[WHY?]

Originally Posted by smoothdrive »

Hello WHY?

Hold on please!! I'm hear to tell you there are many lurkers here enjoying your posts. I ordered the book on Monday, and my daughter just called me at work to say fed x delivered a package from amazon. So I'll start the book tonight.

I very much appreciate what you have posted here and I look forward to starting the book and kicking around some Q&A if you are so inclined. It sounds like the book is a little difficult to read. So, if you were just starting out with Taylor - how would you go about it? Follow the chapters in order/non-order - read a summary form an outside source etc?

Also, I saw that you have posted at the VSA thread -- Do you think the two methods can work in harmony?

TIA

Gary

I would read chapters 1 and 2 then chapter 14 Pertinents Points then start back over with chapter 1 and read the whole book. You will have to read it several times. I have been studing Taylor since before the year 2000. My Taylor book is falling apart and is marked up like crazy. But then again, I ain't as smart as some folks! Taylors principles are good and sound in my opinion. His hand written method..well i think that could certainly be improved upon in the days of computers and ..well I have done that for myself.

As far as VSA and Taylor. I am learning VSA. I think at this point that VSA could perhaps help to anticipate the patterns that Taylor speaks about and confirm Taylors ideas. I have alot of trading books. If someone held a gun to my head and told me I had to give up all my trading books but one, I would choose to keep Taylors book. If they told me give up Taylors and I could keep all the rest I wouldn't think about it 5 seconds....I would help them load up the other books. I would keep Taylors. But I must admit the man sounds like he rambles along not making much sense until you learn to understand his writing style. You may think the man is crazy or just plain confused but if you can weed your way thru his book, and read it many times, and think about what he says, you will soon get the picture. If you have any doubts on Taylors writing, just ask. I will be keeping an eye out on this thread to see how things are going?? I have read Taylor so much I even catch myself writing like that man! That is bad now!

Please understand pages 99-126 (at least in my version of the book) are Raschke and Angells take on Taylor. While they make some good points, and perhaps some useful points, I personally prefer Taylor's way of understanding the cycle. Don't get confused thinking that Angell is explaining Taylors way of doing things because his version is a modified version of Taylor. But if it works for him..good! But it is not what Taylor taught in the strictest sense.

Good to hear there are a few lurkers here on this thread. It was looking like dogpile and myself were here alone.

[garp]

Totally agree with smoothdrive. Please hold on. That is one of the best and promising threads of TL.

[WHY?]

Originally Posted by garp »

Totally agree with smoothdrive. Please hold on. That is one of the best and promising threads of TL.

OK, will do at least for now. Have a great weekend!

[Dogpile]

I wrote some quick easylanguage (tradestation code) to help visually define whether high or low made first historically.

I have annotated the chart a bit.

I note that the goal is to start with a thesis and then see how price action works out. Sometimes, you simply won't be able to figure out in real-time where you are in the Taylor Rhythm -- but you can have a roadmap with the 'idealized version' --- and then adjust on the fly as necessary.

Personally, I like to just think in terms of concepts:

1) When there is a morning test of a previous day low - consider a buy
2) When there is a morning test of a previous day high - consider a short
3) A 'Sell Day' low should not violate the 'Buy Day' low -- a morning low on a sell day may be buyable if it makes a 'higher low' vs the buy day low

--------------

WHY?, I would love to hear some concepts on how your calculations work. I assume you are comparing highs and lows across days but I would like to here a tip or 2 about how you are doing this.

thx in advance,

dog

I will post my EasyLanguage code when it gets better. Don't have time to finish it right now...

http://bp0.blogger.com/_5h-SWVGx6Ms/...thru+10-19.png <---- if thumbnail doesn't work

[WHY?]

I note that the goal is to start with a thesis and then see how price action works out. Sometimes, you simply won't be able to figure out in real-time where you are in the Taylor Rhythm -- but you can have a roadmap with the 'idealized version' --- and then adjust on the fly as necessary.

If one trades as Taylor traded then you know what the cycle is before the open. Then you trade by the rules depending on how price action turned out. Trying to adapt the 3 day cycle to actual price action will get one caught on the wrong side of the market.

