TRADING CHARTS_ONLY

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4 Rules For Using THE Most Useful Technical Indicator, Double Bollinger Bands

Rating: 4.1/5 (33 votes cast)

In her new book, The Little Book of Currency Trading, renowned forex analyst Kathy Lien writes:

Of the hundreds f technical indicators out there, the Double Bollinger Bands are hands down my favorite…they provide a wealth of actionable information. They tell me whether a currency pair is in a trend or range, the direction of the trend, and when the trend has exhausted. More importantly, Bollinger Bands also identify entry points and proper places to put a stop.

While Ms Lien refers above to currency trading, her words apply to any other major financial asset to which technical analysis is applied.

Here’s a short summary of how to use Double Bollinger Bands (DBBs). This short version is for those who just need a short review of them, or who have recently viewed our two part video tutorial on them and want a quick review. Those needing more background and a full explanation of DBBs can click on the links at the end of this article to view the videos.

Why Every Serious Investor Or Trader Should Know DBBs

Most experienced traders and investors use a combination of both fundamental and technical analysis. The mix depends greatly on the both personal preferences, and especially on their preferred time frames.

Long Term Investors

They need to consider fundamentals, much more than short term traders, because most fundamental factors take time, sometimes months or many years, to fully exert their influence. For example, the long term fundamentals for Japanese or US bonds may be grim (PIMCO recently dumped their entire portfolio of US bond holdings), however the prices of these assets have yet to reflect the fading likelihood that current investors buying these will actually get the returns they anticipate, as inflation erodes both their principle and income stream. Thus long term investors select their investments more on fundamentals, and then use some technical factors to choose entry and exit points, so DBBs are relevant for them as well, and they should be familiar with the following rules for using them.

Short Term Traders

Those traders who plan to enter and exit within less than one day or just a few days, need to be much more focused on technical indicators shown on charts. While certain kinds of fundamental data like news events can have a strong short term affect on price, short term trends are mostly moved by market sentiment and resulting money flows in and out of an asset from large institutions and short term traders. The only way short term traders can gauge how these forces are likely influence short term price movements over the coming minutes, hours, or days is via technical indicators. Thus it behooves the short term traders to be very familiar with DBBs, and review the rules of their use.

For those who need more background to understand the brief presentation of the below rules, see the videos referenced at the end of this article.

We’ll be referring to the below weekly chart of the S&P 500 that runs from the week of July 2008 – April 3 2011, though the indicator should work on a chart in any time frame for any asset.

ScreenHunter 01 Apr 06 13 28 1024x665 4 Rules For Using THE Most Useful Technical Indicator, Double Bollinger Bands

CHART 1: S&P 500 WEEKLY CHART COURTESYOF ANYOPTION.COM July 18 2008 – April 3, 2011

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The 4 Rules For Using Double Bollinger Bands

RULE 1: GO SHORT WHEN PRICE IS IN OR BELOW THE DOUBLE BB SELL ZONE (BOUNDED BY THE LOWER RED AND YELLOW BOLLINGER BANDS)



As long as price remains within or below the lower 2 BBs, the downward momentum is strong enough so that there is a high probability that the trend will continue. This is the time to enter new short positions. Exit and take profits when price moves above this zone.

For example, looking at the SP 500 index weekly chart, if we zoom in on Q3 of 2008 shown below, from the week of September 7th (down arrow) until the week of December 14th (up arrow), the odds favored maintaining short positions for those trading off weekly charts.



CHART 2: S&P 500 WEEKLY CHART COURTESY OF ANYOPTION.COM

week of Sept. 7th – Dec. 14th

04apr06 1353

Because the downtrend needs strong momentum to enter the buy or sell zones, Double Bollinger Bands are distinctly lagging indicators and thus not suited for catching less sustained though perfectly tradable trends. For example, if you would have solely relied on DBBs during the Greek stage of the EU debt crisis that occurred in the spring of 2010, you would not have gone short the index until the trend was mostly finished.

Note the chart below.



CHART 3: S&P 500 WEEKLY CHART

COURTESY OF ANYOPTION.COM

Week of April 25 – August 1

06apr06 1402

So as good as DBBs are, like any other indicator they need to be used in combination with other technical and fundamental evidence.

RULE 2: GO LONG WHEN PRICE IS IN OR ABOVE THE DOUBLE BB BUY ZONE (BOUNDED BY THE UPPER RED AND YELLOW BOLLINGER BANDS)



As long as price remains within or above the lower 2 BBs, the upward momentum is strong enough so that there is a high probability that the trend will continue higher. This is the time to enter new long positions. Exit and take profits when price moves below this zone.

For example, looking at the SP 500 index weekly chart below, we zoom in on July 27 – Sept. 27 highlighted by the red arrows the odds favored maintaining long positions for those trading off weekly charts. If look at the chart above for the period of July 2008 – Mid March 2011, it’s clear that this indicator would have kept you in for most of the multi-year uptrend and gotten you out before most of the major selloffs played out.



CHART 4: S&P 500 WEEKLY CHART COURTESY OF ANYOPTION.COM

Week of July 27 2009 – Sept. 27 2009

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RULE 3: DON’T TRADE BASED ON DBBs WHEN PRICE IS BETWEEN THE BUY AND SELL ZONES



When price is in the middle zone of the 1 standard deviation Bollinger Bands (in red), the trend isn’t strong enough to trust, so don’t trade it, unless you have enough other fundamental evidence or signals from your other technical indicators that suggest the trend will continue.

See Chart 5 below for examples when this did and didn’t work during the EU Crisis (Greek Stage) of 2010.



Chart 5: S&P 500 WEEKLY CHART – GREEK STAGE OF EU DEBT CRISIS 2010 COURTESY OF ANYOPTION.COM

Red Arrows Highlighting weekly candles of April 25 2010, May 16 2010, Sept. 12 2010

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For example, in late April 2010, according to this Rule 3 I should not have been short until the week of May 16, highlighted by the left-most up arrow.

However, there was a growing chance that the EU might not bail out Greece in time to avoid a market collapse, so I didn’t wait to start taking at least some short positions – the fundamentals (and other technical signals I was watching) were enough to justify ignoring Rule 3.

My fundamental thesis: If the collapse of just 1 major bank (Lehman brothers) crashed markets in September of 2008, imagine what a national default (and wave of defaults that would follow as no one would lend to the other weak EU economies could do.

So that was a classic case of when to ignore rule 3, and of the need to find that balance between using too little evidence to see the full picture, and using so much that it paralyses you and prevents you from taking action. In the spring of 2010 DDBs were just not enough.

However, Rule 3 would have worked well in keeping you out of the choppy range bound action into the spring and early summer of 2010, highlighted by the two red up arrows in Chart 5. It’s harder to trade profitably when there is no clear trend.

RULE 4: MINIMIZE RISK BY WAITING UNTIL PRICE RETRACES TO THE CHEAPER END OF THE BUY OR SELL ZONE, OR TAKE PARTIAL POSITIONS

This rule attempts to reduce the risk of buying at the top or selling at the bottom that comes when chasing a strong trend, while minimizing the risk that instead of catching a bargain, you catch a ‘falling knife.’

This rule is not easy to implement. Your success depends on how well you read the other technical and fundamental evidence, and how well you are able to understand if you’re catching a bargain or a falling knife.

