Andrews Pitchforks

[Tasuki]

Hello fellow TL traders,
With all the great threads on Traders Lab, I couldn't find one on the Andrews Pitchfork, so I've decided to start one. The problem is, I know only a little bit about AP, but from what I've learned, I think they have great potential. Of course, the master of AP is Timothy Morge, and he has a ton of free info on how he uses pitchforks, but I thought it might be useful to recap some of it here on Traders Lab.
[having some sort of trouble uploading my chart---I'll post this message sans chart and then try to put the chart in the next post].

See attached chart. Shown is a bearish pitchfork. To create an Andrews pitchfork, you need three pivots, a high, low, high (bearish) or a low, high, low (bullish).
The pitchfork on this chart shows some classic features that Tim Morge teaches:

1) there is a nice test of the upper line, showing that the market appears to be respecting the three pivots you chose for the fork. This gives an increased probability that the fork will work. Morge says he NEVER trades a fork he's drawn unless it is successfully tested first.

2) Now that the fork has been shown to have some validity, the first target is the median line, the line in the middle. Morge says that there's an 80% probability that the median line will be reached (after a successful test of the fork), and he has some massive statistics to back up his claim. Mind you, he's a consummate master at finding just the right combination of pivots with which to draw the pitchforks. Aye, there's the rub--the "artistic" part of all this is knowing where and when and how to draw the pitchfork.

3) The idea is to place your short entry just after the test has completed, with a protective stop above the pivot at point C. The proper placement of stops is a big deal with Morge, and he has lots of useful rules for how and when to "hide" your stop behind support or resistance areas. He will move his stop (down, in the case of my bearish example on the chart) as soon as price has moved below a S/R area, but not before.

4) As price comes down toward the median line, you can (hopefully) see a region of back and forth action which Morge calls "coiling action". Pretty much it is what it sounds like---price action is coiling up and storing energy for a further move in the direction it was originally going. In other words, this is a continuation-type pattern.

5) Once price reaches the median line, it bounces off, and the wise trader will exit a large portion of his position, leaving a small portion (how much should be determined by your aggressiveness and risk/reward parameters) to see whether the price will continue to go down to the lower line--which is does in this example in rather dramatic fashion. I'm sure there are also statistics for the likelihood of reaching that lower line, but I'm not sure what the percentage is. If price does get to the lower line, the trade is over, and you should take your profits.

A few pointers:

1) Morge really prefers tick or volume based charts for trading with Andrews Pitchforks, and he has lots of examples to show how they work better than time-based charts.

2) When you can find pitchforks whose lines cross each other, these are considered energy points, and they often act like magnets for price action.

3) There are three types of calculations for Andrews pitchforks:
a) standard
b) Schiff
c) modified Schiff
There's a major difference between (a) and (b), but only a minor difference between (b) and (c).

4) There's alot more to this discipline, including some really elegant explanations of why they work in the first place.

5) For further research, I'd suggest doing a search for Timothy Morge. He has, I think, two websites---one of them is www.medianline.com. I can't find the other one right now. He's also given many lectures on the CBOT education series, at the MoneyShow, and lots of other places. Check out this link:
http://www.hotcomm.com/virmeetCID_EV...asp?CID=YMDZYQ

On 02/15/06 there's a recorded event that Morge gave. Worth viewing if you're new to pitchforks. He's a very organized speaker. He also spoke on 05/03/06, 08/1606, and 06/26/07--just peruse down the list on that link.
Personally, I listen to him every time he speaks.

6) The tool for drawing pitchforks is found on most charting packages. I'm using Tradestation, but I'm sure most platforms allow you to draw pitchforks. If you REALLY get into them, Morge and friends have created a plug-in for Neoticker which draws the forks for you automatically.


If there are other recorded lectures of Tim Morge, please post them here if you find them (and if they're free).
I'd also be very interested in hearing about other practitioners of pitchforks. The reason I've focussed so much on Tim Morge in this post is because he seems to be the only one who's mastered the use of pitchforks. If anyone knows of other experts who share their knowledge with the trading community, please let us know here at TradersLab.

