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Joe:
I really try not to draw for "best fit," though if I come up with two forks
that are close, I'll choose between the two based on which captured
significant highs/lows better.
Instead, I have done extensive statistical research regarding what price
will do WHEN price approaches a "tested" Median Line or one of its
parallels. Most people teach and or read that Andrews said that price will
reverse at these lines. In fact, he said that when these lines were
approached, expect one of THREE things to happen: 1) Price will reverse; 2)
Price will accelerate; or 3) Price will consolidate. These three
possibilities led me to take all the tens of thousands of actual trades in
my database [and their entry and exit techniques] and then study them,
looking for clues about what's truly important.
For instance, I know that by letting price "test" a Median Line or one of
its parallels first, and then if it doesn't zoom [accelerate] during that
initial "test" bar, I have eliminated, with about 80 percent certainty,
that price will now accelerate. So by waiting for the test, I have narrowed
the choices to either reversing or consolidating. That's why I use "test
and re-test" entries.
On profit targets, when price has tested a larger time frame Median Line or
its parallel, Dr. Andrews theory tells us that IF price reversed at that
Median Line [or parallel], with 80 percent certainty, price will now head
to and reach its "next most likely line." This means that if price
approaches a Median Line from below and then reverses lower after testing
that Median Line, with 80 percent certainty it will test the Lower Median
Line Parallel. This has held up quite well in my testing. But remember: You
don't know which of the three things will happen once price approaches that
"most likely line": Price could reverse, accelerate or consolidate. So you
may be grabbing profits too early [that usually doesn't bother me].
One last thing: When I am working with wide forks [drawn off of large
ranges], I'll often use 80 to 90 percent of the distance to the profit
target dictated by the "next most likely line," because the wider the
Median Line set, the more internal pivots you might see before price gets
to its final destination--and I like to lock up profits in that case.
I hope that answers your question. If not, have at me again.
Thanks.
Tim
At 09:24 AM 10/23/2005, you wrote:
>Tim:
>
>After drawing the lines (or even while deciding where to put them initially)
>how much weight do you place on "best fit" and subtle redraws to "best fit".
>Thx.
>
>I have yet to find a really good technique for establishing price
>objectives. I currently most often use an indicator that tells me when it
>gets to a certain level there is a greater then 60% chance of a reversal.
>However the only way one gets the larger trends that way is by "feel", which
>is okay but not always operating without a hitch :).
>
>
>----- Original Message -----
>From: "Timothy Morge" <timothymorge@xxxxxxxxxxxxx>
>To: <realtraders@xxxxxxxxxxxxxxx>
>Cc: <actionReactionLab@xxxxxxxxxxxxxxxxx>
>Sent: Friday, October 21, 2005 10:50 PM
>Subject: Re: [RT] My impression is that many had a bad day
>
>
> > Joe:
> >
> > My apologies for being so late in getting back to your question. I taught
> > two seminars and two refresher courses in the past two days and I am
> > b-e-a-t with a capital B, so to speak...
> >
> >
> > I take your question as a completely honest one. No worries.
> >
> > In point of fact, what irritated me about the earlier post someone made is
> > that the pitchforks on the chart you are referring to, and the ones posted
> > here, were chosen by a proprietary computer algorithm--they were not drawn
> > by me. The used tells the program the criteria for "dominant" pitchforks
> > and it comes back with any that fit the criteria. In this case, that was
> > the match for the criteria that, along with a bit of proprietary logic
> > regarding pivot selection, held 9 or more bars between pivots.
> >
> > Although I draw many of my pitchforks, many are also selected for me by a
> > computer program that was built to mimic the selection process I go
> > through--so that 1) People that don't have the 30+ years I have with
> > pitchforks get some of the benefit of my pivot selection knowledge when
> > using the program correctly and 2) it allows me to teach traders in
> > seminars at the CME and the CBOT and then especially when they first start
> > trading with pitchforks, I can have a ten minute session, via a
>multi-media
> > conference or in a trading and tell them that for today, for instance, the
> > two dominant pitchforks I recommend they start out with have settings of
> > XXX and YYY and they simply plug those settings into the software those
> > dominant pitchforks appear on their charts. They can then transition into
> > drawing their own pitchforks, or learn how to use the inputs for the
> > software and use it to select the dominant forks for the day.
