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Taylor Trading Technique

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....a comment about accumulation....

....williams accumulation indicator on daily chart showed big upwards divergence.... why?

.... because despite price action moving lower in the previous week.... this downward movement was not reflected in [close-open] .... which reflects pro activity....

.... if price is moving down... but pros are still buying....

.... or if futures open way down... but pros are still buying....

...edit...you can see this easily looking at an hourly chart...of trading hours only.... by just drawing one line for each day connecting the close and open of that day.... if price is going down over time.... while the trend lines are all sloping up...it could be accumulation....

... especially if price is not going down (that much) over time....

Edited by elovemer
edit

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....on that M pattern bottom on the daily chart.....

....the last cycle on the bottom is the last two legs of that M

....in this pic.... tomorrow's close would be the end of that length of time....

....if we get a new high.... we will have an upper cycle length to work with....

....(edit)....since this is the lower cycle....there is nothing saying that we should get a new high in this time.... rather it suggests that we should get a low in that time.....

 

.... if the high comes later.... until it comes... we are still trending.....

....as we were trending when the lower cycle kept extending longer and longer....

cy.thumb.jpg.e5e55abc86207b08aa6c2408a17e8995.jpg

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....while the method has been difficult to apply lately due to such great volatility...

....i believe that today.....thursday.... will be a good point to begin a book

...the last cycle on the bottom....on 30min chart.... instead of coming in early.... came in a little late....

....as one cycle usually comes in early.... signifying that the cycle has switched sides.....

 

..... usually the cycle does not come in late....especially after the cycle has alredy been getting extended longer and longer....

...anyway.... we now have a very long upper cycle in place....and a longer lower cycle in place....

..... these should be good reference points during what appears to be an extended up move coming.....yet to be confirmed....

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....with the volatility... i have not been able to apply the method reliably....

 

.... and my cycles.... stopped working because they keep getting longer and longer... to me that represents longer term change....

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When in a bear market look to short on high made first on buy days and on Shortsell days. Look for buying day violations to happen more often for taking QUICK long positions but do not stay in them long. Sell them at or just before the previous days (i.e. buy day's) low.

 

Or use the 3 day method and short on succesive buy days until you get your line shorted then cover on succesive buy day lows or even short sell day lows.

 

Remember in bear markets you must take advantage of the odds in your favor and use Taylor for more shorting opportunities. And in bear market you will see succesive BV's.

 

In bull markets you will see higher buy day bottoms (usually profitable) and more penetrations of the target prices (objective points per Taylor) so naturally the odds favor using the system for long positions.

 

Taylor can be used for daytrading, very short-term swing trading, or longer term swing trading. The strategies employed for each type of trading are unique.

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Thanks for the interesting comments, have read your posts closely, you clearly have good understanding of TT method. I am still in the learning part, would you take the trouble to show some charts appropriate to those comments as I am still confused about buy and sell days etc.

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There is a guy offers TT service on an excel spead sheet. The additional works he does is applying statistical model to each buy/sell level. Thus you can see when price moves to certain number the change of the next direction gets increse or decrease.

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Hakuna could you explain more in detail about where the confusion is concerning the buy...sell days??? Taylors method is NOT a charting method. It is purely price driven with built in cycles that he discovered in most stocks and futures. While charts are a reflection of price IF one uses charts then one falls into looking for chart patterns to try and determine the day of the cycle. I refer you to page 7, 3rd par. in his book. Many attempt to look at charts to determine the cycle and end up confused or just giving up.

 

The heart of Taylor is the very short term manipulation of the markets by the deep pockets. This is done over 3 day cycles because IF a stock went straight up and straight down all the time the risk would be too great for folks to buy into it. Any movement (up or down with a few exceptions) must be sustained by support and resistance areas. It is a mechanism to make the market more orderly. Taylors contention is that this "orderliness" is accomplished in 3 day cycles.

