Taylor Trading Technique

[WHY? 16]

Hello WHY?,

 

Recognizing that my trading ignorance would fill silos: When you reference the dates and numbers below, is that the SPX? If so, I get my EOD data from TC2000 - so when I get home tonight, would I be able to look at the SPX and follow along?

 

Any chance you would consider picking an EOD stock or something like the QQQQ or SPY to occasionally discuss?

 

TIA

 

Gary

If you like name a individual stock or two in tc2000 you would like to track and/or the QQQQ and I will help in that area. I suggest get a decent price stock that has good volume and also out of curiosity pick a stock under 1.50 share (from .20 to 1.50) that has at least 100,000 shares on average (more is better) a day and doesnt trade in highly defined range, and we will track it

[Dogpile 10]

WHY?,

 

if I use the 'look back at the last 10 days and the lowest low was the buy day' rule --- then today looks like the buy day. is this the kind of day you software adjusts for or are you sticking with idea that tomorrow you will only do a short since today was a sell day and therefore tomorrow would be a 'sell short' day?

 

dog

[WHY? 16]

<<What do you think dogpile have we bottomed on the S&P? Today is a taylor sell day.>>

 

lol. happily, I don't have to make that judgment --- I just take the set-ups as they come.

 

<<May I ask you where you would start and why?>>

 

well I was wrong on my count but I will tell you why I thought 10/11 was a day to look to short.

 

Because we had built a ton of volume at 1570 on 10/5. We tested up away from that on 10/9. 10/10 we build a lot more volume at 1570. 1570 had become a 'heavy' point and this price was high in the range. The gap up on 10/11 surprised me somewhat but given the volume profile and the fact that 4 of last 5 days traded 'low first, high last' -- I felt that it could be a bear trap. It was.

 

Taylor-wise, there were 2 low to high days and a violation of the 2nd high -- that is a short set-up in its own right. This was my thinking at the time. I was right on the bear trap and made decent money that day -- though only 5 or so points. This past Friday was a MUCH better day for me. The key to me is to just make money every day and occassionally you make that big win. 10/11 was not my big-win day, 10/19 was... just the way it goes.

Dogpile is it possible you are trying to use intraday volume info to help you determine if it is a B,S, or SS day? If so, then you could get caught on the cross currents of the day. Taylor is an EOD system that would use daily charts to make its decisions (if one uses charts at all). The intraday action at any one point would not determine what day of the cycle it is. That is determined by overall daily action as represented by a daily chart or just the numbers. All with an emphasis on the open, high. low close of THE day to determine the next day of the cycle. Each day that decision is already made BEFORE the market ever opens. The only thing intraday action is used for is for tape reading to fine tune the entry points within the main daily trend. But the main daily trend is already anticipated before the market opens.

 

Take today for instance, I mentioned in an earlier post that it was a Taylor sell day. With the previous weak condition of the market and the low close of 10-19 one would not expect an "ideal" sale day but a possible chance for BV. However, once it traded down and made the BV you would use intraday tape reading to decide if it had bottomed. If so ,you take a long position. In all fairness that would have been taken after the open this morning and not in pre market hours so one could have gotton in about 1499 or 1500 around 10.a.m. The rules on a BV state to sell the long position at or thru any penetration of the low of the previous buy day (in this case 10-19). By 10:30 you could have sold the longs at 1505 or should you have chosen to wait a little longer you could have sold the at 1515 or so. So you capture 5 pt or 15 points on the main part of the trend. You are out of the market for the day. The reason you don't hold that long for long or overnight is because the market is still weak. Showing a litte more strenght but still weak. BV are indications of weakness.

[Dogpile 10]

<<Dogpile is it possible you are trying to use intraday volume info to help you determine if it is a B,S, or SS day?>>

 

I am not relating my volume analysis to a taylor day -- I am not a pure-taylor guy --- I am a hybrid -- I find things that 'speak' to me and use them. I use short-term set-ups that I feel have underlying 'concepts' -- like Taylors -- behind them. Thus, I think of Taylor for his concepts -- I think of Market Profile for its concepts etc.... I am just trading when the concepts I believe in align with my short-term set-ups.

 

I am here simply because I would like to learn Taylor better -- but I am a profitable trader without Taylor --- I would just like to understand True Taylor.

