I learned this method of analyzing a chart from the book “Trading For A Living“.

These days it hasn’t been too difficult to figure out that stocks are going down and that shorting is the best option. Unfortunately, it isn’t always this easy. Investors generally are faced with charts that take us for a ride as they go up when we are sure they will go down and vice-versa.

As we strive to remain objective traders, these charts are the ones that throw us off our game. Lucky for us, there is a method that will help keep us emotion-free and allow us to skip trades that aren’t as “sure thing” as we thought.

Here’s the scenario:

You are looking at a chart and after several minutes of analyzing you conclude that the stock is definitely a buy.

Now, to double check your analysis, take a look at the chart upside down.

If the stock then becomes a sell, then you are making an objective trade decision. If it is still a buy or a hold, you should probably continue scanning the market for better opportunities.

Some general points:

• So far, I have not found any charting service that allows you to flip the chart.
• This has led me to do one of two things: either stand up and turn my head upside down to look at the chart or turn my laptop over to keep from pulling anything.
• One temptation for a trader who uses this technique is to automatically think that the chart will be the opposite action. It is key to put a lot of effort into keeping this from happening by coming back to the chart after an hour or two and reanalyze it.