 

Tom Williams method in VSA can be useful as a preliminary scanning of interested stocks...futures. His method gives techniques for spotting the footprints of the "smart money". It is useful to take note of the footprints they leave and then plug those particular stocks into Taylors system. Williams method is a charting method of looking at individuals bars to spot the foot prints. I don't think it necessary to buy the software for Williams method however, if one wants to shell out the cash I don't see where it could hurt. Williams method does take into account volume. I see it as another tool to spot the action of the deep pockets. Manipulation of the markets is the heart of Taylor. His contention is this manipulation is done in cycles. The names of his days are simply his way of making sense of it all. You could name the days anything. He has rigid rules to follow for each day. His rules protect you on abnormal days and give you a view before the markets open. His system is all about "anticipating" what the market will probally do based upon what smart money is doing and based upon what day of the cycle the stock is in. I hesitate using the word "predict" because it makes some folks so mad they can't see. While no one can't predict exactly what the market will do it is possible to anticipate what it will "probally do". This is so because if manipulation is done systematically and orderly and IF manipulation is daily then cycles will develope. The cycles can be used to "anticpate" the probable next move. Of course it isn't 100% but it is accurate enough to make money. The rules are for when the system is "off".

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Thanks WHY?

o.k on a practical level, friday was an upday, so that presume would be labelled as Buy Day.

 

Today therefore expect a Sell day and tomorrow a Short sale day, hope I am on right track so far.

 

Looking at US session only ES gaps up and has hit 910, Is that high made first on a sell day ie. high violation of buy day.

 

Just trying to get used to the terms and correct designation of up and down days.

 

Perhaps you could take the trouble to help out and follow this through for a week or so.

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here is what Rick said;

""Posted - 12/08/2008 : 17:28:59

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

 

Today was a Buy day. We failed to get a Decline today which has only happened a few times this year. This is very unusual and demonstrate that the trend may be switching to more of a bullish trend. At the open I was looking for an excuse to short however within 1 hour of the open TVGR took effect, prompted me to look for longs."

 

Disclaimer: I don't use numbers and I don't like excel, so I have no clue about this method. I just pass along the ideal of adding the statistical component to the method because it makes more sense than just some wild guess of 'today is buy/sell/sell short day'.

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...IT IS GREAT ... that some folks are posting here now...

.... here is my screen shot...

.... see what you can see

...three things going on in this shot....

.... time cycle, price retracement size, and 3 day method

..... see what you can see.... or ask questions.....

 

.... thanks to OP and all posters.... hopefully this thread will get somewhere....

5aa70ea0e061d_CYCLENOW.thumb.gif.896f19feb4f352d97fe3fb8c9e7bbc0d.gif

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Today was a Buy day. Again today we had a shallow Decline. We did have 60% of the low made first, We gapped up, TVGR took effect and we reached the projected highs.

 

That was the comments in tonight's report

5aa70ea1c56b4_RecapDec_16.thumb.jpg.4b2fc08122bf7eb4617e86b94a92746d.jpg

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....sure... the horizontal rectangles represent time between last lows...or highs...respectively

....the low one came early.... so it bounced up to finish at the high at end of upper cycle

..... that is time

..... then... the vertical rectangles represent the BIGGEST .... retracement... on the up move

.... so in order to remain bullish.... it needs to not retrace more than that amount... it didn't

.... then the 3 day method..... you can see.. BMS .... buy,mid,sell,buy ... never ending....two days were out of whack due to retracement pattern.... they are in grey color

  Shamal said:
can you make some attempt to explain please.

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....forward.... the lower cycle ends thursday morning.... so you might expect some downward gravitation toward that time slot....

  elovemer said:
....sure... the horizontal rectangles represent time between last lows...or highs...respectively

....the low one came early.... so it bounced up to finish at the high at end of upper cycle

..... that is time

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WHAT IS TVGR

 

In simple language, does that mean sell off into Thursday,

 

what is the scenario for test, probable test of high/low of Tuesday,

as I type, ES has gone down to 890, so possible gap down on opening,

 

hence on a practical level what setups to expect via Taylor method and what action would you take.

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  HAKUNA said:
WHAT IS TVGR

 

In simple language, does that mean sell off into Thursday,

 

what is the scenario for test, probable test of high/low of Tuesday,

as I type, ES has gone down to 890, so possible gap down on opening,

 

hence on a practical level what setups to expect via Taylor method and what action would you take.