THUS THE KEY QUALIFICATION TO RULE 4: THERE ARE NO MAJOR CONTRADICTIONS FROM OTHER TECHNICAL INDICATORS OR FUNDAMENTAL DATA THAT SUGGEST THE TREND IS IN FACT EXHAUSTED. If there are, stand aside, don’t trade.

For example, look at Chart 6 below.



Chart 6: S&P 500 WEEKLY CHART COURTESY OF ANYOPTION.COM

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The rule worked well if you bought at the cheap end of the buy zone during the week of Sept. 27 2009 (first down red arrow), there you caught a bargain. However if you bought at the close of the week of April 25, 2010, you caught a falling knife, as a threatened Greek default set off a sharp 4 week pullback. The key was to recognize that the fundamentals were so bad that they outweighed the suggested bargain of Rule 4.

What would have saved you? In addition to reasonable stop losses (which we ALWAYS USE, RIGHT?), rule 4 also suggests taking partial positions when entering strong trends, like 1/3rd of your total planned position if you can’t wait for the retracement to the cheaper end of your buy or sell zone, another 1/3rd if/when you get the retracement, and another 1/3rd when if you get a bounce back into the buy or sell zone.

CONCLUSION AND SUMMARY

Double Bollinger Bands are incredibly useful, but like any technical indicator, must be used in combination with other evidence, the precise nature of which depends on your style of trading and timeframe.

Here’s a brief summary of the 4 rules for using DBBs.
•RULE 1: GO SHORT WHEN PRICE IS IN OR BELOW THE DOUBLE BB SELL ZONE ( BOUNDED BY THE LOWER RED AND YELLOW BOLLINGER BANDS)
•RULE 2: GO LONG WHEN PRICE IS IN OR ABOVE THE DOUBLE BB BUY ZONE ( BOUNDED BY THE UPPER RED AND YELLOW BOLLINGER BANDS)
•RULE 3: DON’T TRADE BASED ON DBBs WHEN PRICE IS BETWEEN THE BUY AND SELL ZONES
•RULE 4: MINIMIZE RISK BY WAITING UNTIL PRICE RETRACES TO THE CHEAPER END OF THE BUY OR SELL ZONE, OR TAKE PARTIAL POSITIONS. Qualification: do not attempt ‘bargain hunting’ if there is significant evidence that the trend is not merely testing support but in fact reversing. If evidence suggests a reversal may be forming, then avoid the trade, or take only partial positions until the trend resumes, and use stop losses to minimize damage if in fact the trend you’re playing breaks down.

Want the full story on Double Bollinger Bands? For more details view the following videos.

PART 1 – HOW TO TRADE TRENDS SERIES BOLLINGER BANDS: This one provides background information that those not familiar with Bollinger Bands might need. It includes material on the original single set Bollinger Bands of John Bollinger himself, and how Kathy Lien added a second set of bands to create a more useful tool for trading trends.

PART 2 – HOW TO TRADE TRENDS SERIES BOLLINGER BANDS: This one is a continuation of Part 1.

THE 4 RULES OF HOW TO USE DOUBLE BOLLINGER BANDS: This one is a summary version of Parts 1 & 2, and just focuses on the 4 rules for using Double Bollinger bands, illustrated with examples of when these did and didn’t work on the S&P 500 Weekly chart.

A final note: If you prefer to trade strong trends, consider trading them with binary options. For pure trend traders they can be an ideal complement to your trading, because they simplify much of the risk management decisions that turn winning trades into losers. All you have to do is predict the direction of the trend in your preferred time frame, and even if the trend only moves fractionally in your direction, your profit is usually about 70%, even if you were only trading on an hourly basis.

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reply #2 to Trend1 - as you are aware, I am no longer visiting or reading Glen's board here, so please contact me via email you obtain for me from Glen privately

I do want to complete my communication with you by offering one more item beyond your first hour analysis inquiry:

Robert Peirce helped found this company, and is a well recognized veteran among the more seasoned veteran analytical professionals -

http://cooksonpeirce.com/

over the years, the Power Index concept appears to be an important mix in his assessment criteria for how much longer to remain exposed long or short in the market and when to reverse direction with his exposure or go flat for a period of time.

I do know that John Bollinger has his own development of the Power Index metric data set, and you may want to consider contacting John for cost of obtaining this information within one of his subscription packages -

http://www.grouppower.com/support/?s=market

I am not able to say more without stepping on intellectual property rights, but I mention this to you Trend1 because I understand you to be very conservative and methodical about your assessment of price and indicator trends, and I believe the Power Index data set is right up your alley

as a compliment to the Power Index info. I do recommend you think about a subscription to John Bollinger's Capital Growth Letter, because I personally believe any technician will benefit from the pairing of the Power Index analysis with the CGL specific recommended market exposure symbol selections

http://www.bollingercapital.com/site/resource

in my opinion, some things are worth paying for ... some things
are worth understanding well since we are betting our own money and taking risk

take care, Trend1

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Trend1 - reply from "rimshot"-- best I can do for ideas right now since I have been in full-on work mode today from 4 a.m. until midnight, Trend1 - I need to travel to my other home location where the small and simple book is located in that personal library before I can quote you the book title to the one specific book which provides a description of price bar analysis and clustering patterns using 5-min or 15-min price bars is actionable, based on my experience ...he explains it clearly, but I will tell you that I believe Jay Yu's approach for this core of what you are trying to accomplish is even more reliable for betting real money and money of any size such as 300k or more per trade lot, then you want to learn about the application of mini pups, pups, inverse pups and the stochastic setups that confirm the formations...you can google Jay Yu at Amazon - his first name has alternate spellings.. I have his private email address and can ask Glen to email that to you if you have Glen's email yourself ... give Jay a request and tell him I sent you and ask for a free one week trial to his paid chat room, and you will see him real-time apply the stochastic analysis to trade entry and exit decisions and manage the risk aspect of the decision before finalizing action.

I teamed up with another serious and conservative trader and we learned Jay's methods over an 18-month intensive mutual exchange of charting Jay's methods using stockcharts and software programs ... it was definitely worth our time, and you can start with one of Jay's older books, The Secrets of the Underground Trader - I can snail mail the book to you if you like. Give Glen your address, and I will ask Glen to forward to me so I can mail you the book on loan and you can keep it up to six months...it is hard cover early printing version that I have

more ideas --

Ned Davis’ book -- Being Right (making good predictions) vs. Making Money.

In the first chapter --- he asserts being a good forecaster is not at the heart of making money in the markets.

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Gary Anderson's book - The Janus Factor

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Michael Mauboussin's book - The Success Equation - if interested in determining how much of the trading outcome is due to skill and how much is due to luck. reversion to the mean is thoroughly addressed.

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The mathematical definition of risk is standard deviation:

* an important topic for a trader to both understand and practice habitual discipline

David Salsburg book - The Lady Tasting Tea: How Statistics Revolutionized Science in theTwentieth Century

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Murray Gunn book -

Trading Regime Analysis

is a groundbreaking work on how markets behave and how to profit from this behaviour.

Offers in detail the methods that can be used to identify whether a market is about to start trending or about to enter a period of range trading.

Highlights important applications for this analysis for institutional investors, asset allocators, hedge fund managers and retail investors.

