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mitsubishi

Beyond Taylor

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I have just re studied the Taylor text and it seems to me that continuity, re cycling, etc. of the Taylor count could be fundamentally non consequential for intra day trading and even for swing trading if the Taylor rules are worked with "sensibly" and "conceptually." That is, in theory, at this point in my understanding.

 

The Taylor rules--as "concepts"--are the "main dish" and the Taylor count is the "dessert." Hence, Mitsubishi's admonishment against the "continuous count" or even a count at all as "non essential" could have some basis in the Taylor theory: a meal can be had without dessert but not without the main dish.

 

More accurately- preference

The count is part of the concept,not the dessert.You simply redefine the word "count" from-

 

a buy day,sell day.short sell day

 

to-

 

a buying period,a selling,period,a short selling period.

 

Does the chart look like a repeating 3 day cycle?- no

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It seems to me that Taylor did fundamentally two things:

 

1. Taylor identified the perennial 3 day cycle (at its essence)

 

2. Taylor created rules for discretionary trading based upon the 3 day cycle together with logic

 

BUT, the Taylor rules were constructed out of a commodities and equities swing trade logic. Other instruments and time frames could work with a different logic. This implies that it is likely that a trader has to construct a different set of rules dependent upon the particular instrument and type of trading (essentially a reference to the time frame or duration for a trade) of interest to the trader, if the instruments or type of trading or both differ from that of Taylor.

 

Furthermore, the identification of logic behind the Taylor methodology displaces the notion that mysticism played a role in the Taylor Trading theory. It seems to me that if the application of a Taylor rule doesn't seem to make sense based upon other "extrinsic" methods utilized by a trader, Taylor would not simply apply that rule and enter or exit a position mechanically.

Edited by LSTTT

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ZDO

In all honesty I must admit that the journey I took to learn the Taylor Method was an informative and a special journey, I not only made special friends along the way, including Mitsubishi and a few others, but I walked away with a feeling of accomplishment because I was able to master a very complicated method plus learn the secrets of being a discipline trader, even though I did not actually make money form what I learned about the Taylor Method, I believe that the real message that Taylor wanted to pass on to future traders was that it matters not what method you use to trade, the key essential ingredient to becoming a successful trader is to first master the art of being a disciplined trader. With that knowledge, one will be able to view the markets in a different perspective and ultimately you will become a better and more successful trader.

 

I may never open the Taylor book again, I have since placed it back on the shelf where it was for about 10 years before i even read it. So with that said I would like to take this opportunity to thank and pay tribute to the person that introduced me to the Taylor method, this strange book was given to me by someone whom I have never met or spoken to, his name is Robert T Rogers, on 10/10/2002 after exchanging a few email with Robert he mailed me the Taylor method, it was an original version of the book,he states in a letter to me "I am enclosing the original of taylor's Trading Technique" it came in a green or blue binder with faded pages. The only reason I even decided to read this book was after I discovered this thread back in 2011 on this forum, Traders Laboratory, so it took me some 10 years to open the Taylor book which was sitting on my book shelf since 2002.

 

It was an amazing and eye opening learning experience with a very deep learning curve that would discourage most traders from going pass the first page, but I did not give up because I believed that there was a message to be learned from studying and comprehending the material. What Taylor teaches and reveals to you is that there is a natural cycle or rhythm within the markets and that this natural cycle is present today as much as it was present during his time back in 1950. This ever present cycle, is not random and it will continue indefinitely into the distant future, governed by the same laws and principles that control nature.

 

The basis of this cycle is similar to that of the Sine Wave, the market is a rhythmic pulse, or pattern that appears in every market. This is what Taylor teach in his 3 day cycle, Selling Day, Sell Short Day and Buying Day.

Within those 3 days traders go through a Sine Wave period which begins with Optimism as they start buying at the bottom, this leads to a Euphoric stage at the top, which turns into Anxiety not knowing if the market will go higher or lower then Fear develops as the market starts to decline which leads to Desperation as the market crashes, then finally the feeling changes to Hope as the market settles and start to rise and finally the cycle ends back where it started as Optimism sets in as the market starts to rise again.

 

One last note I never made contact again with Robert T Rogers, I wanted to thank him for sharing this wonderful book with me, all of his contact information have since become obsolete and a letter I mailed him I never received a reply.

