Andrews Pitchforks

[Tasuki 10]

Hello fellow TL traders,

With all the great threads on Traders Lab, I couldn't find one on the Andrews Pitchfork, so I've decided to start one. The problem is, I know only a little bit about AP, but from what I've learned, I think they have great potential. Of course, the master of AP is Timothy Morge, and he has a ton of free info on how he uses pitchforks, but I thought it might be useful to recap some of it here on Traders Lab.

[having some sort of trouble uploading my chart---I'll post this message sans chart and then try to put the chart in the next post].

 

See attached chart. Shown is a bearish pitchfork. To create an Andrews pitchfork, you need three pivots, a high, low, high (bearish) or a low, high, low (bullish).

The pitchfork on this chart shows some classic features that Tim Morge teaches:

 

1) there is a nice test of the upper line, showing that the market appears to be respecting the three pivots you chose for the fork. This gives an increased probability that the fork will work. Morge says he NEVER trades a fork he's drawn unless it is successfully tested first.

 

2) Now that the fork has been shown to have some validity, the first target is the median line, the line in the middle. Morge says that there's an 80% probability that the median line will be reached (after a successful test of the fork), and he has some massive statistics to back up his claim. Mind you, he's a consummate master at finding just the right combination of pivots with which to draw the pitchforks. Aye, there's the rub--the "artistic" part of all this is knowing where and when and how to draw the pitchfork.

 

3) The idea is to place your short entry just after the test has completed, with a protective stop above the pivot at point C. The proper placement of stops is a big deal with Morge, and he has lots of useful rules for how and when to "hide" your stop behind support or resistance areas. He will move his stop (down, in the case of my bearish example on the chart) as soon as price has moved below a S/R area, but not before.

 

4) As price comes down toward the median line, you can (hopefully) see a region of back and forth action which Morge calls "coiling action". Pretty much it is what it sounds like---price action is coiling up and storing energy for a further move in the direction it was originally going. In other words, this is a continuation-type pattern.

 

5) Once price reaches the median line, it bounces off, and the wise trader will exit a large portion of his position, leaving a small portion (how much should be determined by your aggressiveness and risk/reward parameters) to see whether the price will continue to go down to the lower line--which is does in this example in rather dramatic fashion. I'm sure there are also statistics for the likelihood of reaching that lower line, but I'm not sure what the percentage is. If price does get to the lower line, the trade is over, and you should take your profits.

 

A few pointers:

 

1) Morge really prefers tick or volume based charts for trading with Andrews Pitchforks, and he has lots of examples to show how they work better than time-based charts.

 

2) When you can find pitchforks whose lines cross each other, these are considered energy points, and they often act like magnets for price action.

 

3) There are three types of calculations for Andrews pitchforks:

a) standard

b) Schiff

c) modified Schiff

There's a major difference between (a) and (b), but only a minor difference between (b) and ©.

 

4) There's alot more to this discipline, including some really elegant explanations of why they work in the first place.

 

5) For further research, I'd suggest doing a search for Timothy Morge. He has, I think, two websites---one of them is http://www.medianline.com. I can't find the other one right now. He's also given many lectures on the CBOT education series, at the MoneyShow, and lots of other places. Check out this link:

http://www.hotcomm.com/virmeetCID_EVENTARCHIVE.asp?CID=YMDZYQ

 

On 02/15/06 there's a recorded event that Morge gave. Worth viewing if you're new to pitchforks. He's a very organized speaker. He also spoke on 05/03/06, 08/1606, and 06/26/07--just peruse down the list on that link.

Personally, I listen to him every time he speaks.

 

6) The tool for drawing pitchforks is found on most charting packages. I'm using Tradestation, but I'm sure most platforms allow you to draw pitchforks. If you REALLY get into them, Morge and friends have created a plug-in for Neoticker which draws the forks for you automatically.

 

 

If there are other recorded lectures of Tim Morge, please post them here if you find them (and if they're free).

