Taylor Trading Technique

[elovemer 10]

due to the close on the low ..... flat close

---------

 

looks very likely that this could gap down tomorrow.... for a buy day low violation

[elovemer 10]

thurs, frid, monday .... cycle was positive

prev friday, prev tues, wednes .... cycle was negative

(prev mond .. holiday)

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

 

with today as buy day .... question is.... will this cycle end negative ?

measuring from buy day low tues... to short day high thurs...

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

 

if it does end negative .... it could confirm a new down trend.

[elovemer 10]

buy day low violation

---------

on sell day .... wednesday

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

the only long plays permitted are at or below prev low .... on buy day

or

buy day low violation ... on sell day

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

 

next play .... is a high made first on short sell day ... thursday

Edited March 2, 2011 by elovemer

[elovemer 10]

next buy day ... is friday

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

this cycle is a down trend trading area

.. weak cycle

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

will friday begin a stronger cycle ... or increased weakness

?

[elovemer 10]

today ... thursday...

2nd positive cycle ... since the down cycle

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

 

today is short sell day

... friday is buy day ... could get a pullback

 

next buy day ... is friday

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

this cycle is a down trend trading area

.. weak cycle

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

will friday begin a stronger cycle ... or increased weakness

?

[elovemer 10]

review.

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

long entries

buy day ... at or below prev day's low if low made first ( down move at open)

buy day .... above prev day's low ... if low made last but holding HL ( higher bottom )

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

sell day .... low made first ... violation of buy day low

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

 

the key is ... getting out when a low made first on buy day does not hold

then waiting for a violation....

 

if the run up on last cycle was large ... there is room for a low made last on buy day on a big decline

.... and a violation the next day is the best possible entry one can make

Edited March 3, 2011 by elovemer

[elovemer 10]

cycle chart

...........

..........

[elovemer 10]

for friday buy day ....

would not expect a low made last ... because still inside action on daily chart

not making new highs yet

also .... it has only been one rally day so far thursday ... not three

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

 

if low made first on friday .... then if it completes another up cycle... then the likelihood of a low made last on buy day would be greater

[elovemer 10]

buy day friday

prev low did not hold

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

 

next is possible violation of friday low ... on sell day monday

[elovemer 10]

one thing i am noticing about this method

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

the highs and lows ... are being made last more often than they are being made first

 

and the ones that are made first.... don't go very far.

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

 

friday buy day .... low made last

------

finished up from lows on strong volume.... but not near the highs

on monday sell day.... could see a violation of the low for a long

Edited March 4, 2011 by elovemer

[elovemer 10]

...monday ... sell day

 

either sit tight if long from friday

..... or buy a violation of friday low

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

 

next opp is short sell day tuesday

.... short at or above whatever high is put in on monday

[elovemer 10]

...if.... buy day low violation..... does not bounce

 

 

then target is buy day low

Edited March 7, 2011 by elovemer

[elovemer 10]

buy at friday low

close at buy day low ... for break even trade

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

 

tuesday.... short sell day

low made first for a scalp long

 

if tuesday does not close above 1311.25 which is buy day low.... the cycle is negative

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

monday was a close below daily 20sma.... bears need a 2nd strong close below daily 20sma ... for continuation

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

 

 

 

 

 

...if.... buy day low violation..... does not bounce

then target is buy day low

[elovemer 10]

short sell day.... low made first

[elovemer 10]

wednesday....

.... buy day .... low made first.

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

however... last three buy days had declines of more than 20 points each

 

almost reached previous high.... so take profit same day

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

fishy buy day because the decline is so small

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

thursday is sell day .... only possible trade on sell day ... is a violation of buy day low

....... with buy day low as first target

if it opens up and keeps going up .... just have to wait

 

small size of the decline when compared with previous buy days.... suggests that a violation may happen ... and it should be taken... because thursday is usually the biggest day of the week

... especially considering the giant sym tri on daily chart.

[elovemer 10]

target of a buy day low violation is buy day low... and no further

 

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

next opp is a short sell day...... scalp on a low made first

[elovemer 10]

cycle is negative

..........

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

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

[elovemer 10]

thursday is a buy day

a low made first ... at or below wednesday low

 

target is wednesday high...... next target is tuesday high

 

if a low made first does not hold. ...... target becomes thursday low

 

 

could be big ... as this is opex week ... and major levels on daily chart

[efficiency 10]

Hmmm. no posts since March. The "count" or 3 day B/S/SS cycle would be nice and neat in a perfect world. The world's not perfect.

 

The entire method is anticipatory based upon what generally takes place, but don't anticipate beyond your signals. Prices will appear contrary most of the time to the news.

