Taylor Trading Technique

[Nine 10]

Thanks but how do you actually calculate the 3 period RSI in basic math terms?

 

Here's an example of Wilder's RSI in simple math:

RSI = 100 – [100/1 +RS]

 

What would the Momentum Pinball three period RSI of ROC look like in basic math terms? An equation that can be entered on a basic calculator (the function RSI can't be entered on a calculator)

[sevensa 10]

You already have the formula below?

 

RSI = 100 – [100/1 +RS]

RS = Average of n periods closes up/Average of n periods closes down.

 

 

There isn't a basic formula. This is it. Try google if you don't understand what "Average of n periods closes up/Average of n periods closes down." means. You will find numerous examples on calculating RSI. (Probably something you should have done to begin with...)

[Nine 10]

Ummm, yeah...

 

"You already have the formula below?

 

RSI = 100 – [100/1 +RS]

RS = Average of n periods closes up/Average of n periods closes down."

 

This formula is for Wilder's RSI and I do understand it - as I said before I'm not looking for the RSI formula but the Momentum Pinball indicator which is a 3 period RSI of ROC (daily net change).

 

And instead of google, I thought going to Taylor Trading forum would be the best place to go. Although I did go to google, which is how I got here in the first place.

[Bearbull 10]

...bearbull,

... i am sorry i have been on the road.... and have not had time to dig in yet...

....but here is a shot of the cycles on that last run....

....where the bottom cycle came in early.... and caused the top cycle to end fast and strong....

....obviously... the drawback to using this method to gauge days lost/gained is that seeing the cycle is a subjective process....

... or should i say "placing" the cycle....

 

Thanks, good to have you back, perhaps you could spend some time posting your take on Taylor on each trading day, that way it would be systematic and attract more attention from new traders who may develop an interest in the methodology.

[elovemer 10]

...couple of charts

[elovemer 10]

...ok that first chart... is about the cycles...

....three sets... a set of small upper cycle.... a larger upper cycle...and a lower cycle

...on the small set of upper cycles....price is squeezed down... instead of fiinishing on a high price.... it finished on a low price

 

...this represents possible trend change....

....instead of making an early high....or making a high at all.... it made a low at end of cycle.....

 

...on upper cycle...large one... getting close to end of cycle.... waiting for an early high.... or a high at end of cycle....

...an early high... would suggest a faster extended low to follow

 

..on lower cycle.... waiting for an early low....

...an early low... would suggest a faster extended high to follow

 

....everything must be kept in perspective....in other words....highs or lows (in relation to) the size of the cycle....

... i.e. you would not expect a massive high on a small cycle... unless it is part of a bigger cycle as well

...also the cycles ... exist within the price channel

--------------------------------------

...next chart is "days"

...this just designates which days were buy and sell for the book method

----------------------

....next chart is "penetrations"

...this show the penetrations of previous low or high.... at 161% extension

...this chart only show trading hours...not globex hours

-------------------

....next chart is "first"

...this chart just indicates that the low was made first....or the high made first

....tuesday... will be either a sell day .... or another mid day....

.... if gap up for early high.... then sell day....

 

.... if including globex hours... (you) could have taken monday as sell day with the slight pentration of friday's high ... at the close

----------------------

...last chart is recent book made for several days....

...previous to this.... price has fallen hard... making book method unnecessary and confusing unless you have just held your short

....decline/rally column is for the swing....

...plus/minus penetrations is for sellday/buyday

...D/R is decline/rally for the day only

...HH higher high.... LL lower low....etc...

 

...next column refers to pinball indicator on daily chart

...PS .. means Switch

...PE ... means Extend

...PNE .. means No Extend

...on buy day... indicator switches from low to high

...on sell day.... switches from high to low

... on a mid day..... indicator extends in same direction as switch

..... note... on last sell day .... indicator did not extend in same direction for a mid day.... indicator went down slightly as price sold off hard and made a higher low.....

Edited October 21, 2008 by elovemer
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[Bearbull 10]

Interesting charts, comments on the "mid" would be appreciated.

 

Requested "WHY" who also has a sound grasp of TT method to keep this thread alive, nothing from him as yet.

 

The ES is down on the globex some 15pts of yesterday's close, if there is a gap down on the day session, then it should set up a power buy prior to the sell. Well lets see how it pans out.

[elovemer 10]

....."mid" means day 2 ... the second day of the cycle....

....in my method ...

 

...in Taylor's method

.... if uptrend... day 1 is buy day ...day 2 is mid day....day 3 is sell day....

.... and day 4 (day1 ) is buy day....

