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Actual for You - Forex Secret - Enter To Trade Using Slanted Channels At Forex Market (Part II)
Thank your lucky stars that you live in an era in which it is taken for granted that you’ll have a lot of jobs in your career.I say this because you’ll get a chance to be influenced by a number of managers and business owners, and each one has lessons to give. One of my early bosses was a graduate of the University of Chicago, a philosophy major, no less, and his insights, especially into human behavior, were a treat.One day, we were chatting and he said, “Gary, do you know how to make an average salesman good, and a good one, great?”Of course, I was clueless. “No, Jim, how?”“You put him into debt.”Naturally, he supported this stark and unexpected notion with logic.“Salesmen earn what they HAVE to earn, Gary. So, if they have a big monthly nut to crack, lots of payments, they’ll sell up to their level of debt.”Maybe I hadn’t been paying my own bills long enough to appreciate the magnitude of what he was saying. Also, I was beholden to Abraham Maslow’s psychology. It presumes we are creatures of “positive” motivation—we achieve because we want to.“Nonsense,” Jim retorted, after I offered this view. Then, he broke into a Disney chant that played off of the song, “High, ho, high ho, it’s off to work we go,” originally sung by the seven dwarves.“That’s the way the movie sings it,” he said. But the real lyrics are, “I owe, I owe, so it’s off to work I go!”I still didn’t buy the idea, but through the years, I’ve come to see its validity.Generally speaking, I’ve earned, minimally, what I had to earn, what my lifestyle required. Knowing this, I would occasionally stretch to buy a better car or house, figuring somehow, I’ll find a way to pay for it.Granted, it’s a backwards way of raising one’s aspiration level, but it works.Jim left me that day with this to ponder:“Gary, maybe your monthly payments aren’t high enough!”
2. In the second case of the trend development, the signal for the TD-line breaking through is false from the very beginning. Otherwise, an unexpected event can abruptly disturb the balance between the demand and supply. This causes the price reversal immediately after the breaking. The situation becomes clear the next day after the event – when the first deal price is registered. Here the two variants are possible.
a). The TD-line in force is descending. At the moment of opening the price can go below this TD-line broken earlier. Further the falling down will be continuing. Otherwise, the price can jump downward at the opening. Thus, a gap in prices becomes formed. To the moment of closing the price will drop below TD-line.
b). The TD-line in force is ascending. The next day the price of opening/closing can rise above the ascending TD-line again. A gap in prices becomes formed. The prices keep on rising (see Charts 1.31, 1.32). Under these conditions, it is very doubtful that the price breaking is true. A trader is interested in diminishing the risk of losses conditioned by such an unexpected turn of events. For this purpose, one can give a stop-loss order the next day immediately after opening of trading.
Chart 1.31. (For view the picture see notes in end of article)
The prices have risen above (A-B) TD-line of supply. Notwithstanding this fact, the next day the price at the moment of opening is lower than the price of closing at the day of breaking. Further the price keeps on decreasing. It falls lower than the descending (A-B) line. The price dynamics of this kind nullifies the breaking.
Chart 1.32. (For view the picture see notes in end of article)
The next day after the breaking through the (A-B) TD-line of supply, the prices have stopped falling. The next day the price at the moment of opening has turned out to be at the previous level. The price further ascending movement above the (A-B) line has started from that previous level. Thus, the price breakout has turned out to be invalid.
Drawbacks of the trend slanted channel classical theory
1. Any technique of plotting slanted channel lines is rather subjective. That is, two slanted channels, plotted by two traders at the same chart, for sure will never coincide with one another. T. DeMark was the first to point out to this specificity.
2. E. Neiman has enumerated a cluster of drawbacks, inherent in the classical theory of trend slanted channels. Such disadvantages are the following.
Want to see places, yet be on the job? Many careers offer that pleasure, but none like travel nursing jobs. It’s exciting to experience different cultures, and it is equally rewarding to know many kinds of people in travel nursing jobs. Think about it. Travel nursing jobs will not only offer you excellent money in addition to free housing and insurance, they will also let you see the entire country, experience different cultures, taste different cuisines, and above all meet new people. But there is another advantage. By opting for travel nursing jobs, you are adding to your unique experience of multiple nursing abilities.A travel nursing job is a temporary requirement of the mobile health care provider who is able to attend contracted assignments for a health care facility. Normally, these assignments are for a term of 13 weeks, but may vary subject to terms of agreement. The travel nursing job differs from agency nursing whereby, in the case of the latter, the service provider is a local nurse whom hospitals contract mostly for single-shift assignments.In view of shortages of experienced nursing staff, there is a good scope for travel nursing jobs. Since hospitals can hire experienced travel nurses, by so doing they can save on their resources that would have otherwise been spent for orientation of new nurses or extending matching employee benefits.Though there is no dearth of travel nursing jobs, a prospective candidate will do well to do solid homework before joining the fray. Here are some pointers:1. Before You Apply You need minimum of one-year experience in nursing. Also, you must have nursing license for the states where you wish to practice. A new state license usually takes not less than 6 months for issuance. If you are licensed in a state that participates in the Nurse Licensure Compact agreement, the usual wait to obtain a new license may be waived.2. Which Travel Company To Choose This is an important step in finding a suitable travel nursing job. Be diligent and try to unearth as much information as you can. For example, if you can locate other travel nurses, do ask them pros and cons of a company’s service. Not all companies measure up to expectations. Does a company issue paychecks in time? Does it stand by you in emergency? Does it offer free housing and insurance? What is the standard of housing offered? Will you get travel reimbursement? For all these and much more extensive information, think of participating in various travel nurse forums.<
Opening/closing of deals in “Barishpoltz’s channels”
V. Barishpoltz’s technique is based on the work inside price channels.
1. Deals on “sell” are made to start from the trend slanted channel upper boundary.
2. Deals on “buy” are made to start from the trend slanted channel lower boundary.
According to V. Barishpoltz, the trading tactics is the following.
