Volume is used to confirm the validity of breakouts and the intensity of market participant conviction. 4. Risk Management and Trade Planning
As he began reading the book, John realized that Brian Shannon's approach was more than just a simple technical analysis. It was a comprehensive framework that combined short-term, medium-term, and long-term perspectives to create a complete picture of the market. The author explained how to use various timeframes, from minutes to months, to identify patterns and confirm trading decisions.
Shannon urges newer investors to learn how to read charts from various timeframes, allowing them to understand that short-term trends may not be the same as a stock's long-term trends. He explains that looking at charts on different intervals, whether a weekly, daily, or even hourly chart, could tell completely different stories. Volume is used to confirm the validity of
To implement this, Shannon is known to utilize a specific stack of charts that gives him a top-down view of the market. He uses a combination of charts.
Brian Shannon’s Technical Analysis Using Multiple Timeframes is considered a foundational text for understanding market structure and trend alignment. Published in 2008, it remains highly rated by traders for its practical, logical approach to day and swing trading. It was a comprehensive framework that combined short-term,
A cornerstone of the book is the "2-to-3 times" rule—only taking trades where the profit potential is at least triple the initial risk. How to Access the Material
Using shorter timeframes (10-minute/60-minute) to find low-risk entry points that align with the primary trend. He explains that looking at charts on different
Shannon teaches that markets move in cycles:
Never buy a stock that is trading below its declining 20-day or 50-day moving average.
The stock moves sideways. Big investors are quietly buying shares. The price is building a base. Stage 2: Markup