Edited by Gann Trader

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Looks like Gann Trader has gone Beyond Taylor.....:thumbs up:

Something happened,it seems to me,inbetween concluding that the method cannot be implemented as described in the book TO the market does not change basically in it's structure and operation ....and therefore,by implication must be exploitable.

 

And that is the key.What is inspiration? It is simply a shift in perception.

 

What do they say in the property world? Location,location,location,

Where is the worst location to buy?.If the market rallied strongly all day yesterday closing near or at the high,then today gaps up and starts going sideways is that a great location to buy? I would say that this is most likely place that price will retrace.But the action you take depends on what your current position is.

 

If you bought the previous day then this is the ideal location to sell existing longs and consider either going short or waiting for the gap to fill and go long.And you are asking yourself is today a high made first day?

I use the free information on the left of the chart to weigh the probabilities as to the next segment in price movement.

Taking the same scenario,if the higher timeframe trend is long if I were to go short my target is no further than a gap fill,because the probability is that the trend continues.

Probabilities must be weighed against recent context and what you are currently perceiving.

So,going back to the prev day rally,if that rally actually started a day or more earlier,then that changes the probabilities today.The probability for price to continue rallying without a gap fill today are lower.The probability that price fills the gap and does not take out the opening high increase,which in turn raises the probability that the opening high will be the daily high,a high made first.

 

Now we can put the above concept into the context of a repeating cycle that Gann trader just mentioned.A rally continues until it meets resistance and loses momentum.

 

(Bring whatever tools you prefer to measure that loss of momentum.For me the chart/tape reading is all I use.Not an oscillator or some other indicator,not volume,not DOM,not some guy on a blog saying we're overbought,not some talking head,not some job number.The only thing I trust is what I can see.Read a market using whatever works personally for you)

 

When it loses momentum,the short cycle begins.You have missed the selling cycle at this point.A rally is easy to see,a decline is easy to see,selling is done in secret as much as is possible.If you got out at todays early high,that is usually the last possible point on the selling cycle.The sellers are selling on the way up.You risk giving back some profits if you continue holding existing longs here.The optimal place to exit an existing long is a high made first and early.The optimal place to initiate a short position is a high made first and early.The optimal place to initiate a long position is a low made first and early.

If todays high remains in place then that is the zone in which "they" are short so at this point you either sell rallies or you await a low made first tomorrow where the short cycle has a good probability of ending.

 

One of the bonuses of following this method is you get to make money when you are wrong.If after a 2 day rally and a gap up this morning, you get out of your long position but the market continues up for a 3rd day,you were wrong ,but you made money.Who doesn't want to make money when they are wrong?

In this case,the probability for a high made first the next day increases.

 

OTOH,it becomes clear that when what you expect to happen does not happen you can act accordingly.For example,do not short a dull market that has strength in the background.Do not short if price keeps edging up from the early high-there is a window of time in which the likely/optimal trade has passed.There is a difference between expectation/probability and obstinacy.

 

What I like about this approach is that you don't go every day into the market completely blind.There is a certain amount of discretion in decision making but it's contained within reasonable expectations and probabilities.And one becomes better at the methods one focuses on.

 

It seems to me,that this method often presents problems for traders not because the principles aren't sound or relative to todays markets ,but simply because of the restrictions traders place on themselves.The reluctance to hold overnight.The insistence of using tight stops and small targets.The reluctance to act without "confirmation".

There's too much focus on an exact entry/exit price.Too much reliance on synthetic representations of price-namely indicators.You simply want to trade zones,in sync with the ebb and flow of price segments and,most importantly trade with confidence.

 

You have to ask yourself what elements of my approach are hampering my results?.Underfunding and too much leverage seem to be common causes.Less leverage and bigger targets and stops seems an obvious solution.

 

With this method,usually 1-3 trading ideas a day is what you're looking for.I trading idea is most often optimal.But it's based on the cycle-obviously.If the buying cycle ends early-high made first,exiting an existing long is the first trade,going short is a possible second trade and covering on the same day/going long would be a 3rd trade.Constantly changing your view on whether it's going to go up or down in the next5/30 minutes just seems like mental torture for me..self inflicted.The main cycle is longer than 5/30 minutes.