Personally, I like to just think in terms of concepts:

1) When there is a morning test of a previous day low - consider a buy
2) When there is a morning test of a previous day high - consider a short
3) A 'Sell Day' low should not violate the 'Buy Day' low -- a morning low on a sell day may be buyable if it makes a 'higher low' vs the buy day low.

Taylors concepts are fine but if you apply them differently then they don't have the same meaning and the 3 day cycle really becomes meaningless. For instance, take number your 3 above. Many times a sell day low WILL violate a buy day low. That is called a BV and it is an opportunity to go long. A morning low on a sell day IS NOT a long opportunity according to Taylor. The higher bottom you speak of must take place on the BUY day. That is, if the BUY day low stays above the previous days low(SS day low), then it is a good opportunity to go long because HB are usually profitable. But this is when they take place on a BUY day. No longs are allowed at all on sell days UNLESS a BV takes place early in the session.

[WHY?]

1) When there is a morning test of a previous day low - consider a buy
2) When there is a morning test of a previous day high - consider a short

On these two you would be allowing short or long on any day. This means there is no three day cycle. Taylor would not allow short or longs on just any day. The reason for the cycle is that it is a mechanism for the "smart money" to buy or sell their line profitably and not cause extreme gyrations in the market ALL the time. If one scuttles the three day cycle then Taylors concepts basically have no manipulation context as their environment. The basis of his whole theory is that the markets are manipulated and the cycle reveals that manipulation.

[Reaver]

Sorry I don't have more to add...the main thing I got out of the book was an explanation of why price fluctuates. I know that sounds silly and obvious, but it makes a difference when you're buying dips and shorting rallies to know what is going on...I don't personally believe that the systematic pattern presented is for me....I don't believe in any system though. I like the ideas I got from the book...not necessarily the method itself if that makes sense....

[Dogpile]

<<On these two you would be allowing short or long on any day. This means there is no three day cycle. >>

In my view, there is sometimes a 3-day cycle and sometimes not.

WHY?, it would be helpful if you could post some examples of some classic Taylor that is not the standard 3-day cycle -- which is a lot of the time. I just can't imagine ONLY trading Taylor, there wouldn't be very many trades --- but this is where you could enlighten me on a good non-standard Taylor trade that occured recently. This screen capture software is simple to use and it offers a free trial for 30-days:

http://www.download.com/SnagIt/3000-...-10717260.html

If you could capture some recent action and annotate a real-world example, that would go a long way to helping explain Taylors method.

I think I can offer a few trade ideas that may add an extra few points a week for you if we engage here. I am asking you to share some of your expertise publicly in exchange for that by showing some real-world examples of recent action.

I think of myself as a hybrid technician. I combine patterns and indicators and 'concepts' into set-ups. I will post a summary of Friday as an example. Maybe you could do something similar -- just pick a day and do it. I find that expaining it here on traderslab.com really imprints it on your own brain -- you gain by doing this kind of homework and you gain when somebody else shows you how they are thinking. I have had very positive experiences here and learned and shared a lot. 'ant' and 'jperl' stand out, to pick a few.

Here is how I look at Friday in retrospect. There is no 'Taylor' in this -- I just wanted to show you how I think and then you show me something about how you think.

Friday -- you had a 'gap out of range' (gaps above or below the entire daily-range of the previous day). This is a market profile thing. Thursday had a big gap down but the gap was 'within range' of the previous day. Fridays gap 'out of range' is hinting of a potentially dynamic day -- the 'gap within range' does not. This is offering a 'roadmap' which may or not play out -- but its nice to have the roadmap and know what you are on the lookout for to confirm this. You then had 'open-drive' -- a high conviction directional move off the opening price -- this again is a Market Profile concept and is confirming the bearish roadmap. This down move also comes after a 'narrow inside day' -- which is a standard breakout set-up. After the 'drive' lower -- you then later had a 'test' of the VWAP price --- which coincided with a '15-min First Cross Sell' -- this is a pattern recognition/indicator thing from Linda Rashke, which is my absolute favorite set-up for big moves. I also noted some bear flags that showed up. I find the 'first flag' after a strong inital thrust away from VWAP to be a very nice reward-risk set-up. When you enter the last hour and down-volume is swamping up-volume as it was on Friday -- you have the potential for accelerated selling into the close. Rashke calls this set-up 'last call' -- its a 'trend day' set-up where there is often a strong move that kicks in around 3:15pm on a true trend day.