 

What I find is really sweet is when I learn something new and then sometimes that lines up with something else I know to be a profitable concept -- then you have more confidence to take that trade. That is what learning Taylor better could REALLY do for me.

[WHY? 16]

I am not relating my volume analysis to a taylor day

I thought you might relating intraday vol to the cycle because when I look at your post #63 you state you thought that 10-11 was a "for sure SS day". Then on your post #74 you mentioned "why" you thought that 10-11 was a day to short, that reason being the extreme vol around 1570 intrady on another previous day. So, I kind of put the two post together and thought you might be saying that the vol around 1570 on another day caused you to think that 10-11 was a for sure Short sell day.

 

Also, the pinball; isn't that Rascke's way or a modified Rascke way to rephase the cycle? Doesn't that operate on volume? Or have I totally misunderstand what pinball is about? It could be a way to get a clearer rephase???

 

If you arent using your analysis of volume and relating it to Taylor I would encourage to try and do that. You might discover a better way to rephase Taylor. Angell had his way, Rascke hers, Taylor could have, if he wished. I built rephasing into mine. I just havent really found that much benefit, if any, to rephasing. Maybe Taylor knew that, therefore he did concern himself with it??? Look at it this way. Over a 10 day period we are talking of aprox 3 - 3 day cycles. Taylor method is short term trading anyway, unless you are using it to trend trade. A lower low made 4 months ago wouldnt affect the price action today in terms of short term trading..at least not that much. Me thinks that the most recent price action, say 10 to 15 days, within its context (accum, dist, markup, markdown) would have more to do with the pressures of the market that would affect say the next 2 to 3 days time frame. So, I really just wouldn't worry too much about a day that 3 months ago was a buy day but when I rephase today that same buy day 3 months ago is now a sell day. It really doesn't matter. What matters is the shorter time frame. That is probally why Taylor never cared to go back more than 10 days. Does this make any sense or have I just confused the issue even more?

[Dogpile 10]

<<Does this make any sense or have I just confused the issue even more?>>

 

 

I didn't say anything about going back 3 months so I am not sure what you mean by this last post. I was just asking if you thought today might have been action consistent enough with a 'buy day' to change your thinking for tomorrow. You mentioned today was a sell day and therefore tomorrow would be a 'sell short day' in which longs are not consistent with Taylor. Again, I am just curious on how you interpreted todays action with how it relates for tomorrow. I may very well go long tomorrow -- or I may not -- I am just trying to understand any 'adjustments' made in how you are thinking about it.

 

Today worked out well. We moved below the previous day low and could therefore use the previous day low plus a bit more as a target. This was 1505+ on the S&P futures -- call it 1505-1510.

 

This was a nice target to have (1505+) because I had no other pivot to work with given the trend-down nature of Fridays action. There was no real zone to short into -- therefore I favored the long-side early. I had the Taylor method as a roadmap and we had 'upside range expansion off opening price' (a market profile concept) as confirmation of that bullish roadmap.

 

I did a long-side trade and made some money this morning. Then later did a short-side trade and made a lot on that one. I then stopped trading though I really could have tried another long as my oscillators were extended to downside just as we re-entered that high-volume 1505 congestion zone. In retrospect on the day, I am pleased but feel I did miss a good long on Russell this morning -- but that is ok.

 

For tomorrow, here would be the my guidelines:

 

If today were a buy day -- I would actually look to go long on the day after a buy day if we test down 'first.' An obvious spot would be a test down into the high-volume 1505 area -- looking for a morning reversal and a range expansion type of move up. If we test up first tomorrow and it was a buy day, then I will look to short, should price action favor that (ie, not something like strong upward range expansion off opening price on big volume). I don't really see an obvious high-volume zone right now to short into so this might be tricky. But Taylor could also do a short on a move above todays high tomorrow -- so that is a possibility.

 

If today were a sell day -- tomorrow would be a sell-short day and we would look to short above todays high. No longs on a sell short day so that would not be an option. This is what you (WHY?) called today -- a sell day -- making tomorrow a sell-short day. Will just have to see.

 

If today were a sell-short day, making tomorrow a buy-day -- then we could go long on a viloation of todays low or on a 'higher bottom'. We could also go short on a 'high made first' type of set-up where we violate todays high tomorrow.