Provides unique content as there are no existing titles on trading regime analysis.

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Walter Deemer - read any of his books

he is a veteran, and very conservation is his approaches ... very good with actionable breadth analysis to support trend staying power assessments for price forecasting

[TREND1]

Richard Rhodes' Trading Rules


I must admit, I am not smart enough to have devised these ridiculously simple trading rules. A great trader gave them to me some 15 years ago. However, I will tell you, they work. If you follow these rules, breaking them as infrequently as possible, you will make money year in and year out, some years better than others, some years worse - but you will make money. The rules are simple. Adherence to the rules is difficult.

"Old Rules...but Very Good Rules"


If I've learned anything in my decades of trading, I've learned that the simple methods work best. Those who need to rely upon complex stochastics, linear weighted moving averages, smoothing techniques, Fibonacci numbers etc., usually find that they have so many things rolling around in their heads that they cannot make a rational decision. One technique says buy; another says sell. Another says sit tight while another says add to the trade. It sounds like a cliche, but simple methods work best.
1.
The first and most important rule is - in bull markets, one is supposed to be long. This may sound obvious, but how many of us have sold the first rally in every bull market, saying that the market has moved too far, too fast. I have before, and I suspect I'll do it again at some point in the future. Thus, we've not enjoyed the profits that should have accrued to us for our initial bullish outlook, but have actually lost money while being short. In a bull market, one can only be long or on the sidelines. Remember, not having a position is a position.

2.
Buy that which is showing strength - sell that which is showing weakness. The public continues to buy when prices have fallen. The professional buys because prices have rallied. This difference may not sound logical, but buying strength works. The rule of survival is not to "buy low, sell high", but to "buy higher and sell higher". Furthermore, when comparing various stocks within a group, buy only the strongest and sell the weakest.

3.
When putting on a trade, enter it as if it has the potential to be the biggest trade of the year. Don't enter a trade until it has been well thought out, a campaign has been devised for adding to the trade, and contingency plans set for exiting the trade.

4.
On minor corrections against the major trend, add to trades. In bull markets, add to the trade on minor corrections back into support levels. In bear markets, add on corrections into resistance. Use the 33-50% corrections level of the previous movement or the proper moving average as a first point in which to add.

5.
Be patient. If a trade is missed, wait for a correction to occur before putting the trade on.

6.
Be patient. Once a trade is put on, allow it time to develop and give it time to create the profits you expected.

7.
Be patient. The old adage that "you never go broke taking a profit" is maybe the most worthless piece of advice ever given. Taking small profits is the surest way to ultimate loss I can think of, for small profits are never allowed to develop into enormous profits. The real money in trading is made from the one, two or three large trades that develop each year. You must develop the ability to patiently stay with winning trades to allow them to develop into that sort of trade.

8.
Be patient. Once a trade is put on, give it time to work; give it time to insulate itself from random noise; give it time for others to see the merit of what you saw earlier than they.

9.
Be impatient. As always, small loses and quick losses are the best losses. It is not the loss of money that is important. Rather, it is the mental capital that is used up when you sit with a losing trade that is important.

10.
Never, ever under any condition, add to a losing trade, or "average" into a position. If you are buying, then each new buy price must be higher than the previous buy price. If you are selling, then each new selling price must be lower. This rule is to be adhered to without question.

11.
Do more of what is working for you, and less of what's not. Each day, look at the various positions you are holding, and try to add to the trade that has the most profit while subtracting from that trade that is either unprofitable or is showing the smallest profit. This is the basis of the old adage, "let your profits run."

12.
Don't trade until the technicals and the fundamentals both agree. This rule makes pure technicians cringe. I don't care! I will not trade until I am sure that the simple technical rules I follow, and my fundamental analysis, are running in tandem. Then I can act with authority, and with certainty, and patiently sit tight.

13.
When sharp losses in equity are experienced, take time off. Close all trades and stop trading for several days. The mind can play games with itself following sharp, quick losses. The urge "to get the money back" is extreme, and should not be given in to.

14.
When trading well, trade somewhat larger. We all experience those incredible periods of time when all of our trades are profitable. When that happens, trade aggressively and trade larger. We must make our proverbial "hay" when the sun does shine.

15.
When adding to a trade, add only 1/4 to 1/2 as much as currently held. That is, if you are holding 400 shares of a stock, at the next point at which to add, add no more than 100 or 200 shares. That moves the average price of your holdings less than half of the distance moved, thus allowing you to sit through 50% corrections without touching your average price.

16.
Think like a guerrilla warrior. We wish to fight on the side of the market that is winning, not wasting our time and capital on futile efforts to gain fame by buying the lows or selling the highs of some market movement. Our duty is to earn profits by fighting alongside the winning forces. If neither side is winning, then we don't need to fight at all.

17.
Markets form their tops in violence; markets form their lows in quiet conditions.

18.
The final 10% of the time of a bull run will usually encompass 50% or more of the price movement. Thus, the first 50% of the price movement will take 90% of the time and will require the most backing and filling and will be far more difficult to trade than the last 50%.


There is no "genius" in these rules. They are common sense and nothing else, but as Voltaire said, "Common sense is uncommon." Trading is a common-sense business. When we trade contrary to common sense, we will lose. Perhaps not always, but enormously and eventually. Trade simply. Avoid complex methodologies concerning obscure technical systems and trade according to the major trends only

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SLA_60_D_W
TSLA_60

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Trading TNA_3_60 and TZA_3_60
Question ?
Does the touch of the LOWER BB(20,3) on the TNA_3
give the lowest BUY on the TNA_60 ?

Answer:
Let's work on this.

[TREND1]

TNA_3 and TZA_3
(1) SELL = Touch of upper BB(20,3)
(2) BUY = Touch of Lower BB(20,3)
More testing required. IMHO.

[TREND1]

TRADING TNA_60 and TZA_60

ENTRY

BUY = LOW RISK
(1) Sto near or below 20
(2) Price near lower BB(20,2)
(3) Break of SEC TREND to UP SIDE
(4) Close above SMA(1,1,H)

EXIT
(1) Touch of upper BB(20,2)
(2) Lower HIGH and with in the BB(20,2)
(3) 2 RED CANDLES (2 RC)
..........................................
GREEN = BUY
RED = SHORT
BLUE = TO CASH
BLACK = STOP
2 RC = Start Sec Trend
2 RC = SELL
1 BC = TOP ?

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Trading TNA_3 and TZA_3
ENTRY
(1) HIGHER LOW INSIDE BB(20,2)
(2) LOWER VOL
(3) SLOW STO(14,1) near 20
(4) STOP just below previous low

EXIT
(1) Move away from BB(20,2)
(2) Slow STO moving down

[TREND1]

Donchian Trading Guidelines

Introduction


First published in 1934, many of the 20 trading guidelines from Richard Donchian are as relevant today as they were during the golden age of technical analysis. Considered by many as the father of trend following, Donchian developed one of the first trend following systems based on two different moving averages, which were cutting edge in the early thirties. Based on his experiences over time, Donchian developed 20 trading guidelines split into two groups: general and technical. The guidelines shown below have been paraphrased for a clearer explanation. The original guides are also shown in the bottom half of this page.