· A trader chooses a working currency pair (EUR/USD or any other with the corresponding “stops” and “constrictions (contractions)”.
· The chart period must be opted (e.g., 6 hours).
· No indicators are used.
· The lot under trading is arbitrary – but always constant.
· The possible (admissible) maximum number of losses is three, each making 57 points.
· The starting minimum deposit to be recommended is the margin required + 1800 (when one works with one lot of the size of 100000 of the monetary basis).
· The effectiveness is not less than 100% per month.
· The graphical layout is moving slanted channels.
The channels are charted on the basis of the three last extremes. A line is drawn through two minimums. The second line is drawn in parallel to the first one through the maximum. Otherwise, a line can be drawn through two maximums. Then the second line must be drawn in parallel to the first one through the minimum. That is, the lines are built on the basis of maximum/minimum values – i.e., a trader issues from candle shadows.
Not less than two candles after the point under examination can confirm that the latter can be identified as an extreme. Between two extremes must be not less than two candles. The only exception is that neighboring maximums/minimums can be located at the ends of one and the same long candle.
· When the channel bound is reached, the position must be opened towards the channel center. One may not open a position only against a distinct trend. A trader must judge by himself. Losses can be somewhat reduced in this way. At the same time, often one can miss the market reversal movements, potentially very profitable.
· In the opening, the “stop” makes 57 points.
· The goal is to reach the channel opposite boundary.
· When the distance from the price of opening makes 50 points (towards the direction of profit), the “stop” must be transferred into the point of opening. Further, at the distance of 50 points “constrictions (contractions)” are installed at regular intervals (at every 10th point). The “constriction (contraction)” at the distance of 30 points is possible. However, this yields just an insubstantial increase in the effectiveness. The “constrictions (contractions)” is always fulfilled towards the direction of the increase in profit but never in the opposite direction.
· If “the stop” has worked and the losses made 57 points, the position must be opened towards the opposite direction. The goal must be to regain 57 points. The “constrictions (contractions)” are based on the same principles.
· After the reversal the price can turn anew. It can reach the channel border from outside again. In this case, one must close the deal – even if at a loss. One must leave the market immediately,not waiting for a “stop”. The break in trading must make 2-3 waves. Surely, this condition is not obligatory. However, it gives to a trader the opportunity to relax. In addition, a trader can wait for the flat storm extinction (such development of the currency movement is typical exactly of the flat storm).
On the face of it, it looks rather complicated, doesn’t it? To help the reader to grasp this pattern, I have attached the corresponding illustrative examples. For instance, I have taken the chart on August, 2003 at random. Here I must mention that that month was very unfavorable for trading. In fact, one can say it was fatal for the market and trading.
There is the opportunity to draw the channel with the help of the points ##1, 2, 3. At the point #4 the “buy” price makes 1350. “The stop” is 1293.
At this level of the “stop” (1293) the resistance is realized. The damages make 57 points. The downward-directed position is opened, the “stop” being 1350. There appears “the White Dodge” (in the Chart it is marked with a blue dagger). Consequently, the channel is to be corrected according to new points (in the Chart they are marked with blue dots).
As it is mentioned above, after the reversal, the trend passes through 57 points. At the level 1236, one must “constrict” the profit from above. The distance makes 50 points from the current price. The principal goal is to reach the channel border. However, here the trader has not succeeded in doing this (just “slightly”). The position is closed at the price of 1170. The profit is 123 points. The total balance is +76 points.
The sell corresponds to the level 1205. The stop is located at 1262. At the same white candle occurs the “stop” with the upward-directed reversal. The damage makes 57 points. The balance is +19 pips. That is after one step onward, one makes two steps back. However, notwithstanding the poor situation, one must keep on smiling.
Further the trader must constrict the profit increasing continuously. After 50 points, the “stop” must be installed at the level 1300. Analogously one must work till the last candle. There the next minimum is processed. Thus, it becomes possible to plot a new channel (it is marked with the blue lines in the chart). As the deal is opened upwards, we will not “buy”. So, what will happen after this?
The price “is oscillating”. However, our “stop” in 50 points touches the candle only at the level 1375 (the point of intersection is ticked off with red). The profit makes 115 points. The balance is +134 points. Rather poorly, isn’t it? However, it is not the end yet! We still have heaps of time to gain profit (or to lose – of course, it’s a joke!). After two white candles, we draw a new channel with making use of red points. One should buy at the blue point at the level 1325.
The two white candles are like honey to our souls (rather inspiring). However, these candles don’t reach the channel bounds (the black line in the Chart). Consequently, the deal must be closed at the level 1375 (50 points below the maximum). The profit makes 50 points again. The total deposit has grown by 185 points. And this result is achieved just during the weekly trading. Isn’t time for a break and rest?
Seemingly, it would be worthwhile to “buy” at the “A” black candle. However, by now we have a new channel at our disposal (the blue one). At the boundary of this channel we buy at the price of 1305. The “stop” is located at the level 1248. The downward-directed candle doesn’t touch our “stop”. The white candle does not reach the “blue” channel upper line. We close the position with the “constricting stop” at the level about 1325. The profit makes 20 points. The sum total on the credit side is equal to +205. At the small candle “B” appears a new channel (the green lines). When this channel is broken through, we sell approximately at the price 1335. Our patience is proved to be rewarded. Now the position is closed with the profit 107 points at the price ~1228. The balance is +312 points. However, here we must buy at the same price because it is the channel boundary!