 

Manipulation

Large operators start by buying all the stock above the market (establishing the trend as UP). Being active and up attracts the public. Outside demand is filed by the operator. Ideally, such demand is more than the amount he was "forced" to accumulate. At this point, he sells short. The stock ceases to advance. Experienced traders notice and start taking their profits. Weight of selling starts the stock down. The operator covers for both for profit and stabilization.

Then the process is started all over again. In essence, he buys on the way down and sells on the way up, but always working higher. He pushes toward objectives but there are false moves (such as when a rally is not a rally but a trap to lure buyers). The rise and fall of prices is the same for everyone.

 

BOOK TRADING

More or less records the rhythm and consider 3 days as a cycle. Playing for quick small, sure profits. The objective point each day is ideally made first. These are the surest and quickest profits. We are only concerned with the next OBJECTIVE (and don't care whether the price goes straight because the "real" trend and a thousand transactiosns are between objective points). The best indication of an objective is the prior high or low and is where we expect concentrated buying or selling (support or resistance). Many times the open is the objective.

 

No need to watch other than highs/lows of previous days for penetrations (or failures)IF objectives are made first. Expect penetrations of highs in uptrends and expect penetrations of lows in downtrends These define the real trend.. Moves start from either met objectives OR failures (which are indicative of a changing trend). Failures are caused by inside selling by those who think the price is high enough.. We get a "forecast" of this by flat or weak closes. Extreme highs are made relatively fast.

 

Overall market crosscurrents only confuse and do not change the ultimate direction This reinforces knowing (marking) WHICH objective was made first each day. This "real trend" can only be seen on an intra-day chart. When the signals are made first, there is no delay. Mixed sessions extend the cycle and must be watched.. In downtrends expect TWO "D" sessions and a BV before any rally starts Flat or weak closes are usually in a downtrend. A weak close is a failure of the 'R" column, a strong close is the failure of a "D" column. In uptrends, corrections should be one session and lows generally made first There are generally two swings per week, one uptrend and one downtrend. To remain an uptrend, prior highs must be penetrated.

 

We accept profits from a one day rally from the Buying Day low to the Selling Day high (and allow one more day to exhaust the cycle). Never be too anxious and use market orders. The book trader takes losses,but takes them when they are small, knows why and plays for better position. Protecting capital is fundamental to speculation.

 

Buying Day: Should open AT or retreat TO the prior low. Observe the number of points down from the prior day's high. Making the low first, we look for support buying (retest) and expect a rally to follow. Between the buying day low and the selling day high there will be thousands of transactions. We buy at or a little above the previous day low. Buying a higher bottom (than the prior day) usually results in a profit.. This is where rallies start and reflects support resulting from a rally before the close on a short sale day.. It reduces the "D" unit and forecasts a larger "R" unit two days in advance. If the close is near the high or penetrates through, sell out the same day. A buying day purchase must show a profit from the low to the close.

 

Buying TOO SOON means you need a little better timing. Buying on a low and then seeing it go lower does NOT prove you wrong unless the price closes flat. A flat or weak close suggests the operator is in no hurry to cover (and suggests the confusing Buying day Low Violation on the sell day). Sell out. You are wrong. A trader takes losses. He does not hold on and hope. He plays for better position.

 

Selling Day

This can be a zig zag day (intra-day reverse). The amount of rally from the buy day low to the close determines the selling objective. Weak or strong close? With an up close on the buy day, expect and up open and eventually a penetration of the high. Sell a wide gap or hold and wait for the prior high's penetration. If the open is flat or stalled, sell immediately (ducking the real sell off). Don't hold past a signal because the trend looks "good".

 

Short Selling Day

The day most likely to fool the public. The high should be made first (implies a gap up open) Ideally, the close should be near the low. We watch prices trying to anticipate the coming point to buy tommorow, We get this indication by the way prices close. A flat close means a lower open (causing the low to be made first) and buying early in the session. One or two leading stocks may be ramped up to flavor the overall market. Do not buy stock. Stay out.. A fast decline is indicative of a short sale day and leads to a higher bottom. A fast rise is to get the price higher without public participation.

 

Decline Column

Points out the number of buying opportunities in any one week.A normal decline halts around the prior day's low. A decline ZERO is always a higher bottom We can judge from past declines just what kind of decline is taking place now. A small decline unit is followed by a large rally unit when the stock is in an uptrend. A big decline takes time to consolidate around the low point (therefore the rally units are small after a large "D"). Don't expect a big R after a big D. The Big "W" is a sharp decline, fast rally, then a slower decline that fails. When the DCL is small the RLY is usually LARGE (it's also a higher bottom).

 

Rally Column

Shows the number of selling opportunities and how much of the decline has been recovered.

 

 

 

Buy High Column

The BH zero shows the termination of the three day swing. Penetration is a good place for a quick short sale if the high is made first.

 

Buy Under Column

Catching a temporary low before a rally.The BU zero points out the higher buying day bottoms (and hence higher prices). Flat close then a gap down open. Nothing in this columnis a strong and safe opportunity IF the low is made first. BU leads to BH failure.