...if downtrend....day 1 is sell day ... day 2 is mid day ... day 3 is buy day...

... and day 4 is sell day.....

 

....also he said it can be 1-2 extra days...

..uptrend would be ....buy 1 ... mid 2...(mid3...mid4).... sell 5....buy 6 (1)

......for a 5 day cycle

[Bearbull 10]

Thanks elovemer, hope you keep the analysis going forward, TT method certainly has conceptual advantages, wonder what are your thoughts on POST 205 by Frank. It would certainly be great to have input from him and WHY? on an ongoing basis.

[elovemer 10]

....so if you took monday as sell day at end...

... or tuesday as sell day at open.... you did good..

...the ideal is a high made first not last....

... so according to the system you should have looked for a penetration of the monday high

 

...if you notice on the cycles....

... on the upper cycle ... the high came early on the upper cycle... which hints at a quick and extended low ...

.... this low came today .... right at the end of the lower cycle....

 

....with this huge drop.... confirmed by the end of cycle... you would of course take off all short positions....

....next step is to wait and see how it closes today wednesday...

.....and look for a possible low penetration on thursday for a long entry....

 

......on upper cycle...large one... getting close to end of cycle.... waiting for an early high.... or a high at end of cycle....

...an early high... would suggest a faster extended low to follow

 

.... if including globex hours... (you) could have taken monday as sell day with the slight pentration of friday's high ... at the close

----------------------

...

Edited October 22, 2008 by elovemer
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[Bearbull 10]

Do you take into the globex action.

On Tuesday the high on the day session was 986, whereas Monday's high was 992.75, so there was no high violation in that respect.

 

Also how would you handle today's action, with the price gapped down at the opening?

 

Illustration with charts would be helpful

[elovemer 10]

....yes globex also ...

....the was high violation on monday of friday's high....

...today's action with price gapped down at open.... is very good assuming that your short has already been entered....

....also.... all shorts should have been exited....

.... a low penetration...with futures up so much...looks unlikely....

....so if there is no penetration .....the next choice for a long would be higher low on buying day....

.... if that does not happen.... then the next choice is to wait for the next sell day....

 

....going to post a chart of the new cycles....

--------------------------------

......on upper cycle...large one... getting close to end of cycle.... waiting for an early high.... or a high at end of cycle....

...an early high... would suggest a faster extended low to follow

 

.... if including globex hours... (you) could have taken monday as sell day with the slight .....penetration of friday's high ... at the close

----------------------

Do you take into the globex action.

On Tuesday the high on the day session was 986, whereas Monday's high was 992.75, so there was no high violation in that respect.

Also how would you handle today's action, with the price gapped down at the opening?

Illustration with charts would be helpful

[elovemer 10]

.....the new cycle on top is in white....

...the new cycle on bottom is in green....

 

...looking at the top cycle....

... you can see that if thursday is buy day... on either a low penetration...or buying a higher low on buying day..... then the cycle would end friday morning for a high made first....

...whether that happens or not is unsure....if the high comes early... then expect the low cycle to come in...and vice versa....

 

... i will post my updated book.... [changed] to reflect the sell day monday...

....prices shown will be trading prices.... globex prices shown in [] brackets

 

....as said before.... i am not an authority on the taylor method... my methods are a work in progress.... as may already be appreciated...

[elovemer 10]

...sorry... mistyped..... meant to say "end monday morning" ... not friday morning

....

...looking at the top cycle....

... you can see that if thursday is buy day... on either a low penetration...or buying a higher low on buying day..... then the cycle would end friday morning for a high made first....

.....

[Bearbull 10]

Well has turned out to be quite interesting, despite that high open on the globex, the market did go down to attempt a violation of the previous low but turned straight up before reaching 880.

 

As I said TT concepts are certainly of some use, however timing entry etc is another ball game.

[elovemer 10]

...edit... the lower cycle length... should be changed... to include the low at end of day.... so it will be a longer cycle on bottom

...edit.... you said "violation" ... but if today is buy day... it is actually penetration... not violation...

... a violation would be a new low made tomorrow... the day after presumed buy day...

....edit.... all depends on where and how it closes....

...got a 127% extension penetration instead of 161% ....

.... but it is coming at the close ...rather than the open....

.... according to the system... this implies... the possibility of a low violation tomorrow....depending how close the closing price is to the low of the day

....so the upside target becomes the high of the day....

.... if the close is in the upper range of the day .... then the target can be higher .... but a big fast gain must be booked.... since the penetration did not come at the open....