As it has turned out, this transaction was worthwhile to be made. This chart indicates that at the next to last candle a new channel comes into existence (black lines). Suddenly we can see that we have reached the channel boundary. We close the position at the level 1328. We now sell at the same price as it is the channel boundary. We have gained a figure (100 points). The balance makes +412 points. Everything went too smoothly. Therefore, it looks somewhat suspiciously. However, there is a very difficult flat before us – so many deposits already were lost because of it!
Those individuals who are very busy can work with orders.
For instance, let us examine the price inside the channel from this viewpoint. At the channel upper boundary, we put an order for the position opening during the next 6 hours. It is the order for sell at the price “A”. The stop-loss makes “A”+57points. Simultaneously we install an order for “buy” at the price “A”+57points, while the stop-loss is equal to the price “A”. It is necessary to develop the specular-reflected system at the channel lower boundary.
Unsolved contradictions in the deal opening within DeMark’s trading system
DeMark himself has pointed out drawbacks, possible mistakes and unsolved problem, inherent in his trading system. He has emphasized that none of the developed techniques can be regarded as perfect. It is quite difficult to predict the price movement in the market. Unforeseeable circumstances of all kinds can arise. DeMark states that events can develop according to the three principal scenarios.
1. There happens the breaking through the oppositely-directed TD-line. As the result, a new signal becomes generated. It contradicts to the original one. Under these conditions, a new breaking gives warning of the beginning of a new, opposite tendency. Coming it force, it substitutes for the previous one. Most often the tendency in price ceases to exist exactly in this way. The price guideposts, calculated with the help of this tendency, become nullified (abolished) – see Chart 1.30.
Chart 1.30. (For view the picture see notes in end of article)
One should pay attention to the following fact. The price guidepost is prescribed by the price projector (rated price level) #1 after the downward-directed breaking through the (A-B) TD-line. However, there is not enough time for it to be realized because the upward-directed breaking through the (C-D) descending TD-line of supply. This is why the price guidepost based on the downward-directed breaking through the (A-B) TD-line of demand becomes invalid.
Thus, he example given by DeMark does not indicate the beginning of a new, oppositely-directed tendency. It just clearly exposes drawbacks of TD-points and TD-lines, the notions of which are introduced by this author.
Masterforex-V Trading Academy approach to this problem
a). There is a flat because the lowest boundary A is not downward-broken.
b). Any flat can be either a figure of reversal (the double-triple bottom) or a figure of the trend continuation as well.
2. In the second case of the trend development, the signal for the TD-line breaking through is false from the very beginning. Otherwise, an unexpected event can abruptly disturb the balance between the demand and supply. This causes the price reversal immediately after the breaking. The situation becomes clear the next day after the event – when the first deal price is registered. Here the two variants are possible.
a). The TD-line in force is descending. At the moment of opening the price can go below this TD-line broken earlier. Further the falling down will be continuing. Otherwise, the price can jump downward at the opening. Thus, a gap in prices becomes formed. To the moment of closing the price will drop below TD-line.
b). The TD-line in force is ascending. The next day the price of opening/closing can rise above the ascending TD-line again. A gap in prices becomes formed. The prices keep on rising (see Charts 1.31, 1.32). Under these conditions, it is very doubtful that the price breaking is true. A trader is interested in diminishing the risk of losses conditioned by such an unexpected turn of events. For this purpose, one can give a stop-loss order the next day immediately after opening of trading.
Chart 1.31. (For view the picture see notes in end of article)
The prices have risen above (A-B) TD-line of supply. Notwithstanding this fact, the next day the price at the moment of opening is lower than the price of closing at the day of breaking. Further the price keeps on decreasing. It falls lower than the descending (A-B) line. The price dynamics of this kind nullifies the breaking.
Chart 1.32. (For view the picture see notes in end of article)
The next day after the breaking through the (A-B) TD-line of supply, the prices have stopped falling. The next day the price at the moment of opening has turned out to be at the previous level. The price further ascending movement above the (A-B) line has started from that previous level. Thus, the price breakout has turned out to be invalid.
Drawbacks of the trend slanted channel classical theory
1. Any technique of plotting slanted channel lines is rather subjective. That is, two slanted channels, plotted by two traders at the same chart, for sure will never coincide with one another. T. DeMark was the first to point out to this specificity.
2. E. Neiman has enumerated a cluster of drawbacks, inherent in the classical theory of trend slanted channels. Such disadvantages are the following.<
Many Independent Financial Advisers (IFA’s) are considering CeMAP training as a way to increase their business profitability by adding to the range of products that they are able to advise on. By undertaking the CeMAP training and becoming qualified, an Independent Financial Adviser can then offer mortgage advice as well as advising on the range of products in his or her current portfolio.The CeMAP qualification recognises the training that the IFA has already undertaken by exempting a fully qualified IFA from the CeMAP 1 exam. In other words, if the IFA has already passed either CeFA 1 OR FPC 1 then they are exempt from having to sit the CeMAP 1 exam. This is obviously a major benefit for an IFA who is already qualified because he or she will not then have to study the CeMAP training material for the Module 1 exam. This exemption is because the FPC 1 and CeFA 1 exams cover the same material as the CeMAP 1 exam and so a duplicate test is not required.In this situation the IFA would then study the CeMAP training material for the CeMAP 2 and 3 exams. As the CeMAP 2 and 3 exams are actually based on the same syllabus, this makes the conversion from IFA to mortgage adviser relatively straight forward. The CeMAP 2 / 3 syllabus looks at mortgage products, payment methods and the complete house purchase process and hence provides all of the information to ensure that the IFA is then fully equipped with the knowledge needed to give professional mortgage advice.In the CeMAP exam process, the CeMAP 2 paper asks fact based questions on the syllabus, whereas the CeMAP 3 exam takes this knowledge and turns it into case studies that test not only the candidate’s knowledge but also the interpretation of that knowledge into real world situations. This case study, or synoptic, exam format is a major strength of the CeMAP exam process ensuring that the newly qualified mortgage advisers are able to apply their knowledge to the real world and not just recite facts.Until 2005 there was something called the CeMAP Bridge paper which provided a conversion for IFA’s into the mortgage industry, however this was scrapped in 2005 and consequently IFA’s now have to undertake CeMAP training for Modules 2 and 3. This is a more comprehensive exam process and ensures a greater degree of uniformity across the mortgage industry.One major benefit for IFA’s in undertaking CeMAP training and becoming mortgage advisers in addition to their curr
· If “the stop” has worked and the losses made 57 points, the position must be opened towards the opposite direction. The goal must be to regain 57 points. The “constrictions (contractions)” are based on the same principles.
