Taylor Trading Technique

[HAKUNA 10]

Yes both the days 17th and 22nd were Sell days for PowerBuy Play,

Powersell setups would be on Buy Days

 

Today is a Buy Violation Long play as market opened below Friday Buy Day Low of 842

[Frank 10]

Today is a Buy Violation Long play as market opened below Friday Buy Day Low of 842

 

very nice hakuna,

 

Low made first 30-minutes and traded up 18.75 pts to High made during 11th bar. Standard type of structure although fell a little short of primary objectives (will more normally make another new HOD into last hour)-- though understandable given it was a pre-FOMC tuesday.

 

I started this thread on range if you haven't checked it out yet -- gives some ideas on range:

 

http://www.traderslaboratory.com/forums/f34/s-and-p-intraday-range-and-5416.html

 

Price today did about 91% of the range that was predicted by the level of VIX. From many different angles, 'time of day' and 'range' -- it was a pretty 'normal' day, though on the low end of the range of 'normal'.

Edited April 28, 2009 by Frank

[elovemer 10]

....condensed version

.....boy is that easier to read !!!!

 

 

Buy day

…. if closes thru previous day's high.... close out before the close of session....

...buy at low of previous day …..short sale day low....

.... try to make all longs on the low made first

 

… compare to past declines from short day high to buy day low....

...compare to past buy day rallies.....from buy day low to close....

 

…. when high is made first on a buy day ….

 

….. when flat or weak close on a buy day ….

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

 

Buying on a buy day low violation...

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Selling day

--------------------------------------…..

Short sale day...

… try to make all short sales on the high made first on penetrations of selling day highs....

 

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Short sale at high of buying day made first

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

 

Failure to penetrate...... possible turning point in trend....

 

DOWN TREND area

…. expect … two decline sessions and buy day low violation

…..

 

UPTREND area

…. expect.... corrective decline to be complete in one and perhaps same session

(low made on short sale day)

….. from a fast decline with an active fast rally from this low up to the close

…..with result that get a higher buy day bottom and penetrated selling objectives

[elovemer 10]

.... tuesday was buy day for me .... and thursday as a short day for me....

.... closed at the same level as monday's low made first....

 

..... i don't know if this thing is getting weaker or if it is just accumulation in readiness for the next push higher.... either way Taylor is safe.....

[elovemer 10]

.... ...low made at the open .....

 

... thursday is my short day .... looking for a high made first and early .....

.... otherwise ... if a low made first ... a reaction long.... and a reversal to short later.....

 

.... if a high made last at end of session .... have to stay out according to Taylor system

.... unless your long cycle is more than 3 days.....

[HAKUNA 10]

elovemer,

Say the market opens low, you go long , then you short later, but the price action does not favour your short, do you then get out or wait to be stopped out.

 

Prices can well keep going south or after a shallow retracement go higher and end up making a high. Ofcourse this can only be determined in hindsight.

[elovemer 10]

..... i would say that .... if you go long on your short sell day ..... then you don't hold it for more than an intraday scalp.....

..... how long you hold it is up to you .......

 

....... after shorting..... your stop position is up to you the individual....

..... if you took the long .... then you can use that as a buffer for your stop position..... really up to the individual .....

 

...... but i would say that on short sell day .... it is more important to try to get the short than to get the long reaction play......

..... if you don't have a play .... then you just wait for the next buy day long opportunity..... Taylor is big on passing up all but the best opportunities....

 

.... shucks i wish Taylor were here.....

elovemer,

Say the market opens low, you go long , then you short later, but the price action does not favour your short, do you then get out or wait to be stopped out.

Prices can well keep going south or after a shallow retracement go higher and end up making a high. Ofcourse this can only be determined in hindsight.

[HAKUNA 10]

......

..... if you don't have a play .... then you just wait for the next buy day long opportunity..... Taylor is big on passing up all but the best opportunities....

 

.... shucks i wish Taylor were here.....

 

YES I think I read in one of the Market Wizard books. comments of a top trader that it was not his doing but waiting that made him money.

Guess that boils down to PATIENCE a virtue which indeed has to be developed and nurtured. Sometimes these Sell days or middle day as you call them are difficult to trade and can get frustrating, best to walk away and then wait for the ideal plays.

[elovemer 10]

...... just to be clear....

... Taylor uses ... buy day , sell day , short day

... i call them ... buy day , middle day , short day

today is Thursday and is a short day for me .... not a middle day ....

... the pivot high was at 11.15 am ....

 

... the only thing not ideal was that it happened slightly after 10.30 am

....yesterday was a middle day ....

 

.... on a middle day ... there is no play at all ... .according to Taylor....

....except to close out any play made on the first day of the cycle....

YES I think I read in one of the Market Wizard books. comments of a top trader that it was not his doing but waiting that made him money.

Guess that boils down to PATIENCE a virtue which indeed has to be developed and nurtured. Sometimes these Sell days or middle day as you call them are difficult to trade and can get frustrating, best to walk away and then wait for the ideal plays.

[HAKUNA 10]

The market sold off after it hit a high of around 888 , however there was also a high made prior to that at 884 in the first hour of trading, the prices could have dropped from there and in hindsight that would have been the pivot high. But there was a retracement to 881 before prices rose again and hit 888 which then became a pivot high.

 

again this is in hindsight. at 884 in the first hour a short would be valid as there is no way of knowing if the market is going to make another high.

[elovemer 10]

... you can't know when the exact pivot will be ....

..... unless you have a magic 8 ball.....

 

..... unless i am mistaken.... the high was 885.75 ..... not 888

...887 was globex high..... not real time high....

