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Magic Box Watch RSS Feed

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Why charts are important in any market and that includes the OTCBB basement. Charts are a tool where using abstract thought is important.

The building blocks of my understanding charts are threefold:  price, volume, and time.  Understanding Market Participants whom make up the chart lies at the intersection of these three variables.  We want to see who is in the market, what they are doing, and where they are doing it.  The edge that I am seeking comes from a simple reality that I observe across traders and Level-2 trading firms:  In seeking meaningful gains, most participants are leveraged.  This prevents them from taking normal heat (normal adverse movement) in their trades.  If a market or stock does not go their way, they need to quickly exit.  This creates a situation in which buyers and sellers who come late to moves are potentially trapped in their positions and eventually need to bail out.  The trader who can recognize signs of exhaustion in moves and able to assess the volume that is potentially trapped can take advantage of these reversals.

The form that these periods of market movement, exhaustion, and trapping/retracement take is one of cycles.  At the next level of abstraction, our ideas of price, volume, and time lead to ideas of trending and cyclical movements in assets.  It is the persistent need of traders to make money and not lose money that creates the mixture of trends and cycles that we see in each market.  It is the fact that different market participants operate on different time frames--some as investors, some as market makers, some as traders--that creates trends and cycles on different time frames.  Very, very often, what is a trend on a shorter time frame is a directional part of a cycle on a larger time frame.  The presence of short, medium, and longer time-frame participants ensures that trends and cycles will be nested in one another, so that understanding the context of any particular market movement is essential to trading.
 


Study of (Ken Goodrich's)Magic Box theory

Workbench chart  (if StockCharts account): Make timeframes 1,2 or 3 month, drop log scale to linear to watch the MA 2 & 5 cross, Williams crossing above -50% means bulls are in control.
 Important: use indicators with fast parameters if you want to use other plug-ins
 RSI 5
 MACD 5,15,10
 AROON 8
 Full STO 5,3
 Williams 5
 ADX 5
 CMF 15

http://stockcharts.com/h-sc/ui?chart=GDVM,uu%5Bw,a%5Ddhclyiay%5Bdb%5D%5BpB50!b2!b5!d20,2%5D%5Bvc5!c20%5D%5Biut!ub5!ua5,15,10!uv8!lk9!ll5!lc15!lf14!up5,5%5D%5Bj20444984,y%5D&r=3555



Workbench with Thumbnail
Log scale
http://stockcharts.com/h-sc/ui?s=GDVM&p=D&yr=0&mn=3&dy=0&i=p8114168745c&a=635806730&r=1544761759229




Linear scale
https://stockcharts.com/h-sc/ui?s=GDVM&p=D&yr=0&mn=3&dy=0&id=p29397895492&listNum=23&a=1093863074



Suppressed image (no StockCharts account)
http://stockcharts.com/c-sc/sc?chart=GDVM,uu%5Bw,a%5Ddhclyiay%5Bdb%5D%5BpB50!b2!b5!d20,2%5D%5Bvc5!c20%5D%5Biut!ub5!ua5,15,10!uv8!lk9!ll5!lc15!lf14!up5,5%5D%5Bj20444984,y%5D&r=3555

 
 



 

                                                                                                                                                                              Compound chart
 #1. AROON- 8 You watch as the AROON DOWN crosses the 75 down and the AROON UP comes up from zero. Most important. (\0/)
 #2.WILLIAMS%R- 9 You watch the line cross the 50.
 #3.CMF- 15 You will usually only see growth when the CMF is in the negative.
 #4.ADX/DMI-5 You watch as the D+ line either crosses the D-, or crosses above the 20.
 #5.MACD histogram- 5,15,10 You watch the negative bars register -50% smaller then the bar before it, or -50% smaller then the largest in the grouping.
 #6.Full Stoch- 5,3 You watch the fast line cross the slow line while the AROON DOWN(8) crosses the 87.50. Crossing the 20 would be best, when the Williams agrees.
 #7.Bollinger Band 20,2 You watch for the Magic Box to occur when the negative close touches above the lower bolly and the next day’s close to it is positive growth in a white candle.
 #8.RSI 5 you watch as the indicator crosses above the 50 for a quick pop.
 #9.MA(2) Watch the 2 day MA cross above the 5 day MA. That’s helpful.
 #10.MA(2)To sell it just watch the 2 day MA kiss the bottom center of the red candle body.

 

THE MAGIC BOX
 (A) The Magic Box is a pure two-day pattern. Basically the "close" of a red candle printing on or near lower Bollinger Band with the next day printing an "open white candle."

 A gift from The Seasonality Stock Reports Board
 The reason that I named this setup the Magic Box was so that you could relate to it and remember it faster. Without relationship to something, it is nothing to us. It must be something memorable to you before you can set it into your subconscious mind and see it always.
(A1) On day one the Aroon Down is setting at 100 on the indicator and price is near the lower Bollinger Band. The Candlestick is dark-shadowed.
 (A2) On day two, to form the Magic Box, the Aroon Down must drop to 87.50, and price to form a white candle, to complete the box. No other indicator is watched until this occurs for this setup, just the Bollinger Band and the Aroon Down.

 If you see a Magic Box develop, that being, on the first day the Aroon Down going from 100.00 while the close is either on or just above the lower Bollinger Band and the second day the Aroon Down is now 87.50, you have a Magic Box.

 (B) The buy opportunity occurs when the confirmation of two things happens: on day three or few days later the Aroon Down goes to 75.00 and the Williams%R comes above the -50%. That is the buy. The Williams must come through the -50%. It may take more than three days but you must wait for the confirmation of the William%R. I have seen again and again, the Aroon Down come down from 100.00 to zero without the Williams ever crossing the -50%, those are the ones you pass on. There will be no growth when this happens. At most there is consolidation or a small drop. During this process the Aroon Up can rise slowly but without the Williams you have nothing.

 There are other Magic Boxes that develop in a stock's life cycle, too, and they, too, can give great growth. These are the supported median, the floating, and the rising Magic Boxes. The buy-in criteria, though, will remain the same for all of them. The Aroon Down comes to the 75.00 and the Williams crosses the -50%. June 7th, 8th, and 9th accomplish this in the 2007 HGR chart, though the William%R took until June 13th to confirm. You must wait.

 Trading: It is highly recommended that you paper trade the system to familiarize yourself with it thoroughly. As with anything in life nothing is guaranteed, so, always use appropriate stop loss according to your risk tolerance.

 Kenneth J. Goodrich
http://investorshub.advfn.com/SEASONALITY-STOCK-REPORTS-1616/
Example
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=37119243
Sell trigger
https://investorshub.advfn.com/boards/replies.aspx?msg=40130527


Compounding
The main focus here is to compound our gains. Too many people enter the stock market with the intent of trying to hit a home run. Swinging for the fences also gives you a high strike out ratio. It is important to compound your gains and go for the singles and doubles and you will find that you eventually hit triples and home runs as well. The chart below shows how you can turn only 3k into 1 million dollars in 200 steps. So join me in moving up the steps of our compounding gains chart. Compound those gains!
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=125078854 




 

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