· After the reversal the price can turn anew. It can reach the channel border from outside again. In this case, one must close the deal – even if at a loss. One must leave the market immediately,not waiting for a “stop”. The break in trading must make 2-3 waves. Surely, this condition is not obligatory. However, it gives to a trader the opportunity to relax. In addition, a trader can wait for the flat storm extinction (such development of the currency movement is typical exactly of the flat storm).
On the face of it, it looks rather complicated, doesn’t it? To help the reader to grasp this pattern, I have attached the corresponding illustrative examples. For instance, I have taken the chart on August, 2003 at random. Here I must mention that that month was very unfavorable for trading. In fact, one can say it was fatal for the market and trading.
There is the opportunity to draw the channel with the help of the points ##1, 2, 3. At the point #4 the “buy” price makes 1350. “The stop” is 1293.
At this level of the “stop” (1293) the resistance is realized. The damages make 57 points. The downward-directed position is opened, the “stop” being 1350. There appears “the White Dodge” (in the Chart it is marked with a blue dagger). Consequently, the channel is to be corrected according to new points (in the Chart they are marked with blue dots).
As it is mentioned above, after the reversal, the trend passes through 57 points. At the level 1236, one must “constrict” the profit from above. The distance makes 50 points from the current price. The principal goal is to reach the channel border. However, here the trader has not succeeded in doing this (just “slightly”). The position is closed at the price of 1170. The profit is 123 points. The total balance is +76 points.
The sell corresponds to the level 1205. The stop is located at 1262. At the same white candle occurs the “stop” with the upward-directed reversal. The damage makes 57 points. The balance is +19 pips. That is after one step onward, one makes two steps back. However, notwithstanding the poor situation, one must keep on smiling.
Further the trader must constrict the profit increasing continuously. After 50 points, the “stop” must be installed at the level 1300. Analogously one must work till the last candle. There the next minimum is processed. Thus, it becomes possible to plot a new channel (it is marked with the blue lines in the chart). As the deal is opened upwards, we will not “buy”. So, what will happen after this?
The price “is oscillating”. However, our “stop” in 50 points touches the candle only at the level 1375 (the point of intersection is ticked off with red). The profit makes 115 points. The balance is +134 points. Rather poorly, isn’t it? However, it is not the end yet! We still have heaps of time to gain profit (or to lose – of course, it’s a joke!). After two white candles, we draw a new channel with making use of red points. One should buy at the blue point at the level 1325.
The two white candles are like honey to our souls (rather inspiring). However, these candles don’t reach the channel bounds (the black line in the Chart). Consequently, the deal must be closed at the level 1375 (50 points below the maximum). The profit makes 50 points again. The total deposit has grown by 185 points. And this result is achieved just during the weekly trading. Isn’t time for a break and rest?
Seemingly, it would be worthwhile to “buy” at the “A” black candle. However, by now we have a new channel at our disposal (the blue one). At the boundary of this channel we buy at the price of 1305. The “stop” is located at the level 1248. The downward-directed candle doesn’t touch our “stop”. The white candle does not reach the “blue” channel upper line. We close the position with the “constricting stop” at the level about 1325. The profit makes 20 points. The sum total on the credit side is equal to +205. At the small candle “B” appears a new channel (the green lines). When this channel is broken through, we sell approximately at the price 1335. Our patience is proved to be rewarded. Now the position is closed with the profit 107 points at the price ~1228. The balance is +312 points. However, here we must buy at the same price because it is the channel boundary!
As it has turned out, this transaction was worthwhile to be made. This chart indicates that at the next to last candle a new channel comes into existence (black lines). Suddenly we can see that we have reached the channel boundary. We close the position at the level 1328. We now sell at the same price as it is the channel boundary. We have gained a figure (100 points). The balance makes +412 points. Everything went too smoothly. Therefore, it looks somewhat suspiciously. However, there is a very difficult flat before us – so many deposits already were lost because of it!
Those individuals who are very busy can work with orders.
For instance, let us examine the price inside the channel from this viewpoint. At the channel upper boundary, we put an order for the position opening during the next 6 hours. It is the order for sell at the price “A”. The stop-loss makes “A”+57points. Simultaneously we install an order for “buy” at the price “A”+57points, while the stop-loss is equal to the price “A”. It is necessary to develop the specular-reflected system at the channel lower boundary.
Unsolved contradictions in the deal opening within DeMark’s trading system
DeMark himself has pointed out drawbacks, possible mistakes and unsolved problem, inherent in his trading system. He has emphasized that none of the developed techniques can be regarded as perfect. It is quite difficult to predict the price movement in the market. Unforeseeable circumstances of all kinds can arise. DeMark states that events can develop according to the three principal scenarios.