> >
> > One last thing: It DID become a more important pitchfork once price tested
> > it on the downside on October 18 and price reverses after touching its
> > Lower Median Line Parallel. But the fork was there, chosen by the criteria
> > given the software, well before then.
> >
> > Let me say one last thing on the subject: I am not anti-system trading in
> > any way, shape or form. My partner was part of the original Unix
> > development team in the 1970's [while I was at the University of Chicago]
> > and we have many wonder trading systems. I also spend too much money to
> > count daily, weekly, monthly and yearly doing in-depth statistical
>analysis
> > on my own use of pitchforks in the tens of thousands of trades I make. I
> > have been keeping images and concise records of each of my trades since
> > 1982, when I was a very large institutional trader and had the benefit of
> > the funding at the time to be able to afford lots of computing power at a
> > time when that was expensive. I have all those records and have had the
> > luxury over the years of having all the trades put into useful databases
> > that allow me to do research on each of the trade entries and exits I
> > employ in my trading. So I have a great deal of hard core statistical
> > analysis on a huge amount of actual trades made using pitchforks. I don't
> > throw up hastily drawn lines after the fact and post them on a forum like
> > this for my own pleasure of seeing if people go "ooh and ahhh." I am
> > comfortable in how I trade and what I show people, because I do a great
> > deal of scientific research on my methods.
> >
> > Is art involved? You bet. Clyde Lee and I periodically discuss this issue
> > and it usually comes down to the point where we both agree that some
> > portion is science and some is art. In general, I think it is 80 pct
> > science and 20 percent art, but with the software I use and with Clyde's
> > software, there is more science and less art--but the art isn't gone
>entirely.
> >
> > My apologies for the long-winded answer. I wasn't insulting systems
> > traders, because at times, I resemble one. But I felt the comments made
> > seemed slanted a bit in my direction, and I would not have responded to a
> > system trader that posted his or her charts by saying that my stuff is
> > worked great and your stuff, like most other stuff being shown, looks good
> > because it is hindsight. Sorry, saying that just isn't right. It isn't
> > accurate and it isn't right.
> >
> > If I totally missed answering your question, Joe, my apologies. Please
> > point me in the right direction with another question and I'll try to me
> > more exact and more succinct.
> >
> > Tim
> >
> >
> > At 07:37 AM 10/21/2005, you wrote:
> > >Tim:
> > >
> > >Trading Systems only prove themselves going forward, and can only adjust
>to
> > >changing market conditions by user adjustment---- just like median lines.
>As
> > >such this is an honest question not a sarcastic one....
> > >
> > >On your chart below did you draw the blue PF off the secondary high at
>the
> > >top because it "fit" the new landscape? If not, how did you figure to put
>it
> > >there beforehand?
> > >
> > >Thx
> > >
> > >
> > >----- Original Message -----
> > >From: "Timothy Morge" <timothymorge@xxxxxxxxxxxxx>
> > >To: <realtraders@xxxxxxxxxxxxxxx>
> > >Cc: <actionReactionLab@xxxxxxxxxxxxxxxxx>
> > >Sent: Thursday, October 20, 2005 10:16 PM
> > >Subject: Re: [RT] My impression is that many had a bad day
> > >
> > >
> > > > Jan:
> > > >
> > > > I am going to give you the benefit of the doubt and assume you are not
> > > > accusing anyone of posting lines drawn "after the fact," especially
>since
> > > > you mentioned Median Lines after I posted here about my trade
>yesterday.
> > > > Let's be honest: If I was going to post an after the fact chart, I
> > >wouldn't
> > > > post a trade I ended up scratching after having six S&P handles in
>it--I'd
> > > > post a chart where I got long at the bottom and got out at the high.
