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In a message dated 98-08-20 20:31:34 EDT, fritz@xxxxxxxx writes:
<<
Terry, do you have a summary of how to use your x-bars? I've seen
you post about them a number of times, but I don't have a clear idea
for how they're supposed to be traded.
>>
Gary,
The primary purpose is to identify market direction, Frequency of turning
points, indications of overbought/oversold possibilities, and
support/resistance areas.
the only rule that i have provided are that 3 plots outside the x-bar price
channels stongly indicates the trend direction with a very high statistical
probability.
Unlike Bollinger bands where the working assumption is that plots outside the
band will ultimately come back in, These bands expect that once you have three
successive plots outside the bands there is a high probability that the plot
of myprice will STAY OUTSIDE the bands long enough for me to have a successful
trade.
Entry/exit criteria is so dependent on an individual's risk tolorance, trading
style etc I intentionally did not include them.
the Idea was for you to develop your own system using additional indicators
money management techniques etc.
For example, try thowing a parabolic indicator on the chart and determine
which parabolic trades would be taken and which ones would be discarded as a
result of the overall picture.
Or a oversold stochastic indicator should be acted on differently while the
plot is outside the bands.
The key point is that the x-bar plot in particular is a powerful tool to keep
you on the right side of the trend. Do that with a high level of consistency
and you will be successful.
Not as sexy as calling the day for the next market turn, but working with the
"sexy" stuff can cause you to get burned big time. Just ask Bill Clinton.
All the best.
Terry
P.S. I Threw the parabolic indicator on the latest chart togive you a feel for
what I mean.
Attachment Converted: "c:\eudora\attach\XBAR8-~5.gif"
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