1. There happens the breaking through the oppositely-directed TD-line. As the result, a new signal becomes generated. It contradicts to the original one. Under these conditions, a new breaking gives warning of the beginning of a new, opposite tendency. Coming it force, it substitutes for the previous one. Most often the tendency in price ceases to exist exactly in this way. The price guideposts, calculated with the help of this tendency, become nullified (abolished) – see Chart 1.30.
Chart 1.30. (For view the picture see notes in end of article)
One should pay attention to the following fact. The price guidepost is prescribed by the price projector (rated price level) #1 after the downward-directed breaking through the (A-B) TD-line. However, there is not enough time for it to be realized because the upward-directed breaking through the (C-D) descending TD-line of supply. This is why the price guidepost based on the downward-directed breaking through the (A-B) TD-line of demand becomes invalid.
Thus, he example given by DeMark does not indicate the beginning of a new, oppositely-directed tendency. It just clearly exposes drawbacks of TD-points and TD-lines, the notions of which are introduced by this author.
Masterforex-V Trading Academy approach to this problem
a). There is a flat because the lowest boundary A is not downward-broken.
b). Any flat can be either a figure of reversal (the double-triple bottom) or a figure of the trend continuation as well.
2. In the second case of the trend development, the signal for the TD-line breaking through is false from the very beginning. Otherwise, an unexpected event can abruptly disturb the balance between the demand and supply. This causes the price reversal immediately after the breaking. The situation becomes clear the next day after the event – when the first deal price is registered. Here the two variants are possible.
a). The TD-line in force is descending. At the moment of opening the price can go below this TD-line broken earlier. Further the falling down will be continuing. Otherwise, the price can jump downward at the opening. Thus, a gap in prices becomes formed. To the moment of closing the price will drop below TD-line.
b). The TD-line in force is ascending. The next day the price of opening/closing can rise above the ascending TD-line again. A gap in prices becomes formed. The prices keep on rising (see Charts 1.31, 1.32). Under these conditions, it is very doubtful that the price breaking is true. A trader is interested in diminishing the risk of losses conditioned by such an unexpected turn of events. For this purpose, one can give a stop-loss order the next day immediately after opening of trading.
Chart 1.31. (For view the picture see notes in end of article)
The prices have risen above (A-B) TD-line of supply. Notwithstanding this fact, the next day the price at the moment of opening is lower than the price of closing at the day of breaking. Further the price keeps on decreasing. It falls lower than the descending (A-B) line. The price dynamics of this kind nullifies the breaking.
Chart 1.32. (For view the picture see notes in end of article)
The next day after the breaking through the (A-B) TD-line of supply, the prices have stopped falling. The next day the price at the moment of opening has turned out to be at the previous level. The price further ascending movement above the (A-B) line has started from that previous level. Thus, the price breakout has turned out to be invalid.
Drawbacks of the trend slanted channel classical theory
1. Any technique of plotting slanted channel lines is rather subjective. That is, two slanted channels, plotted by two traders at the same chart, for sure will never coincide with one another. T. DeMark was the first to point out to this specificity.
2. E. Neiman has enumerated a cluster of drawbacks, inherent in the classical theory of trend slanted channels. Such disadvantages are the following.
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Further the trader must constrict the profit increasing continuously. After 50 points, the “stop” must be installed at the level 1300. Analogously one must work till the last candle. There the next minimum is processed. Thus, it becomes possible to plot a new channel (it is marked with the blue lines in the chart). As the deal is opened upwards, we will not “buy”. So, what will happen after this?
The price “is oscillating”. However, our “stop” in 50 points touches the candle only at the level 1375 (the point of intersection is ticked off with red). The profit makes 115 points. The balance is +134 points. Rather poorly, isn’t it? However, it is not the end yet! We still have heaps of time to gain profit (or to lose – of course, it’s a joke!). After two white candles, we draw a new channel with making use of red points. One should buy at the blue point at the level 1325.
The two white candles are like honey to our souls (rather inspiring). However, these candles don’t reach the channel bounds (the black line in the Chart). Consequently, the deal must be closed at the level 1375 (50 points below the maximum). The profit makes 50 points again. The total deposit has grown by 185 points. And this result is achieved just during the weekly trading. Isn’t time for a break and rest?
Seemingly, it would be worthwhile to “buy” at the “A” black candle. However, by now we have a new channel at our disposal (the blue one). At the boundary of this channel we buy at the price of 1305. The “stop” is located at the level 1248. The downward-directed candle doesn’t touch our “stop”. The white candle does not reach the “blue” channel upper line. We close the position with the “constricting stop” at the level about 1325. The profit makes 20 points. The sum total on the credit side is equal to +205. At the small candle “B” appears a new channel (the green lines). When this channel is broken through, we sell approximately at the price 1335. Our patience is proved to be rewarded. Now the position is closed with the profit 107 points at the price ~1228. The balance is +312 points. However, here we must buy at the same price because it is the channel boundary!
As it has turned out, this transaction was worthwhile to be made. This chart indicates that at the next to last candle a new channel comes into existence (black lines). Suddenly we can see that we have reached the channel boundary. We close the position at the level 1328. We now sell at the same price as it is the channel boundary. We have gained a figure (100 points). The balance makes +412 points. Everything went too smoothly. Therefore, it looks somewhat suspiciously. However, there is a very difficult flat before us – so many deposits already were lost because of it!
Those individuals who are very busy can work with orders.
For instance, let us examine the price inside the channel from this viewpoint. At the channel upper boundary, we put an order for the position opening during the next 6 hours. It is the order for sell at the price “A”. The stop-loss makes “A”+57points. Simultaneously we install an order for “buy” at the price “A”+57points, while the stop-loss is equal to the price “A”. It is necessary to develop the specular-reflected system at the channel lower boundary.