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

 

Here is the funny thing, even if you don't know how to count Taylor days -- you have a 2 in 3 chance of being consistent with Taylor if you just look to buy on a test lower (lower low or higher bottom). And you have a 3 in 3 chance of being consistent with Taylor if you look to short a test of a previous high -- since shorting is allowed on any of the 3 days. Thus, the only time you will be out of sync with Taylor is the time you are going long right into a sell short-day. Does that make sense? You don't really have to count days -- you just have to be a good short-term trader and follow those basic rules and you 'can' be right 5 out of 6 times... I say this only because I can honestly say I don't understand how Taylor is counting days yet. I can 'try' -- but I just can't get definititive answers about how you KNOW this or that day was what.

[WHY? 16]

I didn't say anything about going back 3 months so I am not sure what you mean by this last post

. The three months statement had absolutely nothing to do with anything you have said and I didn't mean it to come across that way. I was trying to get the point over that what is more important is the closer action and it wouldn't matter if rephasing changed an orginal Taylor buy day to say a sell day that happened 3 months ago, or even say 1 month ago. That is all.

 

I was just asking if you thought today might have been action consistent enough with a 'buy day' to change your thinking for tomorrow. You mentioned today was a sell day and therefore tomorrow would be a 'sell short day' in which longs are not consistent with Taylor. Again, I am just curious on how you interpreted todays action with how it relates for tomorrow. I may very well go long tomorrow -- or I may not -- I am just trying to understand any 'adjustments' made in how you are thinking about it.

Taylor would maintain that tomm 11-23 will be a Short sell day IF he had been trading this stock for say 4 or 5 weeks.

 

Today worked out well. We moved below the previous day low and could therefore use the previous day low plus a bit more as a target. This was 1505+ on the S&P futures -- call it 1505-1510.

 

This was a nice target to have (1505+) because I had no other pivot to work with given the trend-down nature of Fridays action. There was no real zone to short into -- therefore I favored the long-side early. I had the Taylor method as a roadmap and we had 'upside range expansion off opening price' (a market profile concept) as confirmation of that bullish roadmap.

 

I did a long-side trade and made some money this morning. Then later did a short-side trade and made a lot on that one. I then stopped trading though I really could have tried another long as my oscillators were extended to downside just as we re-entered that high-volume 1505 congestion zone. In retrospect on the day, I am pleased but feel I did miss a good long on Russell this morning -- but that is ok.

Great! Glad Taylor is perhaps helping you fine tune. Every bit helps!

 

For tomorrow, here would be the my guidelines:

 

If today were a buy day -- I would actually look to go long on the day after a buy day if we test down 'first.' An obvious spot would be a test down into the high-volume 1505 area -- looking for a morning reversal and a range expansion type of move up. If we test up first tomorrow and it was a buy day, then I will look to short, should price action favor that (ie, not something like strong upward range expansion off opening price on big volume). I don't really see an obvious high-volume zone right now to short into so this might be tricky. But Taylor could also do a short on a move above todays high tomorrow -- so that is a possibility.

Nothing wrong with that thinking! Actually, by rephasing via taylor 10 day deal and calling 10-23 a Taylor buy day you have just created two possible opportunities for yourself. A short (probable because of the high close today 10-22) and then cover and go long on decline IF made early in the session. However, I would take care on that long. We got a little strenght back in the market today but it is still an extremely weak market. I wouldn't ride any long up too far unless the intraday tape tomm shows alot of strenght coming back into the market. If you take a long position tomm and market is grudgingly going up and it is getting in the afternoon I wouldn't hold that long for selling on 10-24 (as would be normal) but I would cinch my profits before the day closed. A weak close on a buy day is not good news for a long position. As Taylor would say "cinch" your profits.

 

If today were a sell day -- tomorrow would be a sell-short day and we would look to short above todays high. No longs on a sell short day so that would not be an option. This is what you (WHY?) called today -- a sell day -- making tomorrow a sell-short day. Will just have to see.

