FarridinK

I agree. I've been trading TTT for fair amount of time. I have always found that most folks who fail to understand Taylor fail largely because they are fixated on the cycle, rather than on how Taylor uses where price is in relation to Support and Resistance. For example, I have rarely, if ever, read anyone here mention the "objective Point," a concept Taylor uses without which you will not succeed with Taylor's method, at least not as Taylor himself understood his own teachings.
 
It is precisely this failure to appreciate Taylor's understanding of trading price action that leads folks to assume that the cycle needs repeatedly to be "re-set" or "adjusted" as George Angell famously (or infamously) suggested is necessary.
 
If one were instead to view the cycle not as a set of strict trading rules, but rather as Taylor intended it, i.e. as a critical apparatus through which to view and interpret price action around significant support and resistance levels, i.e. Taylor's objective points, then one would also no doubt understand that for Taylor it is not nearly so simple as buying on Buy Day, selling on Selling Day, and shorting on Short Sale Day.
 
Indeed, a close reading of Taylor will reveal that Taylor clearly (insofar as he can be accused of clarity at all) taught that the trader will at times buy on a Short Sale day and Sell Short on a Buy Day, but unlike George Angell and more than a few forum posters, both here at TL and elsewhere, those circumstances do not override the trading cycle. For example, let me quote Taylor concerning just such circumstances:
 
1) "In the case of a Higher Buying Day Low, the stock or future shows support causing a rally and a strong close on the Short Sale Day - the decline from this rally, next day, on the Buying Day, fails to sell down to the previous low - the Short Sale Day Low - this rally on the Short Sale day is an indication of a Higher Buy Day Bottom"
and
 
2) "A Short Sale put out at the High of a Buying Day made FIRSTon the penetration of the Short Sale Day High, should be covered on the reaction ... for short selling on the Buying Day High made FIRST is generally a weak short sale."
 
To really benefit from Taylor's method, one needs to see that the cycle, in and of itself, is useless without an accute awareness of price - especially where price is in relation to the open, and more importantly, where price is in relation to immediately prior highs and prior lows and previous closes. After all, what does Taylor keep in his book but a record of PRICE high, PRICE low, and the closing PRICE, and whether PRICE made its high or low first.
 
The primary data from which all else in his Book (meaning the hand written Book he kept for trading and not the book he published about his method) consists of (Surprise! Surpise!) volume, opening price, high price, low price, and closing price. As is the case with all indicators, methods, systems, etc. anything that may be useful to making trading decisions will be derived from price. The true value and genius of Taylor's method, properly applied, is that it focuses the trader on specific price levels and price action, i.e. how price behaves around those levels, and how to anticipate in which direction the path of least resistance lay.
 
As an aside, when Ed Dobson chose to publish Taylor's method, he did no one anywhere any favors by not only publishing Angell's and Raschke's interpretations of the method in the same volume, but then he went farther by suggesting in the publisher's forward that readers skip reading Taylor first, if not altogether, and simply read Angell's and Raschke's essays! What a mistake!
 
This is, no doubt, one reason why most traders who approach Taylor become enamored of the trading cycle, and ignore price action, support and resistance, completly ignoring Taylor's objective points, as Angell in particular focuses squarely on the trading cycle in his essay on Taylor's method.
 
Of course, another reason so many focus on the cycle and not the whole of Taylor's discussion on trading price action is that traders always want the easy money. How nice would it be if it really were so simple as buying on a buy day, holding overnight and selling soon after the open on the selling day for a nice profit, and then go short on the short sale day, cover at the close, again for a nice profit, and then start it all over again the next day by again going long on the subsequent buy day! If only trading were that easy!
 
Angell was the one who first suggested that cycles need to be shifted from time to time. Let us all remember that Angell was selling a primitive computer software program using the Taylor method (dubbed LSS by Angell) and as Taylor's method is a discretionary method, Angell's project to automate trading signals from Taylor necessarily broke down.
Angell could only make his program marginally salable by allowing the program to periodically re-set its cycle. The Book Method, you see, is meant for human intelligence, not artificial intelligence.
 
As a further aside, anyone interested can quickly verify that Angell was fined by the CFTC/NFA (http://www.cftc.gov/opa/enf02/opa4628-02.htm) for his sale of and claims made on behalf of his LSS method and his computerized trading system. Why anyone would depend upon an essay that was originally intended as a piece of sales literature for what amounted to a faulty and fraudulent computer trading system scheme for his or her understanding of Taylor's (a real trader, by the way) method is beyond me. But those who insist that the cycle is anything other than a three day affair, or that it otherwise is in constant need of periodic adjustment is doing preciely that - interpreting Taylor's Trading Method through the lens of a fraud and a propagandist.
 