I'd also be very interested in hearing about other practitioners of pitchforks. The reason I've focussed so much on Tim Morge in this post is because he seems to be the only one who's mastered the use of pitchforks. If anyone knows of other experts who share their knowledge with the trading community, please let us know here at TradersLab.

[Tasuki 10]

Ok, hopefully my chart will upload now that the thread's been started.

[zdo 20]

Tasuki,

 

Thanks for starting this thread.

A couple general comments about forks

1 "when they're hot, they're hot and when they're not they're not!"

Forks seem to work like clockwork for a while on an instrument then all of a sudden they don't... forks very fickle

2. The angle of the mid line seems to have importance (and is maybe part of #1). Would like to see some research (on the distribution, etc) of angles that are involved in beautiful forks and those that are blatant failures.

 

All the best,

 

zdo

[Tasuki 10]

A couple general comments about forks

1 "when they're hot, they're hot and when they're not they're not!"

Forks seem to work like clockwork for a while on an instrument then all of a sudden they don't... forks very fickle

2. The angle of the mid line seems to have importance (and is maybe part of #1). Would like to see some research (on the distribution, etc) of angles that are involved in beautiful forks and those that are blatant failures.

zdo

 

zdo,

Thanks for your reply. I think I have a idea why your pitchforks may be working intermittently. The markets, of course, alternate between frenetic activity (e.g. early this week) and sluggishness (e.g. the latter part of this week). With time-based charts, this push-stop-push-stop action is captured faithfully, so the charts move in fits and starts. However, when you use tick charts or volume charts ("share" charts on Tradestation), the market's jerky action is smoothed out, and as a result, pitchforks work much more reliably. I think that the reason for this is that pitchforks, by their very design, capture the energy of the markets, so if that energy is smoothed out, the results are more reliable.

 

On the attached chart, you can see that my pitchfork is still working. It has a pretty steep angle, which I would have thought might make it less likely to be a valid fork, but the market is still respecting it.

Edited January 25, 2008 by Tasuki
clarification

[waveslider 10]

I love pitchforks personally. Agree that with a strongly trending market they're not the best - just like the wolfe wave.

 

I think people mis-use them a lot. Its all about where to start the fork. Has to be where the previous trend accelerated, I like at the 50% line.

 

You have to have some good rules to go along with it to validate the fork and confirm.

 

If you just take a trade in the area of confirmation, it's pretty good chances of nailing targets...

 

I look forward to your thread, Tasuki...

 

PS here's a fork with an interesting twist. The lower tine lines up with a WW target.

[Tasuki 10]

Waveslider, that's a most original pitchfork!

 

Here's another tip for drawing pitchforks. If you find that one (or more) of the pivots you want to choose for drawing your pitchfork is actually a double top or bottom, then USUALLY the first hump will be the better choice. See attached chart.

 

Something else you should notice from that chart is that pitchforks can provide pinpoint accuracy for targets, even on a weekly chart. Pretty amazing.

[waveslider 10]

I think you're right about where to start, in general I've found that a good place to begin a trendline or pitchfork is at a place where momentum begins a new wave.

So not necessarily where price peaks/troughs, but where the actual momentum begins, if that makes sense. Placement should coincide with an area of low volatility, because that's a place where price has settled a bit and a new trend can initialize.

 

NIce chart you posted.

[Szymon 10]

Hi Guys,

 

Here is a website link that contains a lot of information about AP, also there is a link in there that has the original Andrews Pitchforks course, that explains how to use them and from what points. Andrew made a lot of money trading this method, I am sure he incorporated other methods like action and reaction, bull of horns?, etc... All this information is in his course.

 

Regards

 

Simon

[Szymon 10]

Hi Guys,

 

Here is a website link that contains a lot of information about AP, also there is a link in there that has the original Andrews Pitchforks course, that explains how to use them and from what points. Andrew made a lot of money trading this method, I am sure he incorporated other methods like action and reaction, bull of horns?, etc... All this information is in his course.