.... best if trading multiple contracts.... so can take off some

Well has turned out to be quite interesting, despite that high open on the globex, the market did go down to attempt a violation of the previous low but turned straight up before reaching 880.

As I said TT concepts are certainly of some use, however timing entry etc is another ball game.

Edited October 23, 2008 by elovemer
edit

[elovemer 10]

.... a new low on friday.... would be a violation....

....on a buying day low violation...

... "when this decline is made FIRST and early in the session, we buy as near this low point as we can"....

..

.... if the close is in the upper range of the day .... then the target can be higher...

.... but a big fast gain must be booked.... since the penetration did not come at the open....

....

[Bearbull 10]

Let me get right:

 

Wed : 22nd was a sell day, there was high to low, market fell substantially,

 

Hence as per TT the next day Thursday is a Buy Day, so look for penetration or violation of low of wed ie. sell day.

Thursday 23rd , market did go down to 860 albeit late in the afternoon before rallying over 50pts

 

Today should be a sell day, which is what is happening right now, prices have come back to 860

 

It is likey we could see another rally today as we have been knocking at this levels a few times now, will see if support holds;)

[elovemer 10]

....limit down could have a good panic effect for a pop.... but this is an extreme market right now.... have to be careful

....the rule of thumb lately seems to be ... book the gain immediately.......don't hold on for more

Let me get right:

Wed : 22nd was a sell day, there was high to low, market fell substantially,

Hence as per TT the next day Thursday is a Buy Day, so look for penetration or violation of low of wed ie. sell day.

Thursday 23rd , market did go down to 860 albeit late in the afternoon before rallying over 50pts

Today should be a sell day, which is what is happening right now, prices have come back to 860

It is likey we could see another rally today as we have been knocking at this levels a few times now, will see if support holds;)

[elovemer 10]

....updated....

[WHY? 16]

Remember in Taylor it is of vital importance to make note of WHEN the objective points take place. First or last in the trading session. It is the ONLY way to catch the REAL trend and avoid the whipsaws.

[Bearbull 10]

Remember in Taylor it is of vital importance to make note of WHEN the objective points take place. First or last in the trading session. It is the ONLY way to catch the REAL trend and avoid the whipsaws.

 

Would appreciate if you can illustrate with some realtime examples.

[elovemer 10]

....the cycle on the lower .... kept extending longer and longer with every new low .... without an intervening high....

.... now we have a very long lower cycle length.....

..... the current upper cycle length is still unkown ......

....maybe best to use the old upper cycle length for the time being until it is invalidated

[vt108 10]

I track this thread from the beginning. It is a shame Why? stopped writing here. I am happy to see elov making comments about Taylor. Why .. would you please make it alive again? I promise to give you thousends of questions.

[elovemer 10]

...if you look at tuesday... it was perfect TAYLOR setup....

....the massive drop on monday .... served to scare out the longs....

....then the big run up in globex.... served to get joe long again.....

....then the drop during the first half of tuesday served to scare out those who were not already scared out....

..... but TAYLOR's technique.... says go long on penetration.... and the trading hour low was only penetrated by a half point....

...this type of action happens quite often on tuesdays and thursdays....

....maybe WHY has already contributed what he feels that he can....

 

....on tuesday... for the first half session...before 12 .... the high was put in first.... which implies the low will be put in last....if it comes before 12.... then you look to assume that the low of the day is in.... and then look for the high of the day to come during the second half of the session....

 

....how do you know the high is in for the first half session ?

...because of the double top.... and because the size of the retracement during the first 30 min was exceeded after the double top was put in....

 

...when the low was penetrated.... your alarm goes off....

... then you watch the upwards retracement to see if it exceeds the largest retracement during the down move....

....the high at 11am accomplishes this...

... so you consider that the direction has changed after the low penetration

 

....during the up move... you want to see something which suggests upside continuation...

.... if you consider that 12 is the end of the first half session... compare 11.45 and 12.00 points....

....the retracement between those two time points... exceeded those after the low was put in before.....

.... this suggested either a change in direction back to down... or a change to a larger degree wave...

.....for me the signal that volume had changed sides was that.... stochastic went from over bought at 11.45 to oversold at 12.00.... despite the relatively small size of the move which occurred between those times....

 

....this gets into elliott wave stuff.... but the taylor setup was beautiful....

.... with that lower cycle getting stretched longer and longer.... it implies that the next high will be very strong....and it was....

 

...about indicators.... i like TTM squeeze ...and TSI ... true strength index... because the both seem to take time into account by incorporating ma's ....

....the first tipoff about yesterday was that the globex low failed to exceed the previous day's globex low....which it had not failed to do theretofore....