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Garry,
The Double-RePo is a price pattern invented/discovered
by Joe DiNapoli. See the website http://www.fibtrader.com
for details. DiNapoli has 9 predictive price-patterns.
One of the nine is actually a category of patterns,
specifically called "price pattern failures". The concept is that
price patterns are widely monitored and traded, so when
such a pattern fails (price goes the wrong way), there
are many people who are in a losing trade, so the resulting
price move can be very profitable for those who trade
these failures..
For example, a stock may be making a typical Triangle,
or Head-and-shoulders price pattern. People take positions
based on the typical outcome of such patterns. If the price
movement as the pattern completes actually moves in the direction
opposite to what was expected, many traders will exit via their
stop-loss orders.. If you know how to define such a failure
you could benefit by taking a position as the pattern fails,
when other traders are about to start panicking.
I don't trade failures all that often, the Double-RePo is one
of my favourites though.
Best wishes,
-Neal.
>At 10:05 AM 7/7/98 +1000, you wrote:
>Neal,
>
>I am sending this straight to you, if you would like to reply via the list
>that is OK with me.
>
>You say you use Double-Repo's and price pattern failures, can you please
>give me more info on these or a reference so that I can find out more.
>
>Thanks
>
>Garry
>
>gj@xxxxxxxxxxx
>
>-----Original Message-----
>From: Neal Hughes <neal@xxxxxxxxxxxxx>
>To: bullcom@xxxxxxxx <bullcom@xxxxxxxx>
>Cc: realtraders@xxxxxxxxxxxxxx <realtraders@xxxxxxxxxxxxxx>
>Date: Tuesday, July 07, 1998 2:56 AM
>Subject: Re: leading/lagging indicators
>
>
>
>At 10:23 AM 7/6/98 +0200, you wrote:
>>Good morning Rt´s ,
>>
>>I need a little help from you. I´m running constantly in problems when
>>trying to decide which indicators are leading and which are lagging. Could
>>you please just list some, so I get a clearer picture of leading and
>>lagging (I guess I´m lagging on this)
>>
>>Thanks in advance - Ulrich
>>
>
>Hello Ulrich,
>
>Any indicator which issues a signal AFTER price has moved,
>is a lagging indicator. MACD, Stochastic, RSI, Moving Averages
>as they are commonly used are lagging.
>
>Leading indicators (attempt to) tell you where prices
>will go (or turn/find support/resistance) BEFORE they
>get there. Leading indicators are predictive (though not
>reliable for mechanical/blind trading). It's fair to say
>that leading indicators usually require subjective
>human interpretation, which is why novice traders
>have difficulty with them.
>
>Examples of leading indicators are Gann, Elliott, Fibonacci,
>Astrology, price patterns (such as Triangles, Double-RePo's,
>Head-and-shoulders), and price pattern failures (Head-and-shoulder
>failure for example) etc.
>
>I use Fibonacci, price-patterns, and price-pattern failures all the time.
>For me, trading without leading indicators is like flying an airplane
>in fog without instruments.
>
>Combining leading and lagging indicators across multiple
>time-frames is very powerful. Leading indicators are valuable
>in deciding when to fade a common lagging indicator. For example, you know
>that the blind followers of the common Stochastic 25/75 will be
>on the wrong side of the market on the first false signal it gives
>near major Fibonacci support/resistance (they will drive price
>right to a Fib level, where your entry stop is, then they will
>be scrambling to reverse just as you are taking a profit)....
>
>Best wishes,
>-Neal.
>
>
>---
>DiNapoli Fibonacci techniques -
>http://www.fibtrader.com
>
>
>
>
>
>
---
DiNapoli Fibonacci techniques -
http://www.fibtrader.com
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