> > > >
> > > > I've attached the chart from today, with the exact same major lines
>that
> > > > were on the charts. Pay special attention to the down sloping green
>Median
> > > > Line. I believe even you can see that it not only gave you the tops of
>the
> > > > day seven trading days in a row, but it gave you the high from
>yesterday
> > > > and the low of today. And the line was drawn and posted, day after day
> > > > after day beginning in early October. It's been posted here several
>times,
> > > > the same line, and it's been posted on my public web site over and
>over
> > > > again, with updated price data only added. Not what I'd call hindsight
> > > > advantage...
> > > >
> > > > I wouldn't stoop to pointing out that you showed us a string of
>"trade"
> > > > entry prices as evidence of your prowess, because I have no idea what
>you
> > > > do as a system trader or what your system is about or whether it works
>or
> > > > not, so I am in no position to judge it. And frankly, I don't throw
>stones
> > > > at people. I post my thoughts and my work. Some people may get some
> > > > benefits from it, some may not. But I'd prefer not to be slandered,
>here
> > >or
> > > > anywhere else I share my work freely.
> > > >
> > > > Tim Morge
> > > >
> > > >
> > > > At 01:57 PM 10/20/2005, jan4123@xxxxxxxxxxxxx wrote:
> > > > >As they say: use whatever works for you, however, the recent mkt
> > >forecasts
> > > > >which included some great an some not so great calls and the
>discussion
> > > > >which followed yesterday's mkt gave me something to think about.
> > > > >
> > > > >Having watched Median Line's pitchforks which often work, but often
> > >don't,
> > > > >especially if you draw without hindsight advantage, or Elliott or
>Hurst
> > >or
> > > > >Wolfe, all of them trying to forecast what the mkt will do, but
>require
> > > > >that you make the right assumptions or inputs or you start drawing
>from
> > > > >the right point, etc. - i saw a great advantage of having a good,
>proven
> > > > >system which you follow without trying to forecast. And that despite
>some
> > > > >past postings here which gave system trading bad rap.
> > > > >
> > > > >I normally trade EC, but yesterday being in Barcelona and having come
> > >home
> > > > >to late for it, I traded ES. The attached chart shows all system
>trades -
> > > > >I have additional rules which would eliminate the trade 11:47 -12:17.
> > > > >White arrows are exit signals, but I also exit on double tops/bottoms
> > > > >combined with yellow bars, yellow band is 60 period MovAvg band and
>green
> > > > >lines are Donchian Chnl lines. Other lines are also Donch Chnnl lines
> > >with
> > > > >higher inputs - 20, 40, 60. The system is based on mkt bouncing from
> > >chnnl
> > > > >lines or, countertrend, on double divergencies
> > > > >combined with very overbought/oversold condition.
> > > > >
> > > > >System Trades:
> > > > >8:40-8:43 -125pts, 8:55-9:12 +200, 9:14-9:31 -100, 9:31-9:45 +375,
> > > > >10:02-10:30 +275, 10:31-10:45 -150, 11:01-11:43 +325,
>11:47-12:17 -300
> > > > >(not taken), 12:17-12:27 -125, 12:32-13:02 +175, 13:01 - not taken,
>very
> > > > >strong mkt, 13:29-15:14 +1225 ( stayed in trade with lower Donchian
>Chnnl
> > > > >green line confining the mkt).
> > > > >
> > > > >This is not to bragg, but in defense of system trading.
> > > > >
> > > > >My webmail doesn't accept more than 1 attachment, so I'm sending the
>2nd
> > > > >chart by separate mail.
> > > > >
> > > > >Jan Philipp
> > > > >
> > > > >
> > > > >
> > > > >
> > > > >
> > > > >
> > > > >
> > > > >
> > > > >
> > > > >
> > > > >
> > > > >
> > > > >
> > > > >
> > > > >
> > > > >
> > > > >
> > > > >-----Original Message-----
> > > > >From: Rakesh Sahgal <rakeshsahgal@xxxxxxxxx>
> > > > >Sent: Oct 19, 2005 10:51 PM
> > > > >To: realtraders@xxxxxxxxxxxxxxx
> > > > >Subject: Re: [RT] My impresson is that many had a bad day
> > > > >
> > > > >Hi,
> > > > >
> > > > >Was it really all that bad? There were clear
> > > > >indications for anyone who CARED to look CLOSELY that
> > > > >a low will be put in place for a move to 1200(move
> > > > >indicated by some VERY KNOWLEDGEABLE people here).