Unsolved contradictions in the deal opening within DeMark’s trading system
DeMark himself has pointed out drawbacks, possible mistakes and unsolved problem, inherent in his trading system. He has emphasized that none of the developed techniques can be regarded as perfect. It is quite difficult to predict the price movement in the market. Unforeseeable circumstances of all kinds can arise. DeMark states that events can develop according to the three principal scenarios.
1. There happens the breaking through the oppositely-directed TD-line. As the result, a new signal becomes generated. It contradicts to the original one. Under these conditions, a new breaking gives warning of the beginning of a new, opposite tendency. Coming it force, it substitutes for the previous one. Most often the tendency in price ceases to exist exactly in this way. The price guideposts, calculated with the help of this tendency, become nullified (abolished) – see Chart 1.30.
Chart 1.30. (For view the picture see notes in end of article)
One should pay attention to the following fact. The price guidepost is prescribed by the price projector (rated price level) #1 after the downward-directed breaking through the (A-B) TD-line. However, there is not enough time for it to be realized because the upward-directed breaking through the (C-D) descending TD-line of supply. This is why the price guidepost based on the downward-directed breaking through the (A-B) TD-line of demand becomes invalid.
Thus, he example given by DeMark does not indicate the beginning of a new, oppositely-directed tendency. It just clearly exposes drawbacks of TD-points and TD-lines, the notions of which are introduced by this author.
Masterforex-V Trading Academy approach to this problem
a). There is a flat because the lowest boundary A is not downward-broken.
b). Any flat can be either a figure of reversal (the double-triple bottom) or a figure of the trend continuation as well.
2. In the second case of the trend development, the signal for the TD-line breaking through is false from the very beginning. Otherwise, an unexpected event can abruptly disturb the balance between the demand and supply. This causes the price reversal immediately after the breaking. The situation becomes clear the next day after the event – when the first deal price is registered. Here the two variants are possible.
a). The TD-line in force is descending. At the moment of opening the price can go below this TD-line broken earlier. Further the falling down will be continuing. Otherwise, the price can jump downward at the opening. Thus, a gap in prices becomes formed. To the moment of closing the price will drop below TD-line.
b). The TD-line in force is ascending. The next day the price of opening/closing can rise above the ascending TD-line again. A gap in prices becomes formed. The prices keep on rising (see Charts 1.31, 1.32). Under these conditions, it is very doubtful that the price breaking is true. A trader is interested in diminishing the risk of losses conditioned by such an unexpected turn of events. For this purpose, one can give a stop-loss order the next day immediately after opening of trading.
Chart 1.31. (For view the picture see notes in end of article)
The prices have risen above (A-B) TD-line of supply. Notwithstanding this fact, the next day the price at the moment of opening is lower than the price of closing at the day of breaking. Further the price keeps on decreasing. It falls lower than the descending (A-B) line. The price dynamics of this kind nullifies the breaking.
Chart 1.32. (For view the picture see notes in end of article)
The next day after the breaking through the (A-B) TD-line of supply, the prices have stopped falling. The next day the price at the moment of opening has turned out to be at the previous level. The price further ascending movement above the (A-B) line has started from that previous level. Thus, the price breakout has turned out to be invalid.
Drawbacks of the trend slanted channel classical theory
1. Any technique of plotting slanted channel lines is rather subjective. That is, two slanted channels, plotted by two traders at the same chart, for sure will never coincide with one another. T. DeMark was the first to point out to this specificity.
2. E. Neiman has enumerated a cluster of drawbacks, inherent in the classical theory of trend slanted channels. Such disadvantages are the following.
Outsourcing is the secondary product of the globalization phenomenon that swept the world in the 1990s. The immediate and most remarkable effect of globalization was that it resulted in many economies opening up for foreign investments, in a reciprocative basis, subsequently resulting in the economy of many countries becoming dependent on each other in some respect or the other. Also, alongside globalization came the communication revolution, which eventually bridged distances, as a result of which continents became accessible in the matter of a fraction of a second. The much talked about outsourcing phenomenon of today is a result of the combination of both – globalization aided by communication revolution.Outsourcing can be best defined as a way of obtaining services from outside supplier – probably in a second country - predictably at a cheaper rate than possible in one’s organization or country.To look back to the early days of outsourcing, it started off slowly by outsourcing back office works to English speaking third world countries. But, as the world started becoming more and more digitalized, and Information Technology the new buzz word, it became necessary for multinationals involved in cutting edge technology to have more technology savvy brains at their service. When they felt a dearth of trained brains in the area/place of their functioning, obviously they all turned to expert brains of the third world countries. Such a move weighed heavily on the existing economy equations of the corporate majors as outsourcing to a developing country always incurred less expenditure than doing the same work at home. In fact, this was exactly the reason why corporate technical domain became more and more pro-outsourcing. There logic is simple - if one could get quality workforce and expertise at a cheaper rate, why can’t use it to the fullest advantage?But the direct fall out of the trend for outsourcing – as observed recently – is that it resulted in massive loss of job for employees in the developed countries, a sticky issue that had attracted a lot of political as well as public attention off late. In fact, economists had anticipated such an effect before hand, but now only it started taking its toll in large numbers. So what is the future of outsourcing? Will it be banned by law or is it there to grow in the coming years?Well, there are certain jobs that need expert handling; the completion of the job at hand may need an expert in the respective domain to execute. In such cases, companies are le
Those individuals who are very busy can work with orders.
