Taylor Trading Technique

[WHY? 16]

Keep it simple guys Taylor didn't need all that nor did he have the computer. He just sought to capture the main trend each day. He woudn't have known what you guys is a talkin bout.

[WHY? 16]

Best to cover crgn at .98 Only .02 captured on the decline but decline was too slow.

5000 shares profit 100.00 minus comm/10,000 shares 200.00 minus comm

 

Best to cover MCZ at 1.15 Only .02 profit but decline is too slow. Best not to hold overnight. 5000 @ .02 150.00 - comm or 10,000 = 200.00 minus comm. Not bad for borrowing a penny stock for a few hours.

[WHY? 16]

Trading pennies via a la taylor mode

Summary of the penny stock plays today - 5000 shares

 

CRGN .02 share - 100.00 clear minus comm

 

GNTA - No play

 

IMH - .07 share 350.00 clear minus comm

 

MCZ - .02 share 100.00 minus comm

 

TOTAL 550.00 minus comm (3 plays) on these risky risky penny stocks!

 

Great Rate of Return on capitol invested.

 

Summary if 10,000 shares

 

CRGN .02 share 200.00 minus comm

 

GNTA - no play

 

IMH .07 share 700.00 minus comm

 

MCZ .02 share 200.00 minus comm

 

TOTAL 1100.00 on 3 plays in these risky risky risky stocks daytrading them via taylor mode. Great rate of return on capitol.

 

Much more could have been made in IMH today as it traded as low as .94 but the idea in the pennies is to capture a slice of the range FAST and get out of them. On a buy day they can be held overnight if the close appears it will be in ones favor.

 

Much money can be extracted from the markets daytrading pennies stress free ...well almost...even though most traders consider them way to risky to trade. I consider them way to risky to invest in but a cinch to daytrade! Done it many, many, many times. Plus they give you a great rate of return on the capitol invested. Oh well... I am probably in the doghouse now with this forum for even mentioning pennies..seems like you automatically get demoted in the minds of traders if they ever hear you mention about trading pennies. I could care less. A dime is dime if I get from a penny or from a 190.00 share stock. Makes no difference to me. Except, that multiple penny stock trades a day allows one to spread capitol out and put what would go into one stock into several thus creating a better probability of making some money. So pennies are hated by the trading world. Again "i don't care". What works, works.

[Dogpile 10]

if todays VWAP > yesterdays VWAP, a big correction is a potential buy.

 

-----

 

this was theme for day... I made a bunch on short-side... tried long-side but it chopped too much and only made a little there... tried short-side again and lost a little bit and missed the big move up. on to tomorrow.

[WHY? 16]

-----

 

this was theme for day... I made a bunch on short-side... tried long-side but it chopped too much and only made a little there... tried short-side again and lost a little bit and missed the big move up. on to tomorrow.

Glad to hear that. The bias was the short side (better as a SS day than a buy day) even though the range was narrow. Sometime later today I will look at the ES in my software and see what I come up with. Taylor would call tomm 10-24 a buy day with a shorting opportunity and a possible long too. Some strenght came into the market but wasnt alot. Dogpile what kind of vol figures you get today? Total and concentrated?

[Dogpile 10]

in my view, we have a potential breakout set-up for tomorrow. The daily chart shows a day with a higher low than the 3-day low and a lower high than the 3-day high. this forms a bit of a triangle. On a 15-minute chart, we have a 'low adx' set-up -- which is generally a precursor to a directional move the next day. I will look for either 'range expansion off opening price' or will look to play the first 'flag' that sets up once a directional move begins with strong momentum.

 

We do have 2 consecutive 'low to high' days so I am also looking for a high to low' day. Monday looks like the buy day, Tuesday the 'buy the higher low day' (consistent with a 'buy day+1' -- which Taylor called a 'sell day'). The breakout set-up is the dominant thing though, in my view.

[Dogpile 10]

here is the 15-min chart. can see low ADX on the bottom. Can see there are 2 green bars which indicate 'low to high' (green) or 'high to low' (red) days.

 

note that there was a lot of congestion today in the 1521.00 area so I will not be inititating shorts in that area unless we break below that first with momentum -- then short is ok with a stop somewhere well-above 1521.00.