Eleven General Guidelines


1. Be careful buying when the crowd is excessively bullish or selling when the crowd is excessively bearish. Even when the crowd is correct, excessive sentiment in one direction or another can delay a move.

2. When prices trade in a narrow range with little volatility, look for a volume increase to confirm the direction of the next move. Subsequent strength on higher volume is bullish, while subsequent weakness on higher volume is bearish.

3. Let your profits run and cut your losses short. This guideline overrides any other guideline.

4. Trade in smaller amounts during times of uncertainty. Trading losses and whipsaws can be reduced by focusing on solid setups and robust signals.

5. Do not chase a position after a three day move. Wait for a one-day reversal to improve the risk-reward ratio.

6. Use a stop-loss to limit losses and protect accrued profits. Stop-losses should be based on the trading pattern at work. A triangle pattern will have a different stop-loss structure than a rising wedge or head-and-shoulders pattern. 7. Due to the law of percentages, long positions should be larger than short positions during a broad uptrend. This assumes that the upswings will be larger than the downswings as a series of rising peaks and troughs evolves. A short position on a decline from 50 to 40 would produce a 20% profit, but a long position on an advance from 40 to 50 would produce a 25% profit. The percentage gain on advances will be greater and the trading amount should also be greater.

8. Use limit orders when initiating a position. Use market orders when closing a position.

9. Buy securities that are in uptrends and show relative strength. Sell securities that are in downtrends and show relative weakness. These two guidelines are subject to all other guidelines.

10. A broad market advance is more likely to continue when transportation stocks lead (Dow Transports). A broad market advance is suspect when transportation stocks lag.

11. A security's capitalization, its activity level in the marketplace and its trading characteristics are just as important as its fundamentals. (The interpretation of this guideline is rather difficult because it is unclear what Donchian means with "capitalization").

Nine Technical Guidelines


12. A consolidation or sideways trading range after an initial advance often leads to another advance of equal proportions. After this second advance, chartists can expect a counter move and decline back towards the consolidation. Similarly, a consolidation or sideways trading range after an initial decline often leads to another decline of equal proportions. After this second decline, chartists can expect a counter move and advance back towards the consolidation.

13. A long sideways consolidation after an advance marks future resistance. Expect resistance or a bearish reversal when prices decline and then return to this level. A long sideways consolidation after a decline marks future support. Expect support or a bullish reversal when prices advance and then return to this level.

14. Look for buying opportunities when prices decline to a trendline on average or low volume. Conversely, look for selling opportunities when prices advance to a trendline on average or low volume. Be careful if prices stall around the trendline (hug) or if the trendline has been touched too often.

15. Prepare for a bearish trendline break when prices decline to a rising trendline, fail to bounce and subsequently crawl along the trendline. Prepare for a bullish trendline break when prices advance to a falling trendline, hold most of their gains and crawl along the trendline. Repeated bumping of a trendline also increases the chances of a break.

16. Major trendlines define the longer trend. Minor trendlines define the shorter trend. When prices are above a major trendline (rising), use minor trendlines (falling) to define short pullbacks and generate buy signals with upside breaks. When prices are below a major trendline (falling), use minor trendlines (rising) to define short bounces and generate sell signals with downside breaks.

17. Triangles are usually broken on the flat side. This means an ascending triangle is usually broken with an upside breakout, while a descending triangle is usually broken to the downside. Chartists must look for other clues to determine if a triangle signals accumulation or distribution.

18. Look for a volume climax to signal the end of a long move. An extended advance sometimes ends with a volume surge that marks a blow-off . Conversely, an extended decline sometimes ends with a volume surge that marks a selling climax.

19. Not all gaps are filled. Breakaway gaps signal the start of a new trend and are not filled. Continuation gaps mark a continuation of the existing trend and are not filled. Exhaustion gaps mark a trend reversal and are filled. Chartists should not count on a gap being filled unless they can determine what kind of gap it is, which is easier said than done.

20. During an advance, initiate or add to long positions after a one day decline, no matter how small the decline and especially when the decline is on lower volume. During a decline, initiate or add to short positions after a one-day advance, no matter how big the bounce and especially if the bounce is on lower volume.

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SPY_D Lee BOTTOM

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Lee BOTTOM SPX_W

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TSLA_60_D_W
TSLA_60

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Summary of Art Hill's book
Define the Trend and Trade the Trend.
Got it for $9.95 at Stock Charts Store.
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Summary of System
1 Find the Primary Trend. I prefer to use the weekly daily channel.
2 Trade only in the direction of the Primary Trend.
3 Trade only the end of Secondary Trend when you see a confirmation of it's end, such as a break out.

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page 1 To identify trades that make financial sense, traders need to answer the following questions.
1 What is the direction of the bigger trend ?
2 When is a good time to buy or sell within this trend ?
3 What do smaller counter trend movements look like ?
4 How do I know when a counter trend move is ending ?
5 Where do I set my profit target and stop-loss ?
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page 2 TA uses price and indicators to identify trends and forecast price movements in a tradable security.
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page 4 Indicators, by definition ,are derived from price, which means the price data has been processed with a formula.
A moving average is a lagging indicator.
A momentum oscillators like MACD, RSI, STO, etc are leading indicators.
.................................................................................
page 8 While one or two indicators can enhance analysis, three or more will often distort the true picture.
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page 10
The price chart tells us every thing we need to know to take a calculated risk.
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page 10
1 Define the bigger trend.
2 Identify the smaller counter trend.
3.Estimate length of these counter trend moves.
4 Spot price action that signals the end of the counter trend.
5 Set Profit and stop loss levels to assess trade potential
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Page 10 Long positions have a greater chance of success when the trend is UP.
Short positions have a greater chance of success when the trend is DOWN.

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Art Hill's book only mentions a few indicators like MACD and ROC. No mention of RSI
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Art Hill only uses price action in this book
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page 11 Bullish and bearish continuation patterns signal a temporary stop or slow down with in the on going trend.
These patterns provide chartists with an opportunity to buy a stock with less risk and more reward.
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page 12 A position should not be taken until a confirmation is seen. Example: A break out.
....................................................................................................
page 14 This may sound obvious, but chartist should not try to guess the top in an up trend nor a bottom in a down trend.
In other words , chartists should not second guess the market because these trends are there for a reason.
This reason may not be immediately clear, but it will likely manifest itself in the future.
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page 31 How do you know when the trend has actually reversed ?
The first sign of weakness occurs when prices fail to exceed their prior peaks.
Despite reduced buying pressure, a down trend does not officially start until selling pressure increases
enough to push prices below the prior trough.
A lower peak and a lower trough signal that selling pressure has triumphed and a down trend has started.
...........................................................
page 25 Defining trend direction is the first step to seeing what is actually there.

Get the trend correct and your changes of success increase.

Get the trend wrong and your chances of success decrease.

As the dominant force, the trend is expected to continue until proven otherwise with a price reversal.

In other words, forecast is for higher prices when the trend is up.

While the trend will reverse one day, reversals are more the exception and continuations are more the norm.

A trend in motion stays in motion.

Trades have a much better chance of making money by betting on trend continuations instead of trend reversals.

This is the essence of trend following.