Yep, you got it. I will stick with Taylor on this one and call it a SS day. If the market would have showed more strenght today 10-22 I might would rephase (using Taylors 10 day guideline or my software rephase) and see if it would change tomm to a buy day. If it did I would be giving myself 2 opportunities. But since the market was stronger than 10-19 but still weak I'll stick to my SS bias for 10-23.

 

If today were a sell-short day, making tomorrow a buy-day -- then we could go long on a viloation of todays low or on a 'higher bottom'. We could also go short on a 'high made first' type of set-up where we violate todays high tomorrow.

That is correct. But to make it more precise; To go long it must do so early in the session. You wouldn't want to go long if it made the low at the end of the session tomm 11-23 even if tomm is a buy day. Also to short tomm if you call it a buy day that opportunity must present itself early in the session. You would not short on a buy day high made last for you would be bucking the trend.

 

Here is the funny thing, even if you don't know how to count Taylor days -- you have a 2 in 3 chance of being consistent with Taylor if you just look to buy on a test lower (lower low or higher bottom). And you have a 3 in 3 chance of being consistent with Taylor if you look to short a test of a previous high. Thus, the only time you will be out of sync with Taylor is the time you are going long right into a sell short-day. Does that make sense? You don't really have to count days -- you just have to be a good short-term trader and follow those basic rules and you 'can' be right 5 out of 6 times... I say this only because I can honestly say I don't understand how Taylor is counting days yet. I can 'try' -- but I just can't get definititive answers about how you KNOW this or that day was what.

Interesting eh??

[smoothdrive 10]

If you like name a individual stock or two in tc2000 you would like to track and/or the QQQQ and I will help in that area. I suggest get a decent price stock that has good volume and also out of curiosity pick a stock under 1.50 share (from .20 to 1.50) that has at least 100,000 shares on average (more is better) a day and doesnt trade in highly defined range, and we will track it

 

Hello WHY?

 

Thank you very much! A suggestion or two from me for the larger picks would be the QQQQ, CAT or GE. I like your idea for a small priced pick. First, I ran a scan for all stocks in the universe having a price between $.20 and $1.50 with a 30 days simple moving average of volume over 100,000. That scan provided about 120 stocks. So, I increased the volume to 500,000 and that provided the following:

 

ASTM CMGI CNXT CPST CRGN DVW ENCY GNTA IMH INPC INSM MCZ MGRM

MOVI NGEN NWD ONT OPTV POTP PTN QTWW REV SNUS TOA TXCC VG ZHNE

 

If you don’t mind, perhaps you could take a peek at a few of these and pick the one you think would be a good candidate. You would have a much better eye for this than me.

 

Most kind of you sir. Thanks and take care,

 

Gary

[WHY? 16]

Hello WHY?

 

Thank you very much! A suggestion or two from me for the larger picks would be the QQQQ, CAT or GE. I like your idea for a small priced pick. First, I ran a scan for all stocks in the universe having a price between $.20 and $1.50 with a 30 days simple moving average of volume over 100,000. That scan provided about 120 stocks. So, I increased the volume to 500,000 and that provided the following:

 

ASTM CMGI CNXT CPST CRGN DVW ENCY GNTA IMH INPC INSM MCZ MGRM

MOVI NGEN NWD ONT OPTV POTP PTN QTWW REV SNUS TOA TXCC VG ZHNE

 

If you don’t mind, perhaps you could take a peek at a few of these and pick the one you think would be a good candidate. You would have a much better eye for this than me.

 

Most kind of you sir. Thanks and take care,

 

Gary

Do you know how to create a watch list in TC 2000? If so you can be a help to me and save me some time. Create a watch list and call it Taylor. Put in all the stocks in your list above. Next export this to a file. Here is how I need you to export it from within Tc2000.

