Taylor Trading Technique

[WHY? 16]

WHY?/Richbois

 

On a BUY day, a short can be taken on HIGH made FIRST. and unlike a sale day, we do not have to wait for a sell objective.

 

This is especially pertinent if a HIGH was made LAST on SS day, however what if a LOW was made LAST on SS day.?

 

Weak closings forecast failures to penetrate ‘top side’ on the rallies after declines, while strong closings forecast failures to penetrate ‘down side’ on the declines after rallies. p47

 

"A weak closing on a Short Sale Day, may indicate a lower opening on the Buying Day—and we get set to buy on the low made FIRST—" p43

 

"Now, we go back to the close of the Short Sale Day and we find that it was a ‘flat’ closing, then from this indication we expect a lower opening on the Buying Day and so far this would cause the low to be made FIRST and is a stronger indication when made early in the session that a rally would start from this low and hold the gains for a strong closing, which in turn indicates an up opening and a penetration of the Selling Day Objective—the Buy Day High." p 28

 

"When the low and close are about the same on a Short Sale Day, we usually get our (BU) Buy Under, the price goes lower, next day" p71

 

When BU's are made tape reading skills must be especially sharp. Do not take long position on a BU UNTIL support has come in per the tape.

 

Qutoes from: The Tayor Trading Technique pdf version

[WHY? 16]

Today 2/17/09 is obviousley a BV made on a sell day or the second day of the cycle. This presents a long opportunity in this slide down, however, one must not attempt to capture much as the market is very weak. Just a few quick points and out. Any decent rally back towards 2/16's low is the exit point. Again market is weak. We could perhaps see an afternoon rally of sorts..then again we might not so wisdom indicates exiting on any profit one can grab on any rally back to yesterdays low.

[HAKUNA 10]

Thanks WHY?

o.k , the above scenario is buying after BV on a sell day.- only longs allowed on a Sell Day as you have explained before.

 

1. Lets say today 2/17 is a BUY day. That makes 2/16 a SS day which closed on the Low.

 

All of the premarket action today 2/17 was under 2/16 low (attached 5min and 15min both for Buy Day scenario), would it be o.k to go short on the open as shown, as it would be a HIGH made FIRST on a BUY day which can be shorted

 

Then to cover and go long as both short and long are allowed on a BUY day.

 

2. OTOH if it was SS day, after a weak close on 2/16 (sell day), would it then be o.k to short the HIGH made FIRST on a SS day, the only trade for the day as only shorts are taken on a SS day.

[WHY? 16]

Thanks WHY?

o.k , the above scenario is buying after BV on a sell day.- only longs allowed on a Sell Day as you have explained before.

 

1. Lets say today 2/17 is a BUY day. That makes 2/16 a SS day which closed on the Low.

 

All of the premarket action today 2/17 was under 2/16 low (attached 5min and 15min both for Buy Day scenario), would it be o.k to go short on the open as shown, as it would be a HIGH made FIRST on a BUY day which can be shorted

 

Then to cover and go long as both short and long are allowed on a BUY day.

 

2. OTOH if it was SS day, after a weak close on 2/16 (sell day), would it then be o.k to short the HIGH made FIRST on a SS day, the only trade for the day as only shorts are taken on a SS day.

 

Generally speaking pre market or pre day session opening should be used for mostly for indicating what the day session will open at. Therefore, it is best not to trade in the premarket. I wouldn't say never do it but it is best to see what the market does at the open of the regular trading session.

 

Would it be ok to short 2/17 if it was a buy day on a buy day made first? The problem is you don't know in this case IF it is the high made first or the low made first. In a weak market like this only allowing some time to go by will one be able to determine which was made...the low or the high. Taylor says a short sale on high made first on a buy day is generally a "weak" short sell. He also says NEVER short on a buying day when the low is made first by "opening down" p 42 as there isnt enough certainty to make a profit because of the spread not being enough. On page 43 he says a high made first on a down opening on a buying day would be of no interest to us for short selling as this could cause the low to be made last.

 

Page 28 pdf version of the book says: "Now, we go back to the close of the Short Sale Day and we find that it was a 'flat' closing, then from this indication we expect a lower open on the Buying Day and so far this would cause the low to be made first and is a stronger indication when made early in the session that a rally would start from this low and hold the gains for a strong closing".