...............................................................................

page 29 Though certainly not perfect, peak and trough analysis is often superior to moving average analysis for trend
identification.
My comment: And confirmation of other methods.
.....................................................
page 35 BULLISH REVERSAL PATTERNS
1 inverse H&S
2 Double bottoms
3 Rectangle bottoms
4 Symmetrical triangles
..............................................
page 37 There are 3 clear processes to a reversal:
1 Prices were trending down and selling pressure dominates.
2 Prices moved sideways. Except when using channels.
3 Prices break resistance as buying pressure over powers selling pressure.
NOTE: The pattern is not confirmed until the break out.
......................................................
page 45 Rectangles
Must have a least 2 peaks and 2 troughs.
..........................................
page 51 Calculating the Reward-to-Risk Ratio
The reward-to-risk is based on price target and stop loss.
It is important to note that price targets are "soft" estimates.
Prices will reach and exceed some price targets, but they will also fall short on occasion.
Once the price target is set, the chart will change as new price bars are added.
Chartists must continually reassess the price chart, price target, and stop loss.
Adjustments will be required to cut losses, maximize profits and prevent profits from slipping.
.........................................................
page 52 One of many examples of how targets and stop losses are used to calculated Reward-to-Risk ratio
is show on chart below.
PLD_D

.
..........................................................
page 59 Taking advantage of throwbacks
Classical TA teaches the broken resistance turns into support.

page 61 Throwbacks often happen after break outs.
Giving traders a second chance to buy because broken resistance turns into support.
page 59 Taking Advantage of Throwbacks see example below
XOM_D

...............................................................
page 64 Validating Patterns with GAPS
A price gap should be considered in the context of the bigger picture.
Below is an example.
ACN_D

............................................................
Chapter 6 Bullish Continuation Patterns
page 106 A decline back to the prior low would indicate that another pattern is taking shape.
page 107 A 50% retrace of a prior advance is a healthy.
Two steps up and one step back is healthy.
..............................................................
Chapter 7 Bearish Continuation Patterns
.............................................................
Chapter 8 Esimating Reversal Zones
page 159
Estimating Reversal Zones
(1) Dow Theory asserts that secondary moves retrace 33% to 66%
(2) Chartist can use Fib Retracement of 38.2% to 61.8%
..................................................
page 162 In an imperfect world, it does not make sense to use one retracement to anticipate the end of a secondary price movement.
Instead chartists can define a reversal zone.
A move into this zone increases the chances that the secondary move is nearing an end.
The natural starting point for the zone is 50 percent because it is between the two Fibonacci numbers 38 and 61% and the two Dow Theory numbers 33 and 66 %.
In fact 50 percent represents the sweet spot because it is the ideal retracement for a trend, taking two steps forward and one step back wards.
These Zones are not fail proof. They mainly alert the chartists to pay closer attention to price action.
Once the trade begins with a break out , and the trend is still in place.
A new high can be expected.
.........................................................................................

Page 171 A trader who does not use stops will eventually take the mother of all losses.
............................................................
*****CURRENT SYSTEM:
1 Define the PRIMARY trend with weekly, daily and 60 minute channels. GREEN
2 Identify the SECONDARY counter trend with channel and/or trend line. RED
3.Estimate reversal area of counter moves using fib 38 to 62 %
4 Wait for break out of SECONDAY trend.
5 Determine entry based on GAP OPEN and/or break of trend line.
6 Estimate if there is going a PULLBACK.
7 Place STOP LOSS at recent low.
8 Calculate target and if RRR > 2.
9 EXIT trade at 2 red candles or other indicators.
..........................................................
*****Buying opening GAP RULES
(1) Only buy opening gaps in the direction of PRI trend
and only if there is break of SEC TREND.
(2) If opening gap has no break of SEC TREND, expect PULLBACK.

NOTE: Limited back testing.
.........................................................
RRR1 = FIB 50%
RRR2 = FIB 33%
RRR3 = FIB 25%

[TREND1]

Summary of Art Hill's book
Define the Trend and Trade the Trend.
Got it for $9.95 at Stock Charts Store.
................................................
Summary of System
1 Find the Primary Trend. I prefer to use the weekly daily channel.
2 Trade only in the direction of the Primary Trend.
3 Trade only the end of Secondary Trend when you see a confirmation of it's end, such as a break out.

................................................
page 1 To identify trades that make financial sense, traders need to answer the following questions.
1 What is the direction of the bigger trend ?
2 When is a good time to buy or sell within this trend ?
3 What do smaller counter trend movements look like ?
4 How do I know when a counter trend move is ending ?
5 Where do I set my profit target and stop-loss ?
..................................................................
page 2 TA uses price and indicators to identify trends and forecast price movements in a tradable security.
..............................................................
page 4 Indicators, by definition ,are derived from price, which means the price data has been processed with a formula.
A moving average is a lagging indicator.
A momentum oscillators like MACD, RSI, STO, etc are leading indicators.
.................................................................................
page 8 While one or two indicators can enhance analysis, three or more will often distort the true picture.
................................................................
page 10
1 Define the bigger trend.
2 Identify the smaller counter trend.
3.Estimate length of these counter trend moves.
4 Spot price action that signals the end of the counter trend.
5 Set Profit and stop loss levels to assess trade potential

.................................................................
Art Hill's book only mentions a few indicators like MACD and ROC. No mention of RSI
..............................................
Art Hill only uses price action in this book
.....................................
page 11 Bullish and bearish continuation patterns signal a temporary stop or slow down with in the on going trend.
These patterns provide chartists with an opportunity to buy a stock with less risk and more reward.
....................................................................................................
page 12 A position should not be taken until a confirmation is seen. Example: A break out.
....................................................................................................
page 14 This may sound obvious, but chartist should not try to guess the top in an up trend nor a bottom in a down trend.
In other words , chartists should not second guess the market because these trends are there for a reason.
This reason may not be immediately clear, but it will likely manifest itself in the future.
.............................................................................
page 31 How do you know when the trend has actually reversed ?
The first sign of weakness occurs when prices fail to exceed their prior peaks.
Despite reduced buying pressure, a down trend does not officially start until selling pressure increases
enough to push prices below the prior trough.
A lower peak and a lower trough signal that selling pressure has triumphed and a down trend has started.
...........................................................
page 25 Defining trend direction is the first step to seeing what is actually there.

Get the trend correct and your changes of success increase.

Get the trend wrong and your chances of success decrease.

As the dominant force, the trend is expected to continue until proven otherwise with a price reversal.

In other words, forecast is for higher prices when the trend is up.

While the trend will reverse one day, reversals are more the exception and continuations are more the norm.

A trend in motion stays in motion.

Trades have a much better chance of making money by betting on trend continuations instead of trend reversals.

This is the essence of trend following.

