the direction of the graph happens. The same thing happens as these lines get closer together, start converging. The graph will eventually break through one of these levels and continue in that direction dramatically. Often the direction can be predicted and so watching for the right signs can make for extreme investment opportunities. However in a few cases you will need to wait and see which direction the graph changes to before investing, but even then large profits can be made as the shift is often extreme.


Diverging Trends


All investors need to be on the lookout for upward diverging trends. These are where the support and resistance levels are getting further apart in a rising direction. Sooner or later they run out of steam as they are unable to sustain such a rise and therefore break their support levels, crashing hard. As you can see on the Dharok's example below you could have successfully swing traded them the 2nd time they closed in on the support level for a nice profit, but if you tried at the 3rd time you could have easily lost 1/4 of the money you invested.


Downward diverging trends are where the best investing opportunities lie. Generally your looking for both the support and resistance levels to be falling while getting further apart. If the resistance level is stable (horizontal) the rule generally remains the same and the item will soon be in for a massive rise as it will have no choice but to break this unsustainable pattern. The example below shows just how dramatic these rises can be.

Middle diverging trends are where the resistance level is rising and the support level is falling. These still follow the rule that they will have a radical change, but there is no way of predicting if it will be a rise or a fall. The only way you can use these to invest is by waiting until the graph actually breaks through one of the levels. If it breaks through the support level then it will continue to fall and so should be avoided. If it breaks through the resistance level then you can stock for an investment as it will continue in that direction for at least a few days. These still don't make the greatest investments as the price is already rising by the time you stock and so they probably should be avoided.


Converging Trends


Converging trends follow pretty much the same rules as diverging trends with the exception that once the graph breaks through one of the lines you have a little more time to react as the lines are closer together giving you an earlier warning. Because of this middle converging trends can make decent investments but you have to wait until the graph breaks through the resistance level so that you can be sure it will rise. If it breaks the support then investing will not be possible.

Upward converging trends need to be avoided just like their diverging counterpart as they are a warning of an impending crash. No item can rise forever and so as the natural fluctuations get smaller you can be assured that the market will break this pattern with a sudden drop in price. Below you can see this with baby dragon bones and although the drop is not the most severe, losing about 1/4 it's value, it is still much faster than the rise previously.


Great investors are always on the lookout for downward converging trends as they signify massive price rises in the near future. If you recognize these early then you have plenty of time to build up stock at cheap prices all the while knowing that the coming rise will make it one of the best investments. These are pretty rare to find but if you look at the example below you can see that doubling your money on investments like these is not completely unheard of.




Special thanks to Mypet Tr0ll, Xavy and Julij2 for help making this guide along with the Investment Mentors Pudd and Connor.


Last edited by Billious on 6/5/2014, 4:11 am; edited 1 time in total

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Re: Advanced Graph Reading

Post by Gildarts on 25/4/2014, 2:35 pm

Very nice, thanks for takeing the time to make it Very Happy

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Re: Advanced Graph Reading

Post by STD PT on 26/4/2014, 12:34 am

Thanks for that epic gravedig, this is very interesting. I'm serious, by the way.

EDIT: I just realised that this was in the first page. My sincere apologies, kid rampage5.
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Re: Advanced Graph Reading

Post by Daxaal on 26/4/2014, 10:22 am

STD PT wrote:Thanks for that epic gravedig, this is very interesting. I'm serious, by the way.

EDIT: I just realised that this was in the first page. My sincere apologies, kid rampage5.

You can't gravedig a guide that's still relevant and up to date.
mypet tr0ll wrote:Unlocked.
Guides are never to be locked unless they are out of date. No such thing as gravedigging on guides :p
Sorry Google :p
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Re: Advanced Graph Reading

Post by STD PT on 26/4/2014, 12:11 pm

Daxaal wrote:
STD PT wrote:Thanks for that epic gravedig, this is very interesting. I'm serious, by the way.

EDIT: I just realised that this was in the first page. My sincere apologies, kid rampage5.

You can't gravedig a guide that's still relevant and up to date.

Seriously? Even after my edit?

+1 postcount...
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Re: Advanced Graph Reading

Post by Gildarts on 27/4/2014, 5:34 am

No worries STD.
Daxaal is correct as well.

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