[WHY? 16]

Here are some Taylor calls I am posting for price action tomm 10-24

 

1) ASTF Taylor Buy day - Buy at 1.10 to 1.11 if low made first. If looks like it will close near high hold the long and sell on 10-25. If high is made first on 10-24 then short at 1.16 to 1.18 try to cover same day. If both are made by noon do both.

 

2) CRGN Taylor BUY DAY - Short at 1.00 to 1.02 if high made first. Cover same day. If low is made first buy at .95 to .97. Sell longs same day on a good rally or hold for next day if it looks like it will close high. If both made by noon, then do both.

 

3) GE Taylor Short Sell day - Short at 40.56 to 40.63 Cover same day on any decline.

 

4) INSM Taylor Buy day - Buy if low made first at 89 to 91. Sell the longs on any good rally or hold for next day if it looks like it will close high. If high made first short at 1.00 to 1.02. Cover same day. If both made by noon do both.

 

5) MOVI - Taylor Sell day - Possible BV made early in session. If a BV is made go long once tape indicates a bottom is made on any low under .17. The sell out the same day on any penetration of .17 or if need be at .17. A BV to be valid must be made no later that noon. The sooner the better.

 

6) POTP - Taylor Sell day - Possible BV coming early any the session. If so go long at any price under .34 when you think the bottom has been made. Sell long on any rallly to or penetration of .34. A BV to be valid must be made no later that noon. The sooner the better.

 

 

7) PTN - Taylor Buy day - Buy on a low made first at .35 to .36. Sell same day on a good rally or hold to sell the next day if it looks like it will close near the high. If high made first then short at .38 to .39 and cover same day.

 

8) CMGI Taylor sell day - Possible BV. Go long on any thing south of 1.31 once you think the bottom is made. Sell those longs the same day on any penetration of 1.31

 

These are the general guidelines. Exact entries and exits are determined by reading the intraday tape. All BV's must be made early in the session to take them. Never take a BV made in the afternoon. Big gap openings immediately eliminate the stock as a potential candidate. With penny stocks always try to see the opening first before taking a position. Also, with pennies when daytrading the secret is to try and get a good entry and on the exit get out with a slice out of the middle. Don't worry if you don't get the last cent. With penny stocks You have to get out when the volume is there. Or, you might end up on the low and can't get out on a short or, on the high, with a long, and action becomes dead, and you can't get out of your position even though you have a profit. So, get that slice and run! Also, if less than 200,000 shares are being exchanged a day then deal in 5000 or less shares. If 400,000 or more change hands daily then you can deal in up to 15,000 shares at time.

[stackm 10]

I agree with Dogpile that the cycle indicates a "short sell" day tomorrow, in that we had two low to high days in a row. Monday displayed classic "buy day" action in that we tested low and rallied. Tuesday would have been a good day to sell.

 

But I can also see how Why? can state that tomorrow might be a buy day based on his analysis.

 

These are the kinds of uncertainties that have been giving me trouble.

 

I don't have my Taylor book in front of me. Assume tomorrow is as Dogpile suggests, a "short sell" day. The best scenario would be shorting into a gap up.

 

Would Taylor advise stepping aside if the market gaps down? Or perhaps wait for the gap to close and possibly short then?

 

Thanks to all for your time. Glad we have a few folks interested in learning.

[WHY? 16]

Taylor would say that 10-24 is a buy day for ES. Now remember on an ideal buy day it will trade down low first and make the objective early in the session. It could open low too. The point is the low is will made first and soon after the market open in the ideal buy day pattern.

 

On the other hand on a less than ideal buy day it trades up first making the high first. But since it is a buy day I can short it if that happens.

 

So, I have two potential shots tomm. Short in the 1526 to 1529 area and go long in the 1506 to 1509 area. Or do both if the action allows me within taylors rules.

 

Of course, the live intraday action determines the exact entry. But depending on what this does I determine the real trend of the day early on. That is what I want to be on. The real trend.

[WHY? 16]

Monday displayed classic "buy day" action in that we tested low and rallied. Tuesday would have been a good day to sell.

Monday was clearly a sell day that made a BV early not a buy day.

 

These are the kinds of uncertainties that have been giving me trouble.