 

If the low is made first and you think you have seen it,and you are on board in that zone then holding all/most of the day is 1 trade.

I just wonder how many readers here have never actually attempted it?

What a good opportunity Thursday might present in that case.3 days in the red,a gap down would be a good probability zone to see some kind of rally.If you believe there is further weakness to come,sell at the gap fill.(1st target)If you are still bullish try to hold all day-2nd target prev lows....

 

One of the key elements of this method is to always be looking to act quickly early in the session,then having got on the right side,hold that position all day (or several days),or,in the case of a big move in a short period of time.take what the market gives you.

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...I forgot one thing.Since JFK is current.At the end of the Oliver Stone film there is a quote from Shakespeare that is very apt to this thread.

 

"what's past is prologue"

 

And from The Fog of War Robert McNamara- 11 lessons...

 

Lesson #4: Maximize efficiency.

 

Lesson #6: Get the Data.

 

Lesson #7: Belief and seeing are both often wrong.

 

Lesson #8: Be prepared to re-examine your reasoning.

 

Lesson #10: Never say never.

 

Lesson #11: You can’t change human nature

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I just discovered this thread although it seems the party is over. I've been reading TTT and applying it to the NQ with good results. The information provided by WHY? is closest to how I interpret Taylor. I never alter the count, I never buy on a SS day etc. I track a few things that Taylor didn't and changed the layout of the book slightly. I don't think anything revolutionary needs to happen to trade Taylor. There is enough flexibility in the rules. It is not a day trading method but it is a good swing trading method.

 

BTW - today is a buy day for me.

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I just discovered this thread although it seems the party is over. I've been reading TTT and applying it to the NQ with good results. The information provided by WHY? is closest to how I interpret Taylor. I never alter the count, I never buy on a SS day etc. I track a few things that Taylor didn't and changed the layout of the book slightly. I don't think anything revolutionary needs to happen to trade Taylor. There is enough flexibility in the rules. It is not a day trading method but it is a good swing trading method.

 

BTW - today is a buy day for me.

 

Hi YT

WHY? is a good man.

mitsubishi is a good man.

And Petuca made the money .

Print out all his posts and study...... you might be suprised

kind regards

bobc

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Hi YT

WHY? is a good man.

mitsubishi is a good man.

And Petuca made the money .

Print out all his posts and study...... you might be suprised

kind regards

bobc

 

EDIT - figured out the search feature

Edited by YertleTurtle

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EDIT - figured out the search feature

 

C'mon YT

Dont be lazy :(

Start at the beginning. The most important stuff is there :missy:

There is an important rule that few people are aware of in TTT.

I am going to keep it secret for awhile :cool:

regards

bobc

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BC -

 

Not sure what game you are playing. Petuca didn't seem to contribute anything ever.

 

Does anyone know what instruments "WK" and "CK" are in the Additional Material subsection are?

 

Monday is a SS day for the NQ if anyone cares.

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Over time, I have pondered the problem of the Taylor Trading cycle as a determinant of the price action. My conclusion is that the Taylor Trading cycle is not a determinant but simply a map of what could happen and this concept of a map underlies my explanation.

 

If a person is utilizing a map, the person is not "beholden" to the map because the map is simply a guide and not something more than that. Hence the person could deviate from the map at any time, if something interesting or if something problematic shows up. These things of "interest" or "problematic" ARE THE CATALYSTS OR THE LATEST ECONOMIC DATA, for example.

 

Furthermore, if we consider what a map is, we can better understand the limitations of a map. A map is simply an abstract composite of the geographical experiences of people over time. In a sense, it is like an "average." In trading, there is something similar to a map: an almanac. An almanac is simply an abstract composite of "averages" over time, like a map. A person can depend upon a map or an almanac and it could be useful or informative. But, a map or an almanac cannot be a determinant of what a person does because a map or an almanac is an ABSTRACTION AND an abstraction FROM THE PAST. A person or a trader can encounter something not shown by the map or the almanac in current time and the person or trader could be affected by that. For example, a map shows a road but a car accident just happened. A continuation on that road could be problematic because of that. In trading, this could be a new negative catalyst of some sort.