[Tasuki]

Ok, hopefully my chart will upload now that the thread's been started.

[zdo]

Tasuki,

Thanks for starting this thread.
A couple general comments about forks
1 "when they're hot, they're hot and when they're not they're not!"
Forks seem to work like clockwork for a while on an instrument then all of a sudden they don't... forks very fickle
2. The angle of the mid line seems to have importance (and is maybe part of #1). Would like to see some research (on the distribution, etc) of angles that are involved in beautiful forks and those that are blatant failures.

All the best,

zdo

[Tasuki]

	Quote:	zdo
	A couple general comments about forks 1 "when they're hot, they're hot and when they're not they're not!" Forks seem to work like clockwork for a while on an instrument then all of a sudden they don't... forks very fickle 2. The angle of the mid line seems to have importance (and is maybe part of #1). Would like to see some research (on the distribution, etc) of angles that are involved in beautiful forks and those that are blatant failures. zdo

zdo,
Thanks for your reply. I think I have a idea why your pitchforks may be working intermittently. The markets, of course, alternate between frenetic activity (e.g. early this week) and sluggishness (e.g. the latter part of this week). With time-based charts, this push-stop-push-stop action is captured faithfully, so the charts move in fits and starts. However, when you use tick charts or volume charts ("share" charts on Tradestation), the market's jerky action is smoothed out, and as a result, pitchforks work much more reliably. I think that the reason for this is that pitchforks, by their very design, capture the energy of the markets, so if that energy is smoothed out, the results are more reliable.

On the attached chart, you can see that my pitchfork is still working. It has a pretty steep angle, which I would have thought might make it less likely to be a valid fork, but the market is still respecting it.

[waveslider]

I love pitchforks personally. Agree that with a strongly trending market they're not the best - just like the wolfe wave.

I think people mis-use them a lot. Its all about where to start the fork. Has to be where the previous trend accelerated, I like at the 50% line.

You have to have some good rules to go along with it to validate the fork and confirm.

If you just take a trade in the area of confirmation, it's pretty good chances of nailing targets...

I look forward to your thread, Tasuki...

PS here's a fork with an interesting twist. The lower tine lines up with a WW target.

[Tasuki]

Waveslider, that's a most original pitchfork!

Here's another tip for drawing pitchforks. If you find that one (or more) of the pivots you want to choose for drawing your pitchfork is actually a double top or bottom, then USUALLY the first hump will be the better choice. See attached chart.

Something else you should notice from that chart is that pitchforks can provide pinpoint accuracy for targets, even on a weekly chart. Pretty amazing.

[waveslider]

I think you're right about where to start, in general I've found that a good place to begin a trendline or pitchfork is at a place where momentum begins a new wave.
So not necessarily where price peaks/troughs, but where the actual momentum begins, if that makes sense. Placement should coincide with an area of low volatility, because that's a place where price has settled a bit and a new trend can initialize.

NIce chart you posted.

[Szymon]

Hi Guys,

Here is a website link that contains a lot of information about AP, also there is a link in there that has the original Andrews Pitchforks course, that explains how to use them and from what points. Andrew made a lot of money trading this method, I am sure he incorporated other methods like action and reaction, bull of horns?, etc... All this information is in his course.

Regards

Simon

[Szymon]

	Quote:	Szymon
	Hi Guys, Here is a website link that contains a lot of information about AP, also there is a link in there that has the original Andrews Pitchforks course, that explains how to use them and from what points. Andrew made a lot of money trading this method, I am sure he incorporated other methods like action and reaction, bull of horns?, etc... All this information is in his course. Regards Simon

Forgot the link

http://www.trading-naked.com/AndrewsPitchfork.htm

[waveslider]

Beautiful day for forking!

Here's a 699 tick chart of ES

I liked how the target came in here below VWAP and right at the 3 bar indicator (found elsewhere on these forums).

Great gap and run day from a temporarily overbought market.