You have to remember there are ideal buy days and not so ideal buy days. Same for the other two days in the cycle. Monday was a less than ideal sell day that gave one the opportunity to go long on a lower low than the previous day 10-19 (a buy day). If you don't recognize this you will forever be confusing one day with the other and call many BV days a buy day because they tested the low and did so earlier. Just because price action tested the low early in the session and then rallied does not automatically make that day a buy day even though that is the action an ideal buy day has. You can have a less than ideal SS day that that goes under the sell day low early in the session and trades up and closes high. That doesn't make it a buy day just because it tested the low first. It is still a shortsell day but a less than ideal SS day. You would never short that day even though it is an SS day. Why? Because it will most likely open the next day (abuy day) trade up and make for better shorting. See what I mean?

 

I don't have my Taylor book in front of me. Assume tomorrow is as Dogpile suggests, a "short sell" day. The best scenario would be shorting into a gap up.

 

Would Taylor advise stepping aside if the market gaps down? Or perhaps wait for the gap to close and possibly short then?

If it were a Short sell day Taylor would only allow shorting IF it made the objective first i.e. penetrated the high or came close to the high of the previous day (buy day). How it does that doesn't matter. Straight up.... gap up....inching don't matter except in terms of knowing when the top has been reached.

 

But 10-24 is a Buy day not an SS day.

[stackm 10]

I will explain my reasoning here, just so folks can correct my errors...

 

My thoughts were that you can choose the lowest price of a ten day sample, and call that a buy day. Doing this on ES gives us Monday 10/22 as the buy day (lowest 10 day price). This makes sense to me as the markets were engineered lower Monday at the start, and we saw a nice two day rally the rest of Monday + Tuesday from these lows.

 

With this cycle and counting backward, Friday 10/19 would be a short sell day, Thursday 10/18 a sell day, Wednesday 10/17 a buy day. The price behavior these days is consistent with this interpretation of the cycle. Markets started Friday at their highs and dropped all day.

 

Counting forward, the cycle makes sense as well. If we take into account after market action a short sell at end of day Tuesday 10/23 would be profitable as of now.

 

At the same time (Why's) reasoning makes a lot of sense as well. I had originally had marked 10/19 Friday as a buy day before the price action. After the drop, can I justify pushing the buy day forward a day to Monday, or will this break too many rules?

 

I need to dig deeper into the Taylor book and hopefully I can contribute some better insight. Just having a hard time grasping why Friday would make a more logical buy day than this past Monday.

[Dogpile 10]

stackm,

 

I have asked WHY? like 10 different times on how he can be sure it is 'X' day (buy/sell/sell short). I am not disagreeing with him. He states it with certainty but doesn't explain the clear-cut reason. So this just leads to confusion. Hence, my previous conclusion that the less important thing is what you label the day --- the more important thing are the violations of highs and lows and reading the tape. Any day that goes above the previous day high is a potential short trade -- like yesterday. Any day that tests the previous days low (violation or higher bottom) is a potential buy, this was the case yesterday -- despite WHY? calling it a sell-short day (again, I am not disagreeing with him).

 

This is how I am treating it until somebody can come on this thread and tell me why today is definitely a _________ (fill in blank) type of day. Otherwise, it is just too frustrating and you may miss good trades because you are thinking its one thing and its not.

 

No matter what Monday was, it traded 'low to high'.

No matter what Tuesday was, it traded 'low to high'.

Thus, we have 2 low to highs.

A violation of Tuesdays high is a clear potential short.

Trading down first is much trickier.

When its tricky, Taylor can't really help you that much -- its down to your ability to read the pattern and the tape and go with it.

 

that is my current take anyway.

 

btw, I love the fact that you are certain about this stuff WHY? -- it makes me think that you really do have figured Taylor out -- but since you just won't say why for sure today is a sell-short day -- it is kind of like trying to talk to a 'black box' - your software is a mystery.

[WHY? 16]

The ES on 10-24 traded down first (typical of classic buy day) on a failure to penetrate (slightly less than ideal buy day). Shortly before 9 a.m. the decline started so by the open it was already under way. Such tape action with call for an immediate short at whatever price you could get in. The real trend is down and it started before the open. So, Seeing this type of action (knowing it was a failure to penetrate before the decline) one would short at or close to the open. In this case around 1515. Notice how it blew through the 1505 zone? And indication to hold the short for more decline. Between 10:15 and 10:30 one could have seen the decline was over by the tape action. That was the point to go long. On a buy day you can go long. So, long at 1499. Close to noon one could have taken profits on the long around 1506 or just hold on for the next day in the cycle to sell your longs.