 

Exporting Stock Data to a file T2000

 

Download end of day data from wordens 40 minutes or and hour after the market closes. Select the Taylor watch list that has the stocks you put in there (this is very important as you only want the data for these stocks to be exported not on all 10,000 stocks). Next click on Databank at top then "export to text". Again verify that the "List to Export" now says "Export Taylor". Next instructions are VERY important. Follow them exactly. You should only have to do the following data field setup onetime not each day. You have clicked on "Export to Text" and you are at the export screen and have made sure that the list to export is the "Export Taylor list" Now to set up the data fields. Under "Available Data Fields" one by one select the below data fields and click the "add" button. You will have to do this for each field one by one. Select ONLY these fields and make sure they appear in ORDER in the right side of the screen: open, high, low, close, volume, symbol, company name, exchange, and the last field called Date YYYYMMDD. DO NOT select any other of the field options. Next click on "single file" and in the blank space type in this name for it: taylor.txt

 

Next select 40 days for the amount of data, then select the drive and directory where you plan to export it. Send it to a place you can readily find it such as C: or desktop. Next select "descending". Click on export. In just a few seconds it will export 40 days of data for all the stocks in your Taylor watch list. Email this file as an attachment to me. I am sending my email address to you via private mail. This is what I need you to do each day 1 hour after market closes (to give worden time to uodate all the data). Logon and update worden. Then export that tayor watchlist each day and send it to me. That will save me alot of time. Let me know of you can do this.

 

Thanks

[smoothdrive 10]

Just sent it.

 

Do you know how to create a watch list in TC 2000? If so you can be a help to me and save me some time. Create a watch list and call it Taylor. Put in all the stocks in your list above. Next export this to a file. Here is how I need you to export it from within Tc2000.

 

Exporting Stock Data to a file T2000

 

Download end of day data from wordens 40 minutes or and hour after the market closes. Select the Taylor watch list that has the stocks you put in there (this is very important as you only want the data for these stocks to be exported not on all 10,000 stocks). Next click on Databank at top then "export to text". Again verify that the "List to Export" now says "Export Taylor". Next instructions are VERY important. Follow them exactly. You should only have to do the following data field setup onetime not each day. You have clicked on "Export to Text" and you are at the export screen and have made sure that the list to export is the "Export Taylor list" Now to set up the data fields. Under "Available Data Fields" one by one select the below data fields and click the "add" button. You will have to do this for each field one by one. Select ONLY these fields and make sure they appear in ORDER in the right side of the screen: open, high, low, close, volume, symbol, company name, exchange, and the last field called Date YYYYMMDD. DO NOT select any other of the field options. Next click on "single file" and in the blank space type in this name for it: taylor.txt

 

Next select 40 days for the amount of data, then select the drive and directory where you plan to export it. Send it to a place you can readily find it such as C: or desktop. Next select "descending". Click on export. In just a few seconds it will export 40 days of data for all the stocks in your Taylor watch list. Email this file as an attachment to me. I am sending my email address to you via private mail. This is what I need you to do each day 1 hour after market closes (to give worden time to uodate all the data). Logon and update worden. Then export that tayor watchlist each day and send it to me. That will save me alot of time. Let me know of you can do this.

 

Thanks

[WHY? 16]

For 10-23

CRGN is an SS day - short at or near 1.00 - 1.02 if opens normal cover around .96

 

GNTA - Sell day - if it trades under 1.05 by noon go long on a bv when it bottoms. Sell long same day on any rally thru 1.05 to 1.08.

 

IMH - SS day - short near 1.06 /1.07 if it makes it there grudgingly by 11:30. If it starts up fast early in session hold off and short at a higher point. This stock can do that. Otherwise, do nothing on this one. No longs. Cover on any decline the same day.

 

MCZ - Buy Day - short on any penetration of 1.18 early in session but watch tape! Cover on any decline to around 1.09 to 1.10. iF it does all this by 12:00 then take a long postion around 1.08 /1.09 after covering your short. Watch the tape on this one.

 

 

Will send some more later. Gotta sleep.

[Dogpile 10]

just my 2 cents:

 

individual stocks are loaded with 'chaos' in the short-run. I think you are better off sticking to liquid ETFs that don't have futures contracts attached to them. The ones I have been studying are EEM (emerging markets ETF trading 10-20 million shares per day) and XLF (the financial ETF which has been trading 60 million shares per day). The Brazil Index (EWZ) is also very active. XLE, the energy ETF, is very active but I just don't like the way it trades.

 

with ETF's, you will never have to worry too much about some individual stock rumor that will cause the instrument to drop -5 or -10 or -20% out of nowhere. just my opinion.

[OAC 10]

 

XLE, the energy ETF, is very active but I just don't like the way it trades.

 

.