 

This Rule is cited from Victor Sperandeo’s book: Trader Vic II: Principles of Professional Speculation, pg. 231

 

The Trader Vic Gap Rule (TVGR)

 

"If there is a gap, and it is going to reverse, it will do so 10-15 minutes after the opening 95% of the time. Please believe me on the odds, they are real. If the market continues in the direction of the gap after 10 to 15 minutes, it is a strong sign that the move will continue for the rest of the day, closing in that direction as well. Even if the market reverses after the 10-15 minute period, if it fails to fill the gap, odds are that the market will close in the direction of the gap."

 

 

This is the comment included with the report, my customers received last night for today's trading

 

"Tomorrow is Sell day. We already achieved the average rally. We have a 50/50 chance of making a higher high, however we do have 60% chance of making a lower low."

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Rich,

 

I appreciate your statistical approach to Taylor.

 

As I am beginning to understand TTT, I am seeing that Taylor traded phases (BD, SD, SSD) within a three-day cycle that seems to repeat itself (cycle).

 

He had different rules for each of the phases, depending on how the market played out. Thus, for example, you looked to BUY on a LOW MADE FIRST on a BD, but would look to SHORT on a HIGH MADE FIRST on a BD.

 

He had developed clues for how the market might trade tomorrow (e.g., if on a BD the market closes poorly, the next day could see a violation of the BD low) and rules for how to trade that.

 

He also had ways of calculating levels of penetration and lengths of advances and declines, which I think he used to keep himself in tune with the trend.

 

Overall, a pretty comphrehensive and rather ingenius system.

 

One question I have I am hoping you can shed some light on: Do you ever reset the cycle once you have established it?

 

Taylor talked about using the last 10 days to create the book, and that is pretty straightforward. You would have 3 cycles within that period. Once the BD, SD, SSD cycle is set, do you ever change it? Would we today still be using the same cycle if we had set that cycle last June, say, or does it need to be reset from time-to-time?

 

Thanks for the help,

 

Eiger

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  Eiger said:
Rich,

 

I appreciate your statistical approach to Taylor.

 

As I am beginning to understand TTT, I am seeing that Taylor traded phases (BD, SD, SSD) within a three-day cycle that seems to repeat itself (cycle).

 

He had different rules for each of the phases, depending on how the market played out. Thus, for example, you looked to BUY on a LOW MADE FIRST on a BD, but would look to SHORT on a HIGH MADE FIRST on a BD.

 

He had developed clues for how the market might trade tomorrow (e.g., if on a BD the market closes poorly, the next day could see a violation of the BD low) and rules for how to trade that.

 

He also had ways of calculating levels of penetration and lengths of advances and declines, which I think he used to keep himself in tune with the trend.

 

Overall, a pretty comphrehensive and rather ingenius system.

 

One question I have I am hoping you can shed some light on: Do you ever reset the cycle once you have established it?

 

Taylor talked about using the last 10 days to create the book, and that is pretty straightforward. You would have 3 cycles within that period. Once the BD, SD, SSD cycle is set, do you ever change it? Would we today still be using the same cycle if we had set that cycle last June, say, or does it need to be reset from time-to-time?

 

Thanks for the help,

 

Eiger

 

Hi Eiger

 

I originally started my TTT E-books based on Taylor's 10 day principle. Later while I was doing statistics on everything, I discovered that we get Positive 3 Day Cycles even in this bear markets. Since then when I start a new TTT E-book for a different instrument, I use that criteria to pick which cycle day was the 1st day.

 

A Positive 3 Day rally is calculated from the Buy day low to the SS day high.

 

However to answer your question, once the cycle is set I never change it. I tried that a few times but when even I did it proved to be incorrect for days even weeks. I started with data from Jan 1, 2008 on the US index futures, and the cycle is still correct as of today. It still produces over 85% positive 3 day rallies.

 

The only thing I am experimenting with at the moment is using a moving average for my statistics due to the high volatility of late. It seems to help for some markets more then others.

 

I hope that helped

 

PS These Positive 3 Day Rallies demonstrates the genius of Taylor and how these markets are manipulated.

Edited by richbois

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