[WHY? 16]

I love the fact that you are certain about this stuff WHY? -- it makes me think that you really do have figured Taylor out -- but since you just won't say why for sure today is a sell-short day -- it is kind of like trying to talk to a 'black box' - your software is a mystery.

Dogpile, I have been studying Taylor for years. I think my posts reflect that. I have debated as to whether I am going to sell my software or not. I just haven't made my mind up yet. I don't know if I want to get involved in all the technical support/training issues..etc. With Taylor a few things are key. I do not want to openly reveal the secrets of my software. I think you can understand that??? I do not mind discussing Taylor and helping folks along but I suppose at a point I would stop. If I decide not to sell it I may decide to give it away. If I decide to sell it it will be at a good price but not outlandish. But it won't be cheap. Whatever, I do I won't give the code away unless I am about to kick the bucket and want to pass it on to someone like my son or daughter, or close friend. Hope you guys can understand my situation.

[Dogpile 10]

I understand that WHY? -- its just that its difficult to interpret what you are saying because its just the software spitting it out.

 

I actually did mostly shorts today and then tried one long that would have worked huge but I chickened out. Nevertheless, this was my best day since August so I am quite happy. This is AWESOME movement by the futures market -- I sure hope this keeps up.

[WHY? 16]

RESULTS for 10-24

 

GE-It was as I said a SS day. It didn't quite make the target of 40.56 to short but once the tape reveals the decline has started you take it. As I said exact entries are determined by the intraday tape. It would have been hard to get in the high at 40.48 so the short would have happened about 40.43. Shortly before 2:00 one would have covered at around 39.50 thus capturing about .93. This is what Taylor is about. Ferreting out the main trend and riding along.

 

ASTM (not ASTF like I accidently typed above in the forecast) - The only opportunity was an opportunity to short a failed penetration from the open to shortly before 11:00 it just hung out at the 1.13 1.12 area indicating it would make it to 1.16. So, it is a discretionary thing on this one. If so inclined one could have shorted at 1.13 and covered shortly after 1:00 at around 1.08 thus capturing .05. On 10,000 shares that is 500.00 minus commission. Again the point is going with main trend of the day.

 

CRGN - Buy day - Shorting at 1.00 and cover just before 2: p.m. at .94 - again the main trend captured. Made low too late to reverse and take a long postion before the close. Captured .06 10,000 shares X .06 = 600.00 minus commissions.

 

INSM - Buy day- No real play developed on this one.

 

MOVI - Sell day - LOng at .14 on a BV around 11:30. Looking to weak to make it back to .17 before the day ends. Dumped at .15. 10,000 shares X .01 = 100.00 minus commisions. Again trading on the main trend of the day and going long on weakness. That can be done but one can't expect as much gain.

 

POTP - Sell day- Another BV made early. Long position 10,000 at .30 Sell at .32 on weak market on a posible failure to rally to .34 Profit .02 = 200.00 minus commission.

 

PTN - Sell Day - Short at .38 covered at .36. Then reverse and go long at .36 and sell at .38 5000 shares each way = .02 on short and .02 on th long for 200.00 minus comm. This was an example of out to play a narrow range penny stock with Taylor. This stock has an average range of .03 the idea is to capture a slice from the middle. Either .01 or a max of .02. However, since it was a buy day one can go both ways on it (long and/or short) depending on how price action does. In this case, price action do both early in the session thus giving one the opportunity to capture .04 for the day on a stock that averages .03. Again following the trends.

 

CMGI - It made a BV but after noon so it was too late in the session. No play.

 

This is how one uses Taylor to daytrade the pennies with the exception of GE above. Again, it is capturing the main move of the day and grabbing that slice in the middle. It is easier to do on pennies that have at least 300,00 shares a day and over 500,000 makes it fairly easily to play in 10,000 or 15,000 share lots. One more point I want to make. In CRGN you would be in essence risking 10,000.00 to get a return of 600.00. In GE if you risked the same 10,000.00 we are looking at about 248 shares with a gain of .93 a share = about 231.00 profit on your 10,000.00. However, with the pennies the same 10,000 got you 600.00. That is why I say the pennies give a higher rate of return on capitol invested. Remember, you are daytrading them not investing.