 

Hence, my conclusion is that the Taylor Trading cycle is not a determinant of the price action but simply a map of what could happen and not that different from an almanac or set of averages to consult but not to depend on beyond the actual function of an average. It seems that many traders utilizing the Taylor Trading cycle err in endowing the Taylor Trading cycle with more utility than what it is designed for. That error, I believe, is the primary basis for the mystical vs. the pragmatic approach to the understanding and utilization of the Taylor Trading concept.

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A problem of averages is a problem of the past. Averages suggest what is likely to happen but not what has to happen. Today, therefore, could be an exception from that average or "map" or trend.

 

But if that is the case, there should be signs of "today" being an exception. And that exception is a different pattern. There should be signs, in other words, of a different pattern in formation. The averages, therefore, suggest a pattern in conflict with the exception pattern developing and a trader has a choice of which set of signs to work with.

 

But if signs of an exception or a different pattern emerge, the problem is determining if that suggests a possible reversal of the trend because the "average" presumably suggests a trend in motion.

 

Taylor explained this conflict in terms of buyers and sellers. On the BUY DAY, at some point, the buyers are likely to show up. On the SS DAY, the short sellers are likely to show up. The BUY DAY and the SS DAY register the two points of an extreme according to Taylor. BUT, it could be possible in a trend with strength, that on the next SS DAY, buyers CONTINUE TO SHOW UP. The short sellers decide not to show up on the next SS DAY because a new positive catalyst could emerge on that next SS DAY. The short selling has been postponed. This postponement is an exception to the average. But ironically, in a trend with strength, this 4 day cycle could be the "average" vs. an exception. Context is more significant than the overall Taylor theory based on a three day cycle.

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At best that is all anything is i.e. "what is likely to happen" based on averages or past action. For instance, look at any chart...present day or 60 years ago...you will see trends..breakouts...channels...triangles...wedges...flags...pullbacks...reversals...etc they are all there..computer days or precomputer days...the market has always had these patterns and always will unless human nature changes. So we "know" when we see a successful breakout that most likely it will become a channel which will then resolve into a sideways range which will then resolve into another breakout.

 

The problem is the timing. How long will a channel be a channel or how "far" will a breakout spike go before a pullback?

 

Taylor observed a three day pattern that at times was a 4 or 5 day pattern. On rare occasions was it more than that.

 

No breakout spike can indefinetely continue to be a breakout. Sooner or later a pullback must happen and then one will generally see a channel develop which with the passage of time which in turn gets flatter and flatter and soon becomes a sideways range. This is the nature of the markets or some may call it the market cycle. But within these channels or ranges many taylor three day cycles can be observed.

 

Markets simply cannot shoot straight up and straight down every day, all the time. Not many would put money in such an unstable environment. There are too many participants in the markets with varying opinions desires..hopes.. dreams to cause it to shoot straight up and down. . Humans make the markets. Deep pockets can move it or manipulate it to some degree. They generally can inniate a move but the public drives it..nowdays..algos and hft too enter the picture in driving it. That is the theory behind taylors 3 day cycle. That is, those that can move it tend to do so in a 3 to 5 day cycle.

Edited by Patuca

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A problem of averages is a problem of the past. Averages suggest what is likely to happen but not what has to happen. Today, therefore, could be an exception from that average or "map" or trend.

 

But if that is the case, there should be signs of "today" being an exception. And that exception is a different pattern. There should be signs, in other words, of a different pattern in formation. The averages, therefore, suggest a pattern in conflict with the exception pattern developing and a trader has a choice of which set of signs to work with.

 

But if signs of an exception or a different pattern emerge, the problem is determining if that suggests a possible reversal of the trend because the "average" presumably suggests a trend in motion.

 

Taylor explained this conflict in terms of buyers and sellers. On the BUY DAY, at some point, the buyers are likely to show up. On the SS DAY, the short sellers are likely to show up. The BUY DAY and the SS DAY register the two points of an extreme according to Taylor. BUT, it could be possible in a trend with strength, that on the next SS DAY, buyers CONTINUE TO SHOW UP. The short sellers decide not to show up on the next SS DAY because a new positive catalyst could emerge on that next SS DAY. The short selling has been postponed. This postponement is an exception to the average. But ironically, in a trend with strength, this 4 day cycle could be the "average" vs. an exception. Context is more significant than the overall Taylor theory based on a three day cycle.