...............................................................................

page 29 Though certainly not perfect, peak and trough analysis is often superior to moving average analysis for trend
identification.
My comment: And confirmation of other methods.
.....................................................
page 35 BULLISH REVERSAL PATTERNS
1 inverse H&S
2 Double bottoms
3 Rectangle bottoms
4 Symmetrical triangles
..............................................
page 37 There are 3 clear processes to a reversal:
1 Prices were trending down and selling pressure dominates.
2 Prices moved sideways. Except when using channels.
3 Prices break resistance as buying pressure over powers selling pressure.
NOTE: The pattern is not confirmed until the break out.
......................................................
page 45 Rectangles
Must have a least 2 peaks and 2 troughs.
..........................................
page 51 Calculating the Reward-to-Risk Ratio
The reward-to-risk is based on price target and stop loss.
It is important to note that price targets are "soft" estimates.
Prices will reach and exceed some price targets, but they will also fall short on occasion.
Once the price target is set, the chart will change as new price bars are added.
Chartists must continually reassess the price chart, price target, and stop loss.
Adjustments will be required to cut losses, maximize profits and prevent profits from slipping.
.........................................................
page 52 One of many examples of how targets and stop losses are used to calculated Reward-to-Risk ratio
is show on chart below.
PLD_D

.
..........................................................
page 59 Taking advantage of throwbacks
Classical TA teaches the broken resistance turns into support.

page 61 Throwbacks often happen after break outs.
Giving traders a second chance to buy because broken resistance turns into support.
page 59 Taking Advantage of Throwbacks see example below
XOM_D

...............................................................
page 64 Validating Patterns with GAPS
A price gap should be considered in the context of the bigger picture.
Below is an example.
ACN_D

............................................................
Chapter 6 Bullish Continuation Patterns
page 106 A decline back to the prior low would indicate that another pattern is taking shape.
page 107 A 50% retrace of a prior advance is a healthy.
Two steps up and one step back is healthy.
..............................................................
Chapter 7 Bearish Continuation Patterns
.............................................................
Chapter 8 Esimating Reversal Zones
page 159
Estimating Reversal Zones
(1) Dow Theory asserts that secondary moves retrace 33% to 66%
(2) Chartist can use Fib Retracement of 38.2% to 61.8%
..................................................
page 162 In an imperfect world, it does not make sense to use one retracement to anticipate the end of a secondary price movement.
Instead chartists can define a reversal zone.
A move into this zone increases the chances that the secondary move is nearing an end.
The natural starting point for the zone is 50 percent because it is between the two Fibonacci numbers 38 and 61% and the two Dow Theory numbers 33 and 66 %.
In fact 50 percent represents the sweet spot because it is the ideal retracement for a trend, taking two steps forward and one step back wards.
These Zones are not fail proof. They mainly alert the chartists to pay closer attention to price action.
Once the trade begins with a break out , and the trend is still in place.
A new high can be expected.
.........................................................................................

Page 171 A trader who does not use stops will eventually take the mother of all losses.
............................................................
*****CURRENT SYSTEM:
1 Define the PRIMARY trend with weekly, daily and 60 minute channels. GREEN
2 Identify the SECONDARY counter trend with channel and/or trend line. RED
3.Estimate reversal area of counter moves using fib 38 to 62 %
4 Wait for break out of SECONDAY trend.
5 Determine entry based on GAP OPEN and/or break of trend line.
6 Estimate if there is going a PULLBACK.
7 Place STOP LOSS at recent low.
8 Calculate target and if RRR > 2.
9 EXIT trade at 2 red candles or other indicators.
..........................................................
*****Buying opening GAP RULES
(1) Only buy opening gaps in the direction of PRI trend
and only if there is break of SEC TREND.
(2) If opening gap has no break of SEC TREND, expect PULLBACK.

NOTE: Limited back testing.
.........................................................
RRR1 = FIB 50%
RRR2 = FIB 33%
RRR3 = FIB 25%

[TREND1]

Summary of Art Hill's book
Define the Trend and Trade the Trend.
Got it for $9.95 at Stock Charts Store.
................................................
Summary of System
1 Find the Primary Trend. I prefer to use the weekly and daily channels.
2 Trade only in the direction of the Primary Trend.
3 Trade only the end of Secondary Trend when you see a confirmation of it's end, such as a break out.

................................................
page 1 To identify trades that make financial sense, traders need to answer the following questions.
1 What is the direction of the bigger trend ?
2 When is a good time to buy or sell within this trend ?
3 What do smaller counter trend movements look like ?
4 How do I know when a counter trend move is ending ?
5 Where do I set my profit target and stop-loss ?
..................................................................
page 2 TA uses price and indicators to identify trends and forecast price movements in a tradable security.
..............................................................
page 4 Indicators, by definition ,are derived from price, which means the price data has been processed with a formula.
A moving average is a lagging indicator.
A momentum oscillators like MACD, RSI, STO, etc are leading indicators.
.................................................................................
page 8 While one or two indicators can enhance analysis, three or more will often distort the true picture.
................................................................
page 10
1 Define the bigger trend.
2 Identify the smaller counter trend.
3.Estimate length of these counter trend moves.
4 Spot price action that signals the end of the counter trend.
5 Set Profit and stop loss levels to assess trade potential

.................................................................
Art Hill's book only mentions a few indicators like MACD and ROC. No mention of RSI
..............................................
Art Hill only uses price action in this book
.....................................
page 11 Bullish and bearish continuation patterns signal a temporary stop or slow down with in the on going trend.
These patterns provide chartists with an opportunity to buy a stock with less risk and more reward.
....................................................................................................
page 12 A position should not be taken until a confirmation is seen. Example: A break out.
....................................................................................................
page 14 This may sound obvious, but chartist should not try to guess the top in an up trend nor a bottom in a down trend.
In other words , chartists should not second guess the market because these trends are there for a reason.
This reason may not be immediately clear, but it will likely manifest itself in the future.
.............................................................................
page 31 How do you know when the trend has actually reversed ?
The first sign of weakness occurs when prices fail to exceed their prior peaks.
Despite reduced buying pressure, a down trend does not officially start until selling pressure increases
enough to push prices below the prior trough.
A lower peak and a lower trough signal that selling pressure has triumphed and a down trend has started.
...........................................................
page 25 Defining trend direction is the first step to seeing what is actually there.

Get the trend correct and your changes of success increase.

Get the trend wrong and your chances of success decrease.

As the dominant force, the trend is expected to continue until proven otherwise with a price reversal.

In other words, forecast is for higher prices when the trend is up.

While the trend will reverse one day, reversals are more the exception and continuations are more the norm.

A trend in motion stays in motion.

Trades have a much better chance of making money by betting on trend continuations instead of trend reversals.

This is the essence of trend following.

...............................................................................

page 29 Though certainly not perfect, peak and trough analysis is often superior to moving average analysis for trend
identification.
My comment: And confirmation of other methods.
.....................................................
page 35 BULLISH REVERSAL PATTERNS
1 inverse H&S
2 Double bottoms
3 Rectangle bottoms
4 Symmetrical triangles
..............................................
page 37 There are 3 clear processes to a reversal:
1 Prices were trending down and selling pressure dominates.
2 Prices moved sideways. Except when using channels.
3 Prices break resistance as buying pressure over powers selling pressure.
NOTE: The pattern is not confirmed until the break out.
......................................................
page 45 Rectangles
Must have a least 2 peaks and 2 troughs.
..........................................
page 51 Calculating the Reward-to-Risk Ratio
The reward-to-risk is based on price target and stop loss.
It is important to note that price targets are "soft" estimates.
Prices will reach and exceed some price targets, but they will also fall short on occasion.
Once the price target is set, the chart will change as new price bars are added.
Chartists must continually reassess the price chart, price target, and stop loss.
Adjustments will be required to cut losses, maximize profits and prevent profits from slipping.
.........................................................
page 52 One of many examples of how targets and stop losses are used to calculated Reward-to-Risk ratio
is show on chart below.
PLD_D