[Dogpile 10]

WHY?

 

I wanted to thank you though for participating here, I do feel like I understand Taylor better even if I don't totally get the labeling of the days. But that is less important to me anyway. The real important thing is the violation of the high or low (the 'test').

[WHY? 16]

I actually did mostly shorts today and then tried one long that would have worked huge but I chickened out. Nevertheless, this was my best day since August so I am quite happy. This is AWESOME movement by the futures market -- I sure hope this keeps up.

I am glad you had a good day. I want to make a few more points about the action in ES today. When possible try to watch some premarket action especially as it is getting near the open. You will notice that Taylor called for a buy day so one would be looking to go short and could go long (one or the other or both) as long as the tape confirms the forecast. Notice, in the premarket there was a failure to penetrate the high of the previous day and shortly before the open the decline had started. All that indicates FURTHER weakness. The market is tipping it's hand and confirming a short first on a high day. However, since it didn't penetrate and the decline started just before the open you gotta pull the trigger and jump in with a short right after the open. Forget the target entries. The tape is saying pull the trigger or miss the ride. Why? Well, a failure to penetrate is a sign of weakness (to some degree), it is a buy day, the decline has started before the open Time to go for the ride. Now, since it was a buy day when the bottom hit it was time to go long. It rallied back up hard for a huge close. Heavy...heavy demand coming in before the close. Boys we are headed up tommorrow. Smart money is taking her on up on 10-25. It is a perfect setup for a sell day. Longs bought on near the bottom today can be sold at even greater gains tomm on 10-25. See what I mean by catching the main trend for the day. The cross -currents will whiplash you unless you are are very nibble on your feet. I just like taking the main trend.

[WHY? 16]

I wanted to thank you though for participating here, I do feel like I understand Taylor better even if I don't totally get the labeling of the days. But that is less important to me anyway. The real important thing is the violation of the high or low (the 'test')

You are welcome. Glad I was able to contribute a little here and there to help folks understand Taylor. I have gotta say you, Dogpile have been the most knowledgable on Taylor of anyone I have talked to, in any forum. I can see you have at least read the book and tried to think thru it. I think the other StuMp poster understand alot of taylor too. Most people, I would speculate, give up reading the book before they finish it the first time.

 

In terms of the days it really doesn't matter the label of the days. They could be called Bad day, Good day, and So so day! The important thing to remember is that there is a cycle and that cycle has all the days in it and to be MOST effective you have to get the placement of each day correct in the cycle. Otherwise, one is just daytrading each day (going long or short) much like Angell said one could do. But, if you get the placement right and follow Taylors rules then one can't necessarily go long or short on any of the days. For instance, tomm is a sell day. You NEVER short a sell day..NEVER. Sell days are for selling longs you bought the previous day. Now, you are allowed to go long on a sell day but it has to be a BV (buying day low violation..i.e. violated the low of the previous day- a buy day) and it has to make that BV early in the session. So, not shorting on 10-25 can keep you from getting whiplashed. I seriousley doubt it will make a BV tomm 10-25 so the only play is to sell longs you already have (i.e. bot on 10-24). Those you chickened out on and sold early! The temptation will be to perhaps go long on the strong open tomm 10-25 but that could be a mistake. It should easily penetrate the high of today on 10-25 but it will then decline off of that. The problem is knowing when the rally will stop tomm. A long taken early tomm could get you whiplashed. You could probally capture 2 or 3 points but it would be hard to capture the main trend. I would look for it to make a higher high early taking the market on up and then retrace down to the low of the day and possibly retrace back up, and close high. That would be a great setup for 10-26 which should be an SS day in the cycle, unless something weird happens. So, I wouldn't short tomm. I would wait for 10-26 to short IF it closes high on 10-25. IF it closes low on 10-25 then we can expect further weakness and one would not go long on 10-26 (for it is a SS day and you don't go long on SS days) but wait for the following day 10-27 (buy day) to go long on a BU or lower low. Neither, would one look to short on 10-26 (an SS day) if the low was made last on 10-25 (sell day) for that would indicate that the high would be made last on 10-26 and one does not short a high made last on an SS day. Better to wait for 10-27 (buy day) and put out short on a high made first. That puts the play in your favor. Taylor was all about positioning yourself for the best play. It is possible that no plays can be made tomm 10-25 except a selling of longs bought on 10-24. It is also possible no plays can be made on 10-26 (ss day) if the high is made last on 10-25. You NEVER go long on an SS day. Your only opportunity is a short. Also, if the high is made last on the SSDay you pass the shorting opportunity thus better positioning yourself for a better short the next day 10-27 (a buy day). Sometimes, that is the price you pay for ferreting out and trading the longer trends of the day. However, most of the time there are plays to do. But it doesn't hurt to be tracking the ES, YM, ER ...etc. If can't play in one hit the other. Know what mean? See, the cycle must be kept intact and the days placed correctly to get the most out of Taylors system. If you do as Angell did then IMO you are messing with the integrity of the system and will get hammered quite abit as you get caught in intraday cross trends or currents. But, I can understand anyone playing around with Taylor theories and trying to apply them in different ways, in todays markets. I have even thought of 3 mini cycles in day. Maybe one day I will check that out. Dogpile you will understand my train of thought here in this in this post because you know something of Taylor. A newcomer to this thread who doesn't understand Taylor may well think this is gibberish. I can't help that. I would advise anyone to read Taylor.