 

Regards

 

Simon

 

 

Forgot the link

 

http://www.trading-naked.com/AndrewsPitchfork.htm

[waveslider 10]

Beautiful day for forking!

 

Here's a 699 tick chart of ES

 

I liked how the target came in here below VWAP and right at the 3 bar indicator (found elsewhere on these forums).

 

Great gap and run day from a temporarily overbought market.

[Tasuki 10]

Here's a valuable tip I just picked up from a free lecture by Tim Morge. He explains the proper use of Schiff and modified Schiff forks. See attached chart. To wit, you use these alternate calculations when you see a near-vertical move from A to B. If you try to use the traditional calculation, you'll find that the resulting pitchfork does not well-describe the price action, because the vertical move has thrown off the usual ebb and flow of market energies. Hope this is helpful.

[waveslider 10]

Tasuki,

 

FWIW, I think this is trying to force square pegs in round holes.

 

Why? Because the pitchfork isn't appropriate in all market environments, as some one here said - when it works, it works.

 

In the case you put up, just using a simple parallel channel would have worked just as well. Maybe its good to have that confirmation...

 

The channels seem to work best when pitchfork isn't.

 

By the way, nice WW going in ES right now - - a larger one with some room to move?

[swingscalper 10]

I'm relatively new to pitchforks and median lines (MLs). I've got some questions to turn to the experts on pitchworks and MLs here.

 

1) My understanding is that the effectiveness of technical analysis largely depends on the visibility of the pattern/signal. Pitchforks and MLs, in many cases (unless with confluence with Fib numbers and trendlines), are not that visible to the markets. Will this relative invisibility limit its effectiveness?

 

2) How often does the pitchforks/MLs set-up for intraday trading? Can it be used as a main tool for intraday trading? I've looked back the intraday data several months back and haven't found many good set-ups. If that is the case, then pitchforks/MLs are only secondary tools for intraday trading and their value are very limited with that regard.

 

I'm an intraday swing trader and I just want to convince myself that there are enough value in pitchforks and MLs therefore I can dig more into this subject. So far I'm not convinced. Correct me if I'm wrong.

 

Many thanks.

 

Swingscalper.

[psyogibottoms 10]

Well I'd be the first to say that they are definitely worth it. I've just recently discovered them, the AP that is, and have found it has been channeling forex pairs for me with great accuracy. If they slip out of range, it is usually because of my error and after a few moments I see the correction I should have made.

 

Still learning, but amazed at both how useful APs are an Gann Fans, though I'm still confused a lot on that topic. But the Forks are the bomb. IMHO.

 

PS Waveslider, I think if the fork had been drawn as Tasuki has mentioned earlier from the first mountain top in that triple peak, the corresponding fork would have nailed it. JMO - for what it is worth, and it seems like it would have been even more accurate.

[waveslider 10]

Hi Swingscalp, welcome to the forums, you too psyogi -

 

For your questions - -

1. Andrew's forks happen everywhere, and if you can't see one in market you are looking out, if you zoom out a couple of time frames you'll see it. The times that they don't work are in an accelerating trending market. Markets that are trending strongly don't swing so much, so price won't often reach the andrews target.

Are they a self fulfilling prophesy? Probably, particularly on the smaller time frames. I think there are plenty of pros using AP and trendlines/channels exclusively.

 

2. AP sets up all the time, at least once a day in ES I'd say on the lower timeframes. As you train your eyes by applying it, you'll see.

 

PSyogi - - In that chart I just posted it was a different pattern than AP, called a wolfe wave. Tasuki and I go on yakking about that on another thread. WW are more subjective and require a deeper level of understanding of market geometry.

I've been actively playing this particular pattern, it's working out pretty well.

[waveslider 10]

Here's one from friday.

 

In my thinking, the trade was validated.entry was at the crossing of the yellow line.

 

At each blue arrow there was further confirmation. The gold horizontal lines are pivot lows formed at price levels that were previously pivot highs in the preceding move downward.

 

I was in the trade at the last arrow (in SPY) when price was breaking above that range.

