The+Taylor+Trading+Technique+ +raschke+ +rev+2
The+Taylor+Trading+Technique+ +raschke+ +rev+2
The+Taylor+Trading+Technique+ +raschke+ +rev+2
.ain +oncepts
Trade within a 2/3 day time #rame 0atch price action aro$nd previo$s day1s high or low .onitor the length o# the last $pswing relative to the last downswing (,2 and 122 min$te charts are optim$m) )etermine what the play is #or the day 3 i.e.4 the trend #or the day or the test #or the day. 5gnore all news and #$ndamentals. Foc$s on tape action. 6ltho$gh trading on a 1/2 day basis4 be aware o# the bigger pict$re 3 the longer price str$ct$re4 )on1t take co$ntertrend trades within the #irst 3 days o# a breako$t #rom a chart #ormation.
3 3 3 3
<hort <ale )ay <hort <ale )ay <hort <ale on 9$y )ay =igh First 9ack to 9asics 8 tape reading4 vol$me4 and > retracements
<tocks ? commodities tend to #ollow a repetitive 3/& day cycle consisting o#@
6#ter the <ell <hort )ay4 the cycle repeats itsel#4 starting with a new 9$y )ay on which yo$ cover yo$r shorts and look to go long. This is the 7ideal7 cycle. 5n a trending market there is sometimes an extra day or two inserted on the long or the short side.
9asic 'rinciples
6 trader m$st rely on his%her own B$dgment. :istening to others will not give yo$ an edge b$t rather will serve as a distraction.
Daily Focus
Cach day the main #oc$s is on the 7*bBective levels7 / the previo$s dayDs high and low. The 9ook .ethod trader places his orders 7at the market7. )onDt limit yo$r orders. Trading ranges have the most mechanical acc$m$lation and distrib$tion rhythm.
Objective oints
*bBectives #or a trade are the resistance that comes in aro$nd the 'revio$s )ayDs high4 and the s$pport that comes in at or aro$nd the 'revio$s )ayDs low.
3 "ntil a trader gains in experience4 b$y to cover or sell to exit B$st as the obBectives are reached. 3 Think only abo$t exiting yo$r trade as an obBective area is approached. 3 Tho$gh *bBectives may seem conservative4 remember that the trader will get 'ositive slippage. 3 5n stronger trends4 allow #or deeper penetration o# the obBective point.
Sell Day
*nce a long position is established4 yo$r goal is to exit on any #ollow/thro$gh the next day. The previo$s dayDs action indicates the most probable opening move. 5# the 9$y )ay #inished with a strong close $p contin$ed strength the next morning. 5n a strong $p trend4 an $pside penetration o# the previo$s dayDs high can be expected. )o not stay in a position that is acting opposite to what yo$ anticipated.
3 The ideal <ell <hort )ay will open $p #rom the previo$s dayDs close4 make its high #irst and its low last4 and close in the lower end o# its range. 3 6 weak close on a <ell <hort )ay indicates #$rther weakness and an opport$nity to cover short positions the next day.
rice atterns
The 2/)ay (ate o# +hange ((*+) is a $se#$l tool which dovetails well with TaylorDs in one day o$t the next techni-$e. The 2/period (*+ indicates whether the odds #avor being a b$y or a seller #or the next day.
3 =old the trade overnight and exit according to his g$idelines.
rice atterns
Three bar Triangle brea0out )attern@ 'rice has a lower high then the 2 day high and a higher low then the two day low with a narrowing o# the ranges. inball$ 6 3/period (<5 o# the 1/day (*+ has a reading o# above ,E or below 33.
3 :ook #or b$ys when price is above the 22/period C.6 and #or sells when price is below the 22/period C.6.
inball1$ 'rice has p$lled completely away #rom a &/ period simple moving average indicating moment$m. The #irst close in the opposite direction on the other side o# a ! <.6 sets $p a pinball sell. 2 SM3$ 'rice closes above a & <.6 #or EF bars.
Basic Flips
There is a small positive expectation across all markets when entering 7long market on close7 on the day the 2/period (*+ #irst #lips $p and exiting on the next dayDs close. The (*+ indicator t$rns $p or down every 2 1%2 days on average. The 2/period (*+ has better statistical expectation than either a simple price change (1/ period (*+) or a longer term oscillator s$ch as a moving average oscillator.
RO Di!er"ence
5t is a reversal pattern. )onDt look #or this in the strongest trending markets. The ideal time window is &/days b$t this pattern can #orm over ! or , days. 5# the pattern does not work within 1/2 days4 the primary trend is going to reassert itsel#G
Using T5C6S +ith Mar0et Ti/ing and Taylor Trend "or the Day7
Think o# Ticks as correlating +ith the strength o" buy or sell )rogra/s. Ticks can be $sed as a /o/entu/ indicator or an 7overbo$ght%oversold7 indicator in a trading range environment. Ticks represent how m$ch buying or selling )o+er has been $sed to p$sh the market $p or down on a partic$lar swing. Ticks m$st be watched with respect to overall market tone or type o# environment (trading range or trending). Ticks can be $sed in a countertrend manner by looking to #ade the extreme readings when in a trading range. Ticks have an u)+ard bias and are highly correlated with market breadth. Ticks #$nction as a con"ir/ation8non9con"ir/ation indicator. 5# the market makes a new high4 the ticks sho$ld also make a new high. The market alternates between a trending and a consolidation mode. The day #ollowing a trend day or wide range day tends to be a partic$larly good one #or $sing the tic0s in a countertrend /ode,
Using T5C6S +ith Mar0et Ti/ing and Taylor Trend "or the Day7
Trend Day$ Ticks reaching extreme readings on a single day indicate a trend day. There are good odds o# #ollow/thro$gh the next morning a#ter a day where the ticks hit F%/ 1222 in the a#ternoon. #uy on ullbac0s$ 5# Ticks make new highs above F1222 a#ter 12 6.4 look to b$y the #irst p$llback. 5# they make new =5I=< a#ter 2 '.4 b$y the #irst p$llback. 6n extreme tick reading in the #irst 32 min$tes sho$ld be -$estioned. .xtre/e Tic0 !eadings$ .xtreme tick readings between 12 / 12 C<T indicate that the market may res$me the trend in the a#ternoon4 $s$ally a#ter a mid/day consolidation. 5# ticks do not make new highs (or lows when in a downtrend)4 then the a#ternoon leg will not have any #ollow/ thro$gh. Cxtremes Tick readings in the a#ternoon #avor a market #ollow/thro$gh into the next day. 5# price rises and #alls as the tick rises and #alls4 the day sho$ld be a normal trading day. 5# the market has had a strong trend the day be#ore4 the odds o# having morning #ollow thro$gh are very high.