 

Buying Day Low Violation

These occur 35% of the time. Results from buying too soon. and probably be the third session of decline.This occurs on the Sell day and reflects a flat closing on a buy day.. A rally from here is engineered via short covering. Buying this BV if the low is made first, is buying against short interest.You would not be buying at the top of a three day rise, but a rally caused by short covering is weak, so don't carry it too far. A BV with the low made first does NOT go to the normal selling objective. Always sell on a rally that makes up the violation. Buy BV's on gap downs but sell before the close.

 

In the context of being long only, the intent is to buy near the low of Day 1 and sell near the high of day 2. Day 3, was considered the short day. A buy day is LMF, a short day is HMF, and the sell day can be EITHER ( a zig zag day)

 

Putting these actions in a MATRIX:

 

BH HMF..............................................Short

 

BH LMF..............................................Hold ALL day

 

BU HMF...............................................AVOID

 

BU LMF............................................... BUY

 

 

Obviously "they" don't ring a bell telling you if today is LMF or HMF, that's where trading intution, and YOUR skill (not software) play their role.

[efficiency 10]

The entire method is anticipatory based upon what generally takes place, but don't anticipate beyond your signals. Prices will appear contrary most of the time to the news.

 

Manipulation

Large operators start by buying all the stock above the market (establishing the trend as UP). Being active and up attracts the public. Outside demand is filed by the operator. Ideally, such demand is more than the amount he was "forced" to accumulate. At this point, he sells short. The stock ceases to advance. Experienced traders notice and start taking their profits. Weight of selling starts the stock down. The operator covers for both for profit and stabilization.

Then the process is started all over again. In essence, he buys on the way down and sells on the way up, but always working higher. He pushes toward objectives but there are false moves (such as when a rally is not a rally but a trap to lure buyers). The rise and fall of prices is the same for everyone.

 

BOOK TRADING

More or less records the rhythm and consider 3 days as a cycle. Playing for quick small, sure profits. The objective point each day is ideally made first. These are the surest and quickest profits. We are only concerned with the next OBJECTIVE (and don't care whether the price goes straight because the "real" trend and a thousand transactiosns are between objective points). The best indication of an objective is the prior high or low and is where we expect concentrated buying or selling (support or resistance). Many times the open is the objective.

 

No need to watch other than highs/lows of previous days for penetrations (or failures)IF objectives are made first. Expect penetrations of highs in uptrends and expect penetrations of lows in downtrends These define the real trend.. Moves start from either met objectives OR failures (which are indicative of a changing trend). Failures are caused by inside selling by those who think the price is high enough.. We get a "forecast" of this by flat or weak closes. Extreme highs are made relatively fast.

 

Overall market crosscurrents only confuse and do not change the ultimate direction This reinforces knowing (marking) WHICH objective was made first each day. This "real trend" can only be seen on an intra-day chart. When the signals are made first, there is no delay. Mixed sessions extend the cycle and must be watched.. In downtrends expect TWO "D" sessions and a BV before any rally starts Flat or weak closes are usually in a downtrend. A weak close is a failure of the 'R" column, a strong close is the failure of a "D" column. In uptrends, corrections should be one session and lows generally made first There are generally two swings per week, one uptrend and one downtrend. To remain an uptrend, prior highs must be penetrated.

 

We accept profits from a one day rally from the Buying Day low to the Selling Day high (and allow one more day to exhaust the cycle). Never be too anxious and use market orders. The book trader takes losses,but takes them when they are small, knows why and plays for better position. Protecting capital is fundamental to speculation.

 

Buying Day: Should open AT or retreat TO the prior low. Observe the number of points down from the prior day's high. Making the low first, we look for support buying (retest) and expect a rally to follow. Between the buying day low and the selling day high there will be thousands of transactions. We buy at or a little above the previous day low. Buying a higher bottom (than the prior day) usually results in a profit.. This is where rallies start and reflects support resulting from a rally before the close on a short sale day.. It reduces the "D" unit and forecasts a larger "R" unit two days in advance. If the close is near the high or penetrates through, sell out the same day. A buying day purchase must show a profit from the low to the close.

 

Buying TOO SOON means you need a little better timing. Buying on a low and then seeing it go lower does NOT prove you wrong unless the price closes flat. A flat or weak close suggests the operator is in no hurry to cover (and suggests the confusing Buying day Low Violation on the sell day). Sell out. You are wrong. A trader takes losses. He does not hold on and hope. He plays for better position.

 

Selling Day

This can be a zig zag day (intra-day reverse). The amount of rally from the buy day low to the close determines the selling objective. Weak or strong close? With an up close on the buy day, expect and up open and eventually a penetration of the high. Sell a wide gap or hold and wait for the prior high's penetration. If the open is flat or stalled, sell immediately (ducking the real sell off). Don't hold past a signal because the trend looks "good".