.
..........................................................
page 59 Taking advantage of throwbacks
Classical TA teaches the broken resistance turns into support.

page 61 Throwbacks often happen after break outs.
Giving traders a second chance to buy because broken resistance turns into support.
page 59 Taking Advantage of Throwbacks see example below
XOM_D

...............................................................
page 64 Validating Patterns with GAPS
A price gap should be considered in the context of the bigger picture.
Below is an example.
ACN_D

............................................................
Chapter 6 Bullish Continuation Patterns
page 106 A decline back to the prior low would indicate that another pattern is taking shape.
page 107 A 50% retrace of a prior advance is a healthy.
Two steps up and one step back is healthy.
..............................................................
Chapter 7 Bearish Continuation Patterns
.............................................................
Chapter 8 Esimating Reversal Zones
page 159
Estimating Reversal Zones
(1) Dow Theory asserts that secondary moves retrace 33% to 66%
(2) Chartist can use Fib Retracement of 38.2% to 61.8%
..................................................
page 162 In an imperfect world, it does not make sense to use one retracement to anticipate the end of a secondary price movement.
Instead chartists can define a reversal zone.
A move into this zone increases the chances that the secondary move is nearing an end.
The natural starting point for the zone is 50 percent because it is between the two Fibonacci numbers 38 and 61% and the two Dow Theory numbers 33 and 66 %.
In fact 50 percent represents the sweet spot because it is the ideal retracement for a trend, taking two steps forward and one step back wards.
These Zones are not fail proof. They mainly alert the chartists to pay closer attention to price action.
Once the trade begins with a break out , and the trend is still in place.
A new high can be expected.
.........................................................................................

Page 171 A trader who does not use stops will eventually take the mother of all losses.
............................................................
*****CURRENT SYSTEM:
1 Define the PRIMARY trend with weekly, daily and 60 minute channels. GREEN
2 Identify the SECONDARY counter trend with channel and/or trend line. RED
3.Estimate reversal area of counter moves using fib 38 to 62 %
4 Wait for break out of SECONDAY trend.
5 Determine entry based on GAP OPEN and/or break of trend line.
6 Estimate if there is going a PULLBACK.
7 Place STOP LOSS at recent low.
8 Calculate target and if RRR > 2.
9 EXIT trade at 2 red candles or other indicators.
..........................................................
*****Buying opening GAP RULES
(1) Only buy opening gaps in the direction of PRI trend
and only if there is break of SEC TREND.
(2) If opening gap has no break of SEC TREND, expect PULLBACK.

NOTE: Limited back testing.
.........................................................

[TREND1]

Conceptually it makes sense...no issues, but you know I have worked for a long long time with averages and timeframe linking, and the one deviation = what I found on 60 minute that the 20 is approximately ok with daily 3 more often than not...(more often than not is the operative phrase here) because there is a slippage..but once you move to anything lesser than 60 minute and start increasing the moving average..the relationship is less clear and the slippage tremendously increases. this is linking a uniform timeframe path (6.5 hours) with a non uniform path (like an average). Two variables:

1. The longer the timeframe departure from the daily timeframe=slippage increases
2. The higher the difference between the 3 on daily and the average (anything above 20 here)..the more the slippage..

this does not apply to the CCI cycles on your 60 minutes chart cause the difference is small between both averages and timeframes.

These are objective findings from measurement of the values for quite sometime..So I have a technical disagreement on this.

Have one or two more messages left ...LOL

[TREND1]

Ziko's...SPX-- Multi Time-Frame Analysis and Trading system
...I think Alex has a couple more charts to add for this set of charts.
DO you want to make any edits...on what you wrote...?...
SPX-- Multi Time-Frame Analysis and Trading system.

Tools/Indicators: CCI/RSI/BB/Moving averages (Simple+Exponential), ULT

Systems achieves both (1) Trend Identification and Following, AND (2) Mean Reversion

Volatility and Direction of move is captured (1) at the extreme points: when a fat tail risk event is crystalised (leptokurtosis or non-normal distribution). (2) Normal volatility levels are also captured but to a lesser extent.

Following are the time frames from monthly to 5 minutes.

System is based on RSI and CCI (dynamic and standard). Depending on the level of interest, I will explain each indicator of those (as I did with dynamic CCI earlier). Price goes above 10.1 upper band=equivalent to CCI 10 overbought level and vice versa. Price goes above 20.1=equivalent to CCI 20 overbought level and the reverse is true.

This has been tested, refined over time and has been working for me.

Each bigger time frame dwarfs the one below in terms of the length of the move. Daily chart is king, (it is the mean chart. Most profitable trades is when daily signals (weekly going along) and hourly says yes. Most powerful moves occur when all time frames signal together. You can trade individual timeframes in isolation, but need to look at one timeframe above and one timeframe below for proper positioning.

Each CCI represents a moving average...and each BB with the same value represents the deviation of this moving average from the mean. Larger moving averages, like larger timeframes..are more significant than smaler ones. But it is the smaller averages and time frames that give you the triggers.

Two trades:

1. Position trade with the direction of the daily
2. Swing trades which can range from a few minutes, intraday to a couple of days or a bit more. trade your own style and time frame tolerance. Always trade in the direction of the daily even for short term trades...if you really have to go against the daily signal..be nimble..and get out quick. Average True range or normal daily moves on SPX are 15 points. Of course this range inceases when volatility increases like October 2011 for example. Kiy will explain more on why the first 10 points are noise.

Provided you have the daily cover (i.e direction)..you can front run daily by a signal from 15 minutes. Signal migration from 15 to 30 to 60 is essential for trades. When the timeframe has triggered, (steps 1 to 3 depending on your risk tolerance) you move to the higher time frame...and stay with the trade as long as the signal is valid...stay with the trade..most important aspect.

5 minutes chart is just there for position optimisation,,i.e...refining entry price to a point or two. Kiy will have more to say on this.

Remember, anything within the one deviation is fair value, dynamic equilibrium...only when you move out of the one deviation things get interesting..psychology of the crowds in action is triggered outside of teh one deviation if you will.

Short trade -

Signal is generated when (1) a reaction is obtained from price re-entering BB10.1 (upper band), AND (2) price going below EMA 3 on daily. Second level of confirmation is when EMA 3 goes below EMA 5, AND (2) price goes through BB 10.2-Third confirmation is when EMA 3 and EMA 5 go below EMA 10. Fourth confirmation is when the three moving averages cross center line of BB 10.1/20.1 AND price of course has already gone below center line. Fifth confirmation is when MA 10 goes below MA 20. As long as EMA 3 is below 5 you remain short until price goes below 10.1 and 10.2 lower bands. At this time CCI is oversold, first alert is when price crosses 10.1 lower band upwards and goes out of oversold....and the chain is reversed.


Long trade is the opposite of the above.


I usually enter a 1/3 of the position with step 1, a 1/3 at step 2, and the last third at step 3.

The below are live charts..i.e. they will update as you go..I like big charts lol..sorry about that

I hope the above is useful and it is my contribution to the board.