In the end, it is always all about price.
 
If its not about price, then it is about fear, greed, and EGO.
 
Best Wishes,
 
Thales

I would like to make some comments here concerning how Taylor would have seen the price action today by Richbois count being an SS day. Finally, what he most likely would have done. Today was a failure to penetrate early in the session. However there was an immediate decline so why not short this decline?? Taylor says you have to recognize such action and trade on it even though it is a difficult trade to make many times it is very profitable. The key is knowing when to put out the short sell. This requires some tape reading skills. But in this case one would NOT short on 2-5-09. Why?
 
First, I take a few quotes out of his book concerning failures to penetrate the objective.
 
 
"In the beginning it might be well to study these failures to penetrate and the results of them before buying or short selling but you have got to recognize this action and trade on it, for while it is a most difficult ‘play’, at the same time many of the most profitable moves take place from failures to penetrate at both tops and bottoms. The failures to penetrate Buying or Selling Objectives are not exceptions to our method of trading, for a little study of the past movements of stocks and commodity futures will reveal that this action takes place approximately 40% of the time on an average, at either of these points, therefore, this movement is a very definite part of the method as a whole."
 
"When a stock makes a high FIRST on a Selling Day with a penetration of the Buying Day High, then reacts and is selling nearer the low of the day at the close, the indications are for a lower opening on the Short Sale Day. Should the lower opening occur, after the decline the stock or future will make an attempt to rally, in most cases, and this rally will penetrate the—High of Selling Day—if the immediate trend is higher, however, should the rally fail to reach this Objective and at the top of this rally the activity dies out and the trading narrows down to a few transactions at about the same price, then begins to ‘sell off’, we would ‘put out’ a short sale on this declining trend and J-U-S-T as it starts."
Quotes from p 46 The Taylor Trading Technique.
 
Now a quote about price action on an SS day
 
"We try to make all short sales on the high made FIRST on penetrations of—Selling Day Highs—‘This is the most favorable action for your play’—we would not ‘put out’ a short sale where the stock or future opened down and declined future, without a rally, for this action would carry the implications that rally, should it start later in the session, may cause the closing price to be up near the high of the day and this would be making the high LAST on a Short Sale Day, indicating a 46 future rally, and an up-opening but where the stock opened at the same price as the previous close and declined early in the session and then rallied higher than the opening price or for a penetration of the Selling Day High—we would ‘put out’ a short sale just as this rally began to exhaust itself after the penetration. This action is not as favorable to our trade as the above." P 39 The Taylor Trading Technique.
 
In summary, when there was no decline followed by a rally that failed to penetrate it is best to pass by the short. While one "could" have shorted and come out ok today in many cases one would get caught in the cross currents. Thus Taylor would have probably passed by shorting today right after the open.
 
Now taking the count as Elovemer did it was a buy day. First, some Taylor quotes from his book The Taylor Trading Technique
 
"The Short Sale Day Low is our point to watch and we watch for it to be reached or for the price to sell under this point, since this is where we buy our long stock." p28
 
Since today was a buy day by Elovemer count then yesterday 2-4-09 was an SS day. It is very important to watch the close oin the SS day to judge where you will probably be buying your long at on the next day. In this case the low close on the SS day 2-04-09 indicated a further decline on the next day 2-5. So one wouold be expecting to buy probably go long on a lower low than the previous days low made on 2-4.
 
"Now, we go back to the close of the Short Sale Day and we find that it was a ‘flat’ closing, then from this indication we expect a lower opening on the Buying Day and so far this would cause the low to be made FIRST and is a stronger indication when made early in the session that a rally would start from this low and hold the gains for a strong closing" p28
 
"On a Buying Day when the stock rallies from the low and the gain in points is sufficiently large, we sell out on the same day."p27
 
"The Buying Day—for our long stock provided the decline ends at or near this low but we can with reasonable certainty figure whether this low will be our buying ‘spot’ or if we may not expect further concessions to buy on and we get this indication from the way the stock closes on the Short Sale Day. We get this indication by watching the close and whether prices are up or down, that is down from the high of day or up from the low of day, weak or strong. Remember, we are watching the prices on a Short Sale Day trying to anticipate the coming point at which we can buy or go ‘long’" p 27
 
What would Taylor have done on 2-5-09 if the count said it was a buying day? First, he would have taken note of the close on the previous day (ss day) and seeing it close weak he would have expected the decline to continue on down after the open on 2-5. Therefore, he would have waited and as the tape indicated the decline was stopping he would have went long. Within an hour or so of the opening he would have been long and probably flat by the close today 2-5 with a good gain.