For instance, let us examine the price inside the channel from this viewpoint. At the channel upper boundary, we put an order for the position opening during the next 6 hours. It is the order for sell at the price “A”. The stop-loss makes “A”+57points. Simultaneously we install an order for “buy” at the price “A”+57points, while the stop-loss is equal to the price “A”. It is necessary to develop the specular-reflected system at the channel lower boundary.
Unsolved contradictions in the deal opening within DeMark’s trading system
DeMark himself has pointed out drawbacks, possible mistakes and unsolved problem, inherent in his trading system. He has emphasized that none of the developed techniques can be regarded as perfect. It is quite difficult to predict the price movement in the market. Unforeseeable circumstances of all kinds can arise. DeMark states that events can develop according to the three principal scenarios.
1. There happens the breaking through the oppositely-directed TD-line. As the result, a new signal becomes generated. It contradicts to the original one. Under these conditions, a new breaking gives warning of the beginning of a new, opposite tendency. Coming it force, it substitutes for the previous one. Most often the tendency in price ceases to exist exactly in this way. The price guideposts, calculated with the help of this tendency, become nullified (abolished) – see Chart 1.30.
Chart 1.30. (For view the picture see notes in end of article)
One should pay attention to the following fact. The price guidepost is prescribed by the price projector (rated price level) #1 after the downward-directed breaking through the (A-B) TD-line. However, there is not enough time for it to be realized because the upward-directed breaking through the (C-D) descending TD-line of supply. This is why the price guidepost based on the downward-directed breaking through the (A-B) TD-line of demand becomes invalid.
Thus, he example given by DeMark does not indicate the beginning of a new, oppositely-directed tendency. It just clearly exposes drawbacks of TD-points and TD-lines, the notions of which are introduced by this author.
Masterforex-V Trading Academy approach to this problem
a). There is a flat because the lowest boundary A is not downward-broken.
b). Any flat can be either a figure of reversal (the double-triple bottom) or a figure of the trend continuation as well.
2. In the second case of the trend development, the signal for the TD-line breaking through is false from the very beginning. Otherwise, an unexpected event can abruptly disturb the balance between the demand and supply. This causes the price reversal immediately after the breaking. The situation becomes clear the next day after the event – when the first deal price is registered. Here the two variants are possible.
a). The TD-line in force is descending. At the moment of opening the price can go below this TD-line broken earlier. Further the falling down will be continuing. Otherwise, the price can jump downward at the opening. Thus, a gap in prices becomes formed. To the moment of closing the price will drop below TD-line.
b). The TD-line in force is ascending. The next day the price of opening/closing can rise above the ascending TD-line again. A gap in prices becomes formed. The prices keep on rising (see Charts 1.31, 1.32). Under these conditions, it is very doubtful that the price breaking is true. A trader is interested in diminishing the risk of losses conditioned by such an unexpected turn of events. For this purpose, one can give a stop-loss order the next day immediately after opening of trading.
Chart 1.31. (For view the picture see notes in end of article)
The prices have risen above (A-B) TD-line of supply. Notwithstanding this fact, the next day the price at the moment of opening is lower than the price of closing at the day of breaking. Further the price keeps on decreasing. It falls lower than the descending (A-B) line. The price dynamics of this kind nullifies the breaking.
Chart 1.32. (For view the picture see notes in end of article)
The next day after the breaking through the (A-B) TD-line of supply, the prices have stopped falling. The next day the price at the moment of opening has turned out to be at the previous level. The price further ascending movement above the (A-B) line has started from that previous level. Thus, the price breakout has turned out to be invalid.
Drawbacks of the trend slanted channel classical theory
1. Any technique of plotting slanted channel lines is rather subjective. That is, two slanted channels, plotted by two traders at the same chart, for sure will never coincide with one another. T. DeMark was the first to point out to this specificity.
2. E. Neiman has enumerated a cluster of drawbacks, inherent in the classical theory of trend slanted channels. Such disadvantages are the following.
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2. In the second case of the trend development, the signal for the TD-line breaking through is false from the very beginning. Otherwise, an unexpected event can abruptly disturb the balance between the demand and supply. This causes the price reversal immediately after the breaking. The situation becomes clear the next day after the event – when the first deal price is registered. Here the two variants are possible.
a). The TD-line in force is descending. At the moment of opening the price can go below this TD-line broken earlier. Further the falling down will be continuing. Otherwise, the price can jump downward at the opening. Thus, a gap in prices becomes formed. To the moment of closing the price will drop below TD-line.
b). The TD-line in force is ascending. The next day the price of opening/closing can rise above the ascending TD-line again. A gap in prices becomes formed. The prices keep on rising (see Charts 1.31, 1.32). Under these conditions, it is very doubtful that the price breaking is true. A trader is interested in diminishing the risk of losses conditioned by such an unexpected turn of events. For this purpose, one can give a stop-loss order the next day immediately after opening of trading.
Chart 1.31. (For view the picture see notes in end of article)
The prices have risen above (A-B) TD-line of supply. Notwithstanding this fact, the next day the price at the moment of opening is lower than the price of closing at the day of breaking. Further the price keeps on decreasing. It falls lower than the descending (A-B) line. The price dynamics of this kind nullifies the breaking.
Chart 1.32. (For view the picture see notes in end of article)
The next day after the breaking through the (A-B) TD-line of supply, the prices have stopped falling. The next day the price at the moment of opening has turned out to be at the previous level. The price further ascending movement above the (A-B) line has started from that previous level. Thus, the price breakout has turned out to be invalid.
Drawbacks of the trend slanted channel classical theory
1. Any technique of plotting slanted channel lines is rather subjective. That is, two slanted channels, plotted by two traders at the same chart, for sure will never coincide with one another. T. DeMark was the first to point out to this specificity.