Enjoy

[TREND1]

TSLA_60


TSLA_D


TSLA_W

[TREND1]

FSLR_D
[img][/img]

[TREND1]

MT_W

[TREND1]

MT_W

[TREND1]

DM SYSTEM
these_are_my_words on DeMark back in October 2003

in a few later years when i was forecasting stocks on this board i used DeMark methodology and those of you that were around in those days and some of you with membership status may search the board for examples. problem is ihub censors.

this is what i copied from this board in October 2003
============================================
============================================
This is a very short writeup in my words, no Trade Mark words.

Part I, for a Sell, there must be 9 consecutive days up, each day greater than the close the day 4 days before.

Part II, the intra day price range of the 8th or 9th day must intersect the price range of any of the days 3 or more days before that day. (If not then, the 10th must intersect the price range of any of the days 3 or more days before. Etc.. until fulfilled.)

Part III, after parts I and II are completed, there must be 13 not necessarily consecutive days where the close is greater than the close, 2 days before.

=================================
For a Buy, insert the words, less than, instead of greater than.
================================

It is written up with examples and his Trade Mark list of words in his book "The New Science of Technical Analysis" by Thomas DeMark.
=================================

It is not something to toy with until you are comfortable with trading as the stock can continue on the end, running up, so you must use stops, or wait to step in.

However, once signal is given you know if you are playing the other side, you better be very careful. In that context i think it is very important for beginners to know there are signals that may be counter to what they are planning to do.
============================================
============================================

[TREND1]

FSLR_D

[TREND1]

MSPD_D

[TREND1]

AAPL_D_SWING_POINTS

[TREND1]

Alerts

RUT > 830.55 HH
RUT trigger 818.90
SPX > 1434.27 HH
SPX TRIGGER 1411.63
TZA TRIGGER 15.33

[TREND1]

Basic Rules for JPS (Just Plain Stochastics) stochastic (21,3,7)

Signals only valid at end of hour bars Long - Stoc main line rises above 20 or cross over of Stoc lines between 20-80 Short- Stoc main line drops below 80 or cross over of Stoc lines between 20-80

[TREND1]

TREND_INDICATORS_2007_to_2012
.
SPX_D_2010-2012

.
SPX_D_2007_2009

[TREND1]

TOPS_BOTTOMS_INDICATORS_2007_to_2012
.
SPX_D_2010_2012

.
SPX_2007_2009

[TREND1]

RUT_D_BOTTOM_INDICATORS
.
07_RUT_D_$CPC:$RHCOMPQ

.
08_RUT_D_$NAAD_MA(13)

.
09_RUT_D_ROC(9)

[TREND1]

SPX_D_2007_TO_2012
.
SPX_D_2007

.
SPX_2008

.
SPX_D_2009

.
SPX_D_2010

.
SPX_D_2011

.
SPX_D_2012

[TREND1]

Happy Family with 1.00 % PNF
.
SPX

.
RUT

.
NDX

.
DOW JONES

.
NASDAQ

.
NYSE

.
Wilshire 5000

.
TRANS

[TREND1]

SPY_D_GAPS

[TREND1]

Video: Where Did the Debt Come From?

http://www.americanprogress.org/issues/economy/news/2012/10/24/42577/video-where-did-the-debt-come-from/

[TREND1]

Happy Family Weekly 6 YEARS with S&R
.
SPX_W

.
RUT_W

.
NDX_W

.
DOW JONES_W

.
NASDAQ_W

.
NYSE_W

.
Wilshire 5000 _W

.
TRANS_W

[TREND1]

Duma Rules
The rules are in 62829 posted way back in Oct. They were for ND (No Delay) and SR (Support/Resistance) versions. I have since locked in on a version that uses the basic rules with just a check on the 3min chart to make sure one is not trading into a mini reverse trend.

The signal on Nov 5th is a good example of how I am using the 3min chart. When the long signal came at 1pm, the bar was red indicating something was not quite right. A quick check of the 3min chart showed that MACD & Stoc were just about to bottom out. In actual trading, I would have probable waited until I got a MACD cross which would have been at 1:09 81.52. 1pm price was 81.44 which is what I logged. The key difference here that if I had been trading with support/resistance, the first minor resistance point would have been 81.65 and the second 81.77. Much better to enter early 81.52 and bail around 81.39 if prices reverse.

This is starting to be more of my game plan for entries. Enter as early as it seems reasonable safe which provides much closer stops. Sorta of a swing trade idea. This is the best idea I have been able to come up with for not just taking the signals blind on the hour, but to add a small amount of caution to them.

I will add this post in the iBox on the SR60JPS chart headline.

Basic Rules for JPS (Just Plain Stochastics) stochastic (21,3,7)

Signals only valid at end of hour bars Long - Stoc main line rises above 20 or cross over of Stoc lines between 20-80 Short- Stoc main line drops below 80 or cross over of Stoc lines between 20-80

[TREND1]

ELECTION 2012
http://www.intrade.com/v4/misc/electoral-map/

[TREND1]

Alerts
RUT 807.24
SPX 1403.28
TZA 14.43
TZA 16.44

[TREND1]

RUT_TNA_TZA_SHORT_TERM_RUT_MID_LONG TERM
.
RUT_SHORT_TERM

.
TNA_SHORT_TERM

.
TZA_SHORT_TERM

.
RUT_MID_TERM

.
RUT_LONG_TERM

[TREND1]

SPX_SSO_SDS_SHORT_SPX_MID_LONG_TERM
.
01_SPX_60_SHORT_TERM

.
02_SSO_60_SHORT_TERM

.
03_SDS_60_SHORT_TERM

.
04_SPX_D_MID_TERM

.
05_SPX_W_LONG_TERM

[TREND1]

TZA_D

[TREND1]

RUT_D_INDICATORS
.
01_RUT_D_STO(5,1)_SHORT_TERM

.
02_RUT_D_VTX(20)_MID_TERM

.
03_RUT_D_AROON(20)_MID_TERM

.
04_RUT_D_MACD_MID_TERM

.
05_RUT_D_50X200_EMA_LONGER TERM

[TREND1]

RUT_D_INDICATORS

.
RUT_D_MACD

.
RUT_D_VTX(20)

.
RUT_D_AROON(20)

.
RUT_D_STO(5,1)MONEY WAVE

.
RUT_D_50X200 EMA (LONGER TERM )

[TREND1]

SPY_SECTORS 1/3 % PNF
.

.

.

.

.

.

.

.

.

.

[TREND1]

Duma's Current Rules
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=80651870

[TREND1]

AAPL_D

[TREND1]

SPX_SSO_SDS_SHORT_SPX_MID_LONG_TERM
.
01_SPX_60_SHORT_TERM

.
02_SSO_60_SHORT_TERM

.
03_SDS_60_SHORT_TERM

.
04_SPX_D_MID_TERM

.
05_SPX_W_LONG_TERM

[TREND1]

RUT_TNA_TZA_SHORT_TERM_RUT_MID_LONG TERM
.
RUT_SHORT_TERM

.
TNA_SHORT_TERM

.
TZA_SHORT_TERM

.
RUT_MID_TERM

.
RUT_LONG_TERM

[TREND1]

RUT_60_D_W_M_NORTHAM
.
RUT_60

.
RUT_D

.
RUT_W

.
RUT_M