 

AP is very useful! Please post charts you see as valid so we can all benefit from the failures as well as the successes.

[waveslider 10]

Killer day for trading pitchforks.

 

Here's the SPY 3 min chart. There's even more on the tick charts - - -

 

1st pitchfork had VWAP as a confirmation target.

 

2nd pitchfork began at conservative 50% point.

[froggy 10]

Hello everyone (my first post here on the forum). I've been trying Pichforks for a couple of weeks and they're looking quite interesting. Only had 13 completed Pitchfork trades, with 7 successes and 6 losses, resulting in a small profit so far.

 

Do you think Pitchforks work best in particular markets? For example I'm mainly trying forex currently but have tried coffee (success) and wheat (loss), and I've got a dodgy-looking 5 minute downward pitchfork going on Euro Schatz bonds currently. Would you think forex is best for Pitchfork-based trading or individual stocks, indices, commodites etc?

[waveslider 10]

Froggy,

 

I think pitchforks work better in futures markets. Why? Because they tend to swing more (trend less) and are volatile. Any market that seems to "swing" more than trend is a pitchfork market.

In trending markets people use the pitchfork as a channel type tool. It seems to work alright, but I think drawing channels is just as effective. The pitchfork is designed to use market geometry to locate price targets.

Trending markets will accelerate as trend matures, and this means that pitchfork will not work so well (unless you like bent pitchforks, maybe for farmers in San Fran.). In trending markets, fanning channel lines is the best.

Just my 2 cents, hope that helps.

[froggy 10]

Thanks Waveslider - I take it that by futures markets you mean forex. You've probably helped quite a lot as I was thinking that trending markets would have been good for pitchforks as long as you catch the right pivots on a temporary downdrift (for, say, an upward trending market).

[waveslider 10]

No, I meant futures...

Forex will trend more while futures tend to swing. I believe channels work best for trending markets because you can accelerate them.

[froggy 10]

Ooops! Sorry, I'm from England - possibly a bit different in terminology but Futures encompasses everything to me...stock futures, forex futures, index futures, bond futures, commodity futures etc. I might be wrong...again ...but do you mean commodity futures?

 

Apologies if it seems I'm being pedantic but any pointers in the right direction of what to concentrate on would be really appreciated - after a promiing start my pitchfork profit has diminished to zero so far, but I've been mainly concentrating on forex which it sounds like is probably the wrong way to go.

[Tasuki 10]

Ooops! Sorry, I'm from England .

 

Froggy, FOREX refers to the foreign exchange currency markets, some of which have futures contracts derived from them. For example, the FOREX symbol for the Eurodollar vs the US Dollar is EURUSD, and its futures derivative is ECM08 (for the current front month futures contract).

 

Taz

Edited April 16, 2008 by Tasuki
correction

[waveslider 10]

Hi Froggy, I guess I should have been more specific also!!

 

I meant specifically the e-mini futures (I am most familiar with them though I watch FOREX a lot).

 

The e-mini contracts have huge amounts of volume intraday and are used extensively by larger players as a hedging vehicle.

 

There is a ton of swing in these e-mini contracts, particularly the S&P e-mini which does have a tendency toward mean reversion than the others.

 

If you are just getting started, I recommend trading ONE emini contract until you can afford to trade TWO based on your EARNINGS. Sorry for the capitals, but its VERY easy to blow out an account in these markets because of their leverage and quick moves.

 

You may find a better futures market for pitchfork. What is remarkable about the S&P emini is the fact that it is used as a hedging vehicle, big players are not necessarily participating in it "naked" (without a corresponding hedged position). So when and where they decide to buy back a short position may not be "logical", but instead based on their model. For this reason (volatility) I see it as an exceptional market to find swings in..

 

Post some charts of how you are applying the pitchfork when you get time and we can see how your thinking is developing.

[namstrader 10]

Here is the YM today April 22. I see many pitchforks all the time.

 

This is from a 24H chart 5minute