 

Remember, the decline is from the SS day high to the buy day low except on those occasions where the decline continues on the sell day causing a BV. With this in mind one could see that if today were a buy day (2/17) that it opened weak and the slide would be down.

 

Taylor says buying low points made first on a buy day are usually profitable except in declines where a steep downtrend has begun.

 

In summary IF 2-17 were a buy day and a down opening I would leave the short side alone and wait until the last possible time before noon to see IF any low made holds or is supported and then look at going long. However IF by the end of the day it looks like it will close weak then the best thing for me to do would be to sell it out any long I may have taken with a small gain or loss as NO rally was forthcoming from the low made first on the buy day. On a buy day of one goes long and the low closes flat then one is on the wrong side of the trend. Get out.

 

Of course this is different IF it is in an uptrend. Failures to penetrate previous days high early in the session in an uptrend can possibly be a shorting opportunity. Remember, the Taylor game was to catch the larger trend of the day. And of course it isnt 100% but his rules protected one when the system was wrong about the price action.

Edited February 17, 2009 by WHY?

[WHY? 16]

One must always remember that you are playing for the odds in your favor. Taylor had ideal setups and there are less than ideal setups. Ideal setups put the odds in your favor. Less than ideal are more risky but many times still tradeable. Much depends on how much risk one is willing to take. In the end it is discretionary. The system gives you a framework for trading. Exact entry and exits and the decision to make a play or not are purely discretionary.

 

Thus on shorting a a buy day high made first AFTER it trades close to or penetrates the high of the previous day (the SS day) puts the odds in your favor. Shorting a high made first on a down opening on a buy day that does not penetrate the high of the previous session or come close to penetrating it is LESS than ideal and more risky. The trend can turn fast back up. IF I traded such a senario (and I probably would not but would pass) it would be with eyes glued to the screen and I would probably be out of the postion with a quick but smaller profit and try to not plan on capturing any larger move as the odds are against me.

 

On any given day there is a main trend and many cross currents. Sometimes a couple of main trends. Trying to short or go long on cross currents is what Taylor tried to avoid. Not that it can't be done but his game was to try a catch a goodly portion of the main trend of the day. That was it.

[WHY? 16]

All the quotes above are from the PDF version of The Taylor Trading Technique

[WHY? 16]

Looking at a chart of todays price action from the perspective of it being a buy day Taylor would have probably skipped any shorting and went long around 11:20 or so and out that afternoon with a 4 or 5 point gain as the rally back was weak.

 

From the perspective of it being a sell day today 2/17 (2nd day of the cycle), the entry and exits would have been about the same time as the above. That is just how price action panned out today.

[elovemer 10]

.... by a one day shift of my original count.... with down swing trend

....feb 10 was sell.... with SMBS cycle.... with today tuesday as buy day .... and tomorrow wednesday as next sell day....

[monad 10]

Great insights WHY? on BUY day nuances under ideal and non-ideal conditions.

 

Earlier Hakuna inquired about a statement from Taylor. I am somewhat curious, it appears a typo error, however you know more about this stuff than most.

 

"On page 72 in the "Pertinent Points" Chapter the following is stated:

 

"There seems to be about two swings a week, one Upward and one Downward. In the Bull movement, the one downward will be longer and is the swing that causes the failures to penetrate the Selling Objectives and the cause of Buying Day Low Violations."

 

Should'nt it be Bear movement instead of Bull movement?

 

From what you have posted earlier in post 451, It sure looks like a typo error.

 

Weak closings forecast failures to penetrate ‘top side’ on the rallies after declines, while strong closings forecast failures to penetrate ‘down side’ on the declines after rallies. p47

[WHY? 16]

By the count you guys are taking today 2/18 it would be a SS day. The Taylor play today would have been the shorting shortly after 11 a.m. and covering this afternoon.

 

By my count today 2-18 was a buy day and the Taylor play would have been going long around 10.a.m and exiting around 11 a.m.

[monad 10]

By the count you guys are taking today 2/18 it would be a SS day. The Taylor play today would have been the shorting shortly after 11 a.m. and covering this afternoon.

 

By my count today 2-18 was a buy day and the Taylor play would have been going long around 10.a.m and exiting around 11 a.m.

 

In your post of 256, you mentioned:

 

"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"

 

1. So a short could also have been taken at the open on 2/18, on a SS day. The shorting opportunity after 11a.m would be a retest of that opening high and also premarket high of 795 level.