 

Short Selling Day

The day most likely to fool the public. The high should be made first (implies a gap up open) Ideally, the close should be near the low. We watch prices trying to anticipate the coming point to buy tommorow, We get this indication by the way prices close. A flat close means a lower open (causing the low to be made first) and buying early in the session. One or two leading stocks may be ramped up to flavor the overall market. Do not buy stock. Stay out.. A fast decline is indicative of a short sale day and leads to a higher bottom. A fast rise is to get the price higher without public participation.

 

Decline Column

Points out the number of buying opportunities in any one week.A normal decline halts around the prior day's low. A decline ZERO is always a higher bottom We can judge from past declines just what kind of decline is taking place now. A small decline unit is followed by a large rally unit when the stock is in an uptrend. A big decline takes time to consolidate around the low point (therefore the rally units are small after a large "D"). Don't expect a big R after a big D. The Big "W" is a sharp decline, fast rally, then a slower decline that fails. When the DCL is small the RLY is usually LARGE (it's also a higher bottom).

 

Rally Column

Shows the number of selling opportunities and how much of the decline has been recovered.

 

 

 

Buy High Column

The BH zero shows the termination of the three day swing. Penetration is a good place for a quick short sale if the high is made first.

 

Buy Under Column

Catching a temporary low before a rally.The BU zero points out the higher buying day bottoms (and hence higher prices). Flat close then a gap down open. Nothing in this columnis a strong and safe opportunity IF the low is made first. BU leads to BH failure.

 

Buying Day Low Violation

These occur 35% of the time. Results from buying too soon. and probably be the third session of decline.This occurs on the Sell day and reflects a flat closing on a buy day.. A rally from here is engineered via short covering. Buying this BV if the low is made first, is buying against short interest.You would not be buying at the top of a three day rise, but a rally caused by short covering is weak, so don't carry it too far. A BV with the low made first does NOT go to the normal selling objective. Always sell on a rally that makes up the violation. Buy BV's on gap downs but sell before the close.

 

In the context of being long only, the intent is to buy near the low of Day 1 and sell near the high of day 2. Day 3, was considered the short day. A buy day is LMF, a short day is HMF, and the sell day can be EITHER ( a zig zag day)

 

 

Putting these actions in a MATRIX:

 

BH HMF..............................................Short

 

BH LMF..............................................Hold ALL day

 

BU HMF...............................................AVOID

 

BU LMF............................................... BUY

 

 

Obviously "they" don't ring a bell telling you if today is LMF or HMF, that's where trading intution, and YOUR skill (not software) play their role.

Edited May 14, 2011 by efficiency
Repeat Please DELETE

[snowbird 10]

I assume by "D" and "R" sessions you are referring to declines and rally's". You discuss "columns" in reference as well, so I imagine you tracking these sessions on a daily basis, possibly in a spreadsheet, to gauge market strength, weakness and response within the cycle?

 

Thanks,

 

snowbird

[efficiency 10]

D or DCL means decline from the high of day 1 to the low of day 2

 

R or RLY means rally from the low of day 1 to the high of day 2.

 

In conjunction it could be viewed as an "X" or cross.

 

 

You virtually cannot have a large rally day without a small DCL.

[waveslider 10]

D or DCL means decline from the high of day 1 to the low of day 2

 

R or RLY means rally from the low of day 1 to the high of day 2.

 

In conjunction it could be viewed as an "X" or cross.

 

 

You virtually cannot have a large rally day without a small DCL.

 

I'm lurking - can you explain your theory further

[efficiency 10]

It's not a theory., it's my interpretation of Taylor's book after reading it over and over,. taking notes, and re-wording it so it's coherent.

 

 

George Angell did the same thing concerning Taylor's aniclllary 3 day (B/S/SS) cycle by re-synchronizing the sequence with every 10 day low.

 

I don't use that 3 day cycle. Just that matrix I provided coupled with a little paitience. As such, it requires screen time.

[snowbird 10]

So if I understand your explanation and matrix correctly.

 

Today (Monday May 16th) was a BH HMF day on most of the US major indexes, with the high being made 1st in the session, followed by a penetration of Fridays low and then a decline the rest of the day.

 

There actually could have been two potential trades today... long when price opened below yesterdays low (target yesterdays low (this is the rally portion of the larger overall decline for the session so one must be nimble)... and a second possible short trade after the high made in the morning session (this is the larger "decline" portion of the session with a larger potential profit as well?)

 

Given this PA and Taylor theory (price never hit Taylor upper objectives for the day and closed weak), we would now be in at least a short term downtrend, and therefore would be biased for the same action tomorrow?

 

Your insights are welcome if I have interpreted incorrectly.

 

snowbird

 

One other question