2. E. Neiman has enumerated a cluster of drawbacks, inherent in the classical theory of trend slanted channels. Such disadvantages are the following.
· The direction of the trend in force contradicts the trend direction predicted by the analytical methods (especially under the condition of the trend reversal).
· When a trend is detected, it is difficult to estimate the price of opening issuing just from a single general figure. In the given case, lines of support/resistance are helpful.
· Trend lines and models, plotted in different time intervals, can also entail contradictive conclusions. For instance, the weekly- and daily trends can indicate themselves as the “bull” and “bear” ones, respectively.
The third group of weaknesses of the classical theory of trend slanted channels is conditioned by the following fact. The 3rd point of the slanted channel makes the 5th wave according to Elliot theory – i.e., it the point of beginning of the market reverse movement.
D. Swagger has pointed out to the 4th group disadvantages of the trend slanted channel theory.
Surely, trend channels and corridors are helpful. However, often their significance is exaggerated. One can easily overestimate the trend line reliability if such lines are plotted post factum. They often lose the sight of the following circumstance. In the process of development of the “bull”/”bear” trend, trend lines often have need for correction. That is, sometimes the trend line breakout can serve as an early (advanced) warning of the tendency reversal. At the same time, there are equal chances that the breaking can result just in the trend line correction. For instance, Chart 3.11 represents by itself the continuation of Chart 3.4 for the next 2 months. In Chart 3.11, the lowest trend line can be plotted issuing from all the data available. The upper line is the continuation of the trend line from Chart 3.4. The latter is drawn on the basis of price data available before June. The breaking through this line in June has not caused the tendency reversal. This breakout just has made the trend line correction necessary.
Chart 3.11. The ascending trend line correction – Silver; June, 1993. (For view the picture see notes in end of article)
Chart 3.12. The ascending trend line correction – EUR/USD; June, 1991 (For view the picture see notes in end of article)
Chart 3.14. The descending trend line double correction. Continuous futures per French bond index at MATIF exchange. (For view the picture see notes in end of article)
As one can see, Chart 3.14 is the continuation of Chart 3.13 for the next 4 months. In Chart 3.14, the lowest trend lines are copied from Charts 3.6, 3.13. They correspond to the trend lines before May and June, respectively. The breaking through these lines has not caused the tendency reversal. This breakout just has made the trend line correction necessary. This example demonstrates that sometimes the trend line must be subjected to correction several times.
D. Swagger has made the following conclusion.
The given example testifies that the trend line breakout rather makes a rule than an exception. It is an undeniable fact that, in the course of their development, trend lines must be inevitably broken through – often more than once. It is the same as to say that trend lines are often subjected to correction during their prolongation. What’s important is that trend lines much better work post factum than in the regime of real time. Often trend line breakings are false signals.
The 5th group is singled out according to V. Barishpoltz’s technique. The reader must answer the following question. Why the stop-loss has snapped into action at the 57th point - as V. Barishpoltz has described it. After this, you will understand the essence of the problem. This will help you to avoid making the analogous mistakes.
The 6th group of drawbacks, inherent in the classical theory of trend slanted channels can be formed on the basis the technique of testing, developed by J. O. Katz and D. McCormick.
The 7th group of the drawbacks in question is the result of vague, inexact wording concerning the slanted channel breakout.
· What breakout can be regarded as true – i.e., deals will be opened towards the opposite direction.
· What breakout can be regarded as false – i.e., short positions must be preliminary closed, whereas long positions will be maintained open.
The reader should look at this chart carefully (this chart was for the first time was submitted in Murphy’s book). (For view the picture see notes in end of article)
· Why is the given breakout false, the “bull” trend keeping on continuing?
· Under what condition the given breakout can turn out to be true?
If a trader cannot answer to these questions, he should not open a real account at Forex. Such trader will inevitably get into the company of those 19 of 20 individuals who are forced to leave Forex for good.
One cannot find answer to these questions in the works by classicists of Forex.
It is so sad to read J. Murphy’s comments concerning the problem of slanted channel level breakout.
Sometimes prices break through the trend line during a day. All the same, at the moment of closing the prices resume their normal course (see Chart 4.9). This is why the analyst beats his brains over the problem “has the breaking really occurred?”. For pity, the unequivocal answer hardly exists. Sometimes the breakout can be neglected – especially if the further movement in the market confirms that the trend initial line is true. Sometimes a compromise is necessary – when, in addition to the trend initial line, the analyst plots the trend new line (the pilot one). In this case, the trader simultaneously has two lines at his disposal. In Chart 4.9, the trend initial- and pilot lines are depicted with the solid and dashed lines, respectively.
The following pattern can develop. The trend line breakout, being relatively small, occurs just within one trading day. At the moment of closing, the prices have leveled off, reaching a mark above the trend line again. As the practice proves, under these conditions the analyst can neglect this breaking. He should keep on using the trend initial line. As in many other areas of the market analysis, one must rely on one’s best advisers - the intuition and experience.
The comments of this kind clearly demonstrate that J. Murphy has admitted his incompetence in the problem of true and false breakout of the slanted channel.
Brief conclusions
1. There exist at least 6 techniques of plotting slanted channels
2. Points of opening/closing deals can be determined according to each of these techniques. The use of any technique can result either in gaining profit or in suffering losses.
3. To know when the opening of deals is correct and when it is wrong, one must answer to the following question. What is the difference between the true and false breaking through the slanted channel level?
I would like to emphasize that this important problem is still unsolved by classicists of Forex.
Note: Full text of this article and pictures of examples you can see on http://masterforex-v.su/002_006.htm
If you wish to be trained on Trading System Masterforex-V - one of new and most effective techniques of trade on Forex in the world visit http://www.masterforex-v.su/
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