 

.... to take your point here..... you have between 9.30 and 10.30 to make a decision..... unless you extend your decision to 11.15 or so......

 

...... if you limit your decision to up to 10.30 ..... then maybe you would have gotten stopped out if your stop was very close..... at 11.15am

..... but remember .... Taylor did not use stops..... at least we can guess as much from the way he describes the method......

...... remember this is a SWING trading method.... not a scalping method....

.... as such .... you can't consider that a tight stop is the best policy using this method.....

 

..... again... i am not Taylor.... we are just discussing our perspectives on his work.......

.... that is my perspective....

:0)

 

again this is in hindsight. at 884 in the first hour a short would be valid as there is no way of knowing if the market is going to make another high.

Edited April 30, 2009 by elovemer

[elovemer 10]

... another comment i would make about today's action.....

..... Taylor would have us close the short on a fast and large decline....

 

.... well we have not really had a large decline today .... not really fast either.....

..... 20 points is not that much from a swing trade perspective....

 

.... so Taylor.... would most likely hold short .... aiming for a penetration of today's low....

..... although it also depends on where the close is....

.... if it closes nearer to the low than the high..... then Taylor would most likely hold for a penetration on buy day tomorrow......

 

.... if it closes well up from the low.... nearer to the high.... then Taylor would close out the same day .....

.... and then he would expect the possibility of a higher low held on buy day ... as a point to buy at the next session....

[elovemer 10]

.... i agree.....

...... it would have been valid....

 

... and hopefully the stop placement would be large enough to not get stopped out at 11.15 am

..... although ..... if you had a tight stop..... you could also try again at 11.15am

 

at 884 in the first hour a short would be valid as there is no way of knowing if the market is going to make another high.

[HAKUNA 10]

elovemer,

Yes it was globex high, presume you do not take into account the globex session and focus only on the day session.

Wonder if you took that short,

 

well today will be a Buy day for you and as you say a decline would in be in order prior to buying.

[elovemer 10]

.... session is closed.....

..... due to yesterday finishing near the low .... looking for a penetration on buy day ....

.... and got that penetration around the 10.30 pivot time

 

..... having said that.... a scalper would have been stopped out by the intraday decline...... which ended with a higher low

..... a swing trader would not ....

 

.... and now.... since the close is at the high..... the Taylor swing trader will be holding thru to monday and will close if a big gain is put in on monday ....

.... if not ... but still closes near the high.... the trader will hold for a penetration of monday high ..... on tuesday....

 

elovemer,

Yes it was globex high, presume you do not take into account the globex session and focus only on the day session.

Wonder if you took that short,

 

well today will be a Buy day for you and as you say a decline would in be in order prior to buying.

[elovemer 10]

... unless this crashes at the close...... on track for short day tuesday.....

... any long position taken on buy day .... should be closed today monday due to the large gain put in ..... as per Taylor's rules.....

.... session is closed.....

......

[elovemer 10]

.... will be hard to bring one's self to short this on tuesday on a high made first....

.... but that is the system.....

.... at least... for me... i have tuesday as a short sale day ......

[Frank 10]

wanted to add a thought which is based on statistical tendencies

 

if you think about taylor from this perspective, I think it offers some insight. taylor system is really based on highs and lows in a nutshell. so you can calculate how often the market violates both the previous days high AND previous days low (outside day). turns out this is relatively rare situation, occuring about 10% of the time. what this means is that once it takes out the previous days high (penetration), it is unlikely to take out the previous days low.

 

so for tomorrow, the previous days low is a long way down --- and very unlikely (though possible). well, if the market 'starts' below the previous high and then trades up through the previous high, we know odds are very very low that it will then turn around and crash through the previous days low. just as important, my previous data shows that the low or high for the day is most often made in the first 90 minutes (today was first 5 minutes). so if the market 'starts low' and trades up and through the previous high, you can kind of see that the odds are very very very low that price crashes down. net net, though it may be a sell-short day --- I would say that unless it 'starts high' with a large gap up, it seems unlikely to actually go down a ton. all of this is very consistent with Market Profile theory, which says that 'trend days' like today show one-sided market action that likely did not complete (there should be enough residual momentum to support price enough to at least go and take out todays high tomorrow). never say never, but I think most likely situation is for the market to put in a consolidation day before any significant downward price action ensues (ie, before it starts taking out the previous day lows).

[elovemer 10]

....thanks... Frank.... it gets lonely being the only poster on here....

... and Hakuna too ...

Edited May 5, 2009 by elovemer

[monad 10]

Did you get your short trade elovemer today

[elovemer 10]

....yeah but it is getting started slowly.....

.... let's see if it can follow through or not towards the close....

.... does look a lot like consolidation....

 

Did you get your short trade elovemer today

[Frank 10]

was thinking consolidation day but this was outlier in terms of range. it ended up a NR130 (narrowest range of past 130 sessions - excluding selected holidays) and was an inside day.

 

high was made early and took out the morning low later on --- but could never get going to downside.

 

market profile wise for tomorrow, the idea is to 'go with' a move outside first-hour range IF volume accompanies the attempted directional move.

[elovemer 10]

.... looks like they want to steal short sell day in AH .... once again...

....yeah but it is getting started slowly.....

.... let's see if it can follow through or not towards the close....

.... does look a lot like consolidation....

[elovemer 10]

..... as well as buy day ..... CRAP !!!!

.... looks like they want to steal short sell day in AH .... once again...

[monad 10]

If this is a Buy day and considering only day session, surely a gap up past yesterday's high calls for a Short according to Taylors Rules.