 

2. For Buy Day, a short was also viable on the open followed by a long as per you post of 256.

 

2.

[monad 10]

By the count you guys are taking today 2/18 it would be a SS day. The Taylor play today would have been the shorting shortly after 11 a.m. and covering this afternoon.

 

By my count today 2-18 was a buy day and the Taylor play would have been going long around 10.a.m and exiting around 11 a.m.

 

In your post of 256, you mentioned:

 

"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"

 

1. So a short could also have been taken at the open on 2/18, on a SS day. The shorting opportunity after 11a.m would be a retest of that opening high and also premarket high of 795 level.

 

2. For Buy Day, a short was also viable on the open followed by a long as per you post of 256.

[elovemer 10]

....if swing trend shifts back to an up trend here....which i think it could....

.... then i keep my original count...... with today thursday as middle day .... and friday as sell day .... BMSB cycle

.... by a one day shift of my original count.... with down swing trend

....feb 10 was sell.... with SMBS cycle.... with today tuesday as buy day .... and tomorrow wednesday as next sell day....

[WHY? 16]

In your post of 256, you mentioned:

 

"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"

 

1. So a short could also have been taken at the open on 2/18, on a SS day. The shorting opportunity after 11a.m would be a retest of that opening high and also premarket high of 795 level.

 

2. For Buy Day, a short was also viable on the open followed by a long as per you post of 256.

 

I need to look at a chart to respond to what you are saying here. I dont trade the emini. I am just posting stuff here for the benefit of those here who trade it since this is the instrument posters here seem interested in. Therefore, I don't have any good charting software for futures...etc as I trade stocks and don't need it. Can you post a 5 min chart for the emini between 9:30 a.m Eastern time and 11:30 a.m? IF I were trading the emini per taylor I would be interested in the price action from 9:30 a.m. onward. If you can post a chart that would help. thanks

Edited February 19, 2009 by WHY?

[rigel 10]

Great thread on Taylor folks

[monad 10]

WHY?

 

Here is the 5min chart:

 

As you can see the market gapped up on the open, so being a SS day, guess it would be o.k to short. The next opportunity came after 12 when it tested the opening High.

 

However if it was BUY day then the long was around 10a.m as you pointed out.

[WHY? 16]

Thanks Monad. I ask because when I look at those free chart sites on the net they show 9:30 near the low of that first drop. Again I have not traded the emini for years so i have no reliable charting system.

 

If your chart is correct then yes shorting a buy day or shorting a SS day was there at the open however the charts I have access to seem to differ from your chart. Also, going long was there later in the session per my buy day count. That long could have been sold same day as I mentioned or held overnight and sold today per taylors rules. However, most of you guys seem to be strict daytraders trying to adapt taylor to multiple entry/exits during the day so you probably wouldn't have held overnight. For Taylor daytrading could be held overnight. I suppose he was technically wrong on that description. About the discrepancies in the free net charts and your chart well i don't know why they differ but they seem to differ. On your chart you are showing the open at 9:30 a.m. ET correct?

[BlowFish 10]

Not sure if this helps....the time scale is exchange time so it starts at 8.30 central where the vertical dashed line is. 10 minute bars.

[monad 10]

Yes WHY? 9.30EST.

 

Your comments "By the count you guys are taking today 2/18 it would be a SS day. The Taylor play today would have been the shorting shortly after 11 a.m. and covering this afternoon.

 

By my count today 2-18 was a buy day and the Taylor play would have been going long around 10.a.m and exiting around 11 a.m."

 

I presume the times you mentioned are chicago time CST. but the chart should be the same ie. 18th Feb, Wednesday.

Edited February 19, 2009 by monad

[elovemer 10]

... high made first on buy day for reaction short play....

 

.... then changed to high made last ... fairly weak close

[elovemer 10]

count i am using.....

[elovemer 10]

.... monday

.... high made first on gap up.... sell day....

 

.... will down trend continue ?

[elovemer 10]

.... by this count.... then next short day would be on thursday

count i am using.....

[Larry22 10]

Today is a Buy day based on Richard's TTT excel spreadsheet.

Since I also had a potential wave count showing end of a big wave 3 end I was able to buy near the first TTT target around 744.3.

[elovemer 10]

... if strong close today tuesday... may look to buy higher bottom on buy day tomorrow wednesday....