 

If you like to trade classical patterns, XLE has many clearly cut patterns on an intraday basis. I find it has less shakeouts probably due the fact it is driven by both equity and oil prices.

Sector ETFs as whole are good candidates for Taylor type of analysis

" Sector rotation = Big money manipulation."

[WHY? 16]

Shorting ES handed you 8 good points already by 10:10.

[Dogpile 10]

yah, sweet move off the violation of previous day high.

 

1505 is high-volume zone so no more shorting for me if/when it goes near there.

[WHY? 16]

Or 10 points

[WHY? 16]

yah, sweet move off the violation of previous day high.

 

1505 is high-volume zone so no more shorting for me if/when it goes near there.

As Tayor would say it "penetrated" the previous days high and made the objective! If it hits 1505 area you looking to go long or call it a day?

[Dogpile 10]

no, looking long potentially before 1505 -- just no more shorting if it goes that low.

[WHY? 16]

no, looking long potentially before 1505 -- just no more shorting if it goes that low.

Are you doing multiple shorting? Shorting intraday rallies ...covering on declines as it moves down?

[WHY? 16]

What if it breaks hard south of 1505?

[WHY? 16]

Just an update on the pennies trading taylor style

 

CRGN made target for shorting at 1.00. Wait for the decline to .97 or .96. Try to capt .03 anyway. It is hard to find a broker that will let you short stocks under 5.00 share but I am doing this so folks can see how taylor works on the pennies.

 

GNTA - No play today. Did not make a BV early

 

IMH - Short at 1.06 out .99 10,000 shares X .07 $700.00 or 5000 shares X .07 = 350.00. Not bad to make this on a penny stock. You just borrowed it for a couple of hours or so.

 

MCZ - short at 1.17 waiting to cover around 1.10 to 1.12.

[Dogpile 10]

<<Are you doing multiple shorting? Shorting intraday rallies ...covering on declines as it moves down?>>

 

well, I only do a few trades a day...

 

I play:

1) the FIRST pullback in what I think is a new move

2) a good 'a-b-c' corrective pattern if the original move appears to have residual momentum

3) I fade moves when my oscillators are extended as we enter a 'high-volume' zone.

 

Those are my basic trades. Across ES, YM, NQ, ER2... a few trades set-up every day. I do miss some and that is frustrating.

 

Basically, I am just trying to do what everyone else is -- synchronize 2 timeframes. For you, it seems to be the Taylor/3-day type of timeframe with a 'micro-timeframe' -- you call it 'the tape' -- but same thing.

 

For me this is:

 

1) A Daily/Taylor type of timeframe with a very short-term timeframe (like you)

or

2) A very short-timeframe with an intermediate timeframe like a 15-min chart

or

3) A breakout from an area of known 'balance' - this is when daily and 15-min charts are both indicating the same thing --- both are 'coiled up' and ready for a directional move.

 

Some trades I will just play for a few points. Other trades I will scalp off some of it early and get a free ride for a bigger move.

 

I have opened a second futures account to try to trade some things with 'higher timeframe' hold -- more like trade just small size and look for the next 20-40 pt move on something like RUS.... not there yet though.

[OAC 10]

OK, I am revealing my trade secret here:

(1) If prices stay above VWAP most of the day = Buy Day

(2) If prices oscillates above and below VWAP most of the day = Sell Day

(3) If prices stay below VWAP most of the day = Sell Short Day

[Dogpile 10]

<<OK, I am revealing my trade secret here:>>

 

lol, there are no secrets -- just valid concepts.

 

here is my secret:

 

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

 

if todays VWAP < yesterdays VWAP, look for hard down - ie, downside range expansion off opening price... also look for 'low made first'

 

thus,

VWAP > VWAP[1] is most consistent with a 'sell day' (buy on weakness)

VWAP < VWAP[1] might be a 'buy day' if 'low made first'

 

most important:

be careful if 'range expansion off opening price'

and

be very wary of 'high made first'

and

err on the side of bullishness -- the market most of the time goes up -- or it drops quickly

if its not dropping quickly, odds are its going to go up soon.

[Dogpile 10]

example of a 'set-up':

 

this is trying to enter for a move down on a 'high made first' day. The market has corrected UP on a 15-min timeframe with A-B-C type of 'structure'

 

see chart