> > > > >Just look at the evidence:
> > > > >
> > > > >1. In the chart attached you will see that price
> > > > >tanked on 10/18 courtesy of the black medianline. This
> > > > >median line has caused price to halt in it's track on
> > > > >3 occasions i.e. 9/22,10/3 and finally on 10/13. The
> > > > >reliability of depending on this medianline was hence
> > > > >fairly high, subject to other safeguards that you may
> > > > >be using.This chart was first posted by me on 9/27
> > > > >with the very same medianline.Just imagine the
> > > > >accuracy of people who are proficient with the
> > > > >technique using intra-day data would have achieved.
> > > > >Personally for me MedianLines have been one of the
> > > > >most worthwhile things I have learned and I cannot
> > > > >thank Tim Morge enough for this.
> > > > >
> > > > >2. Once the medianline in question had been paid due
> > > > >respect then the lower bollinger of shorter period
> > > > >bollinger drawn on the chart was pierced. This is the
> > > > >bit thats interesting and which I am not able to
> > > > >understand completely and hence unable to explain.
> > > > >When price pierces a lower bollinger band and a lower
> > > > >bollinger band of a longer length is below the shorter
> > > > >period lower bollinger, QUITE OFTEN this acts as a low
> > > > >being put in place.
> > > > >
> > > > >3. Look at the relationship between the stochastics of
> > > > >different lengths(same as the bollingers used). This
> > > > >time around it was positive. Shorter period Stoch
> > > > >above those of longer periods. It was the reverse on
> > > > >9/27.
> > > > >
> > > > >All of the above observations are based on EOD data.
> > > > >Leave alone all of what I have written above and just
> > > > >focus on the Bline method/system that Judy aka Buffy
> > > > >uses. That gave CLEAR indications on an EOD basis that
> > > > >things were turning, on an intra day basis one of the
> > > > >big days for sure.
> > > > >
> > > > >As to this being a prelude to a trend change, that is
> > > > >not indicated as yet by the chart. Most probably we
> > > > >will end up seeing the 1150 range as has been
> > > > >indicated on the forum(not by me)after a visit to the
> > > > >1200-1205 range.
> > > > >
> > > > >
> > > > >Regards
> > > > >
> > > > >
> > > > >Rakesh
> > > > >--- Deosaran Bisnath <deobisnath@xxxxxxxxx> wrote:
> > > > >
> > > > > > Just a few observations, all of us have bad days,
> > > > > > and good days.
> > > > > > Am simply stating my take on the disillusioned mood
> > > > > > of a few traders
> > > > > > I know, and a few trading sites. Daytraders may have
> > > > > > escaped unscathed, I
> > > > > > barely made it into positive zone, mainly because I
> > > > > > was not a believer for most
> > > > > > of the day, even though the market was warning us in
> > > > > > no uncertain manner. But,
> > > > > > when NASDAQ futures relaunched above 1560, I was
> > > > > > convinced this was headed much
> > > > > > higher. Huge amounts of stops were hit, new shorts
> > > > > > entered, all the way up,
> > > > > > especially the rally from 1182 to close. Massive
> > > > > > daily candle, a KEY reversal
> > > > > > day, is it? Pre-Option Expiration Wednesdays are
> > > > > > usually wildly volatile, but
> > > > > > this one was about the most volatile for some time.
> > > > > >
> > > > > > As usual, it was the big guys who initiated this
> > > > > > move and they were the big
> > > > > > winners.
> > > > > >
> > > > > >
> > > > > >
> > > > > >
> > > > > >
> > > > > > __________________________________
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