Very well said. Cheers!

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    • Date : 11th December 2019. FOMC Preview – 11th December 2019. FOMC Preview No policy changes or surprises are expected with today’s announcement (19:00 GMT) and Chair Powell’s press conference 30 minutes later. It will be interesting to see if, as expected, the voting is unanimous this time round. The FOMC members have expressed significant differences of opinion during 2019 as three rate cuts were implemented.  The apparent paradox of low unemployment and low inflation, the new “norm”. The two-digit unemployment rate (U-3) in November edged down to 3.53% from 3.56% in October, and a 3.52% cycle-low in September, all below the 3.58% prior cycle-low in April and a 4.00% rate at the beginning of the year. Current readings remain much lower than the 4.2% long-run unemployment rate projection noted in the September SEP, it is expected that this estimate will be trimmed today. Headline CPI rose 0.4% in October while the core index rose by 0.2%, for respective y/y gains of 1.8% and 2.3%, versus September figures of 1.7% and 2.4%. Today the November headline is expected to fall again to 0.2% and the core remains flat at 0.2% too. The Fed’s favoured inflation gauge, the PCE chain price measure, rose 1.3% y/y in October and expectations are for an uptick to 1.4% in November. The core PCE chain price measure rose 1.6% y/y in November, versus 1.7% in September, and expectations are for the pace to hold at 1.6% in November. The FOMC’s latest median estimates for 2019 inflation are 1.5% for the headline and 1.8% for the core. Hence, the focus will be on the Fed’s new quarterly forecasts, with expectations raised and likely to be mostly bullish results with a bump up in the median growth projection and a drop in the median dot to reflect a steady stance through 2020. However, the individual dots are likely to show both, forecasts for cuts and hikes. Chair Powell is expected to reiterate the US economy and policy are in a “good place,” (a phrase he has used a number of times lately) and could sound a little more upbeat after the strong jobs report. But, he will continue to warn of downside risks. The FOMC isn’t likely to announce any new measures on reserve management operations (QE?) or a repo facility. All steady into 2020 and beyond. USDIndex remains biased to the down side but has support around 97.40 and the 200-day moving average. A breach of this key support zone brings in 97.00 and the October low of 96.85. A break over 97.80 (the confluence of the 20 and 50-day moving averages) and 98.00 would be required before a re-test of the recent high at 98.50 could be considered. Always trade with strict risk management. Your capital is the single most important aspect of your trading business. Please note that times displayed based on local time zone and are from time of writing this report. Click HERE to access the full HotForex Economic calendar. Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE! Click HERE to READ more Market news. Stuart Cowell Head Market Analyst HotForex Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • Bitcoin Cash (BCH) Holds At The Bottom, Is The Consolidation Ongoing?   Key Resistance Levels: $275, $300, $325 Key Support Levels: $200, $160, $120 BCH/USD Price Long-term Trend: Ranging Bitcoin Cash had been trading in the large price range between the levels of $200 and $240. Presently, the coin is now fluctuating at the bottom of the chart. In retrospect, the bulls break the $240 resistance line and reached a high of $310. The coin was resisted as BSH drops back to a range-bound zone. The bears tested the low at $200 but there was a pulled back. The pullback was a correction as the upward move was stopped at $227. BCH is trading between the low at $200 and $227. The bulls are now having difficulty to move upward because of the resistance at $227. Conversely, the bears have failed to break the low of $200. Daily Chart Indicators Reading: The Fibonacci tool indicates that the coin reverses at the 1.272 extension level. BCH will resume the downtrend if the downtrend line or the support line is broken below. The RSI period 14 level 35 is indicating that the price is falling. BCH/USD Medium-term bias: Ranging On the 4-hour chart, the coin is fluctuating between the levels of $200 and $220. The bulls tested and broke the $220 price level but fell back to the range-bound zone. The price is trading below the $227 resistance level; a break is being expected shortly. 4-hour Chart Indicators Reading The market is trading above the 20% range of the daily stochastic. This signifies that BCH is in a bullish momentum. The blue and red lines are trending horizontally indicating that price is fluctuating. General Outlook for Bitcoin Cash (BCH) Bitcoin Cash is still confined within the price range of $200 and $240. Presently, BCH is in a tight range; a break above $227 will move