[WHY? 16]

The real important thing is the violation of the high or low (the 'test').

This is really neither, here nor there, and perhaps not really worth commenting on but just thought I would say that Taylor language would call it a penetration or failure to penetrate on the high and a violation on the low side.

[Dogpile 10]

WHY?

 

I would just think about this with an open-mind:

 

What you are doing when you are trading the Taylor Technique is doing something that is a simple but powerful trading concept. You are aligning 2 timeframes. Your 'reward' is framed out on the higher daily 'Taylor timeframe' --- your risk is framed out on the lower timeframe -- however you do this --- you call this 'watching the tape'.

 

What I am saying is that there are other timeframes to align that are powerful as well. Some are scalpers using 1min, 400 tick and 800 tick charts -- I know someone quite good at that actually.

 

I love Taylor because his 'rhythm' lines up nicely with a timeframe near and dear to me --- the major theme of the day but still intraday where you don't have to worry about overnight news and gaps -- at least primarily.

 

Thus, I would remain open to thinking about expanding your trading 'arsenal' because you are clearly good at aligning the timeframes that you have chosen.

 

just my 2 cents. keep up the commentary. I will start a new 'Taylor Thread - Nov 2007' when we get there and hopefully we can continue to discuss this...

 

dog

[Dogpile 10]

re tomorrow,

 

today we had a directional breakout set-up:

3-Bar Triangle

Low 15-min ADX

 

Tomorrow we do not. Therefore I will look for a morning reversal into a support/resistance price zone -- but as always, be mindful if we get strong range expansion off opening price.

 

We have 3 consecutive 'low to high' trading days. If we violate the high first, I will be looking for a spot to short if the tape confirms such.

 

If we trade down first (off opening price) -- I will look for a long into a support zone.

 

Since we have 3 straight low to highs, the trend is up -- 1 'high to low' day would set up a long for friday (Pinball Buy).

[WHY? 16]

For 10-15 is a Taylor sell day- my take on ES is we will trade up thru and penetrate the high of 10-24 early in the session perhaps even in the pre market hours. I would sell 10-24's longs at or around 1526 to 1529 area and look for a reversal. Taylor wouldnt short this decline. So, most likely no position will be taken tomm unless it trades down first and makes a BV early in the session. Alot of demand came in today near the close however overall it is still a weak market. It remains to be seen how much demand came it before the close. I am pretty sure it was enough to push on through the high of 10-24 and perhaps take it to 1529. Just have to wait and see.

[WHY? 16]

For 10-15 is a Taylor sell day- my take on ES is we will trade up thru and penetrate the high of 10-24 early in the session perhaps even in the pre market hours. I would sell 10-24's longs at or around 1526 to 1529 area and look for a reversal. Taylor wouldnt short this decline. So, most likely no position will be taken tomm unless it trades down first and makes a BV early in the session. Alot of demand came in today near the close however overall it is still a weak market. It remains to be seen how much demand came it before the close. I am pretty sure it was enough to push on through the high of 10-24 and perhaps take it to 1529. Just have to wait and see.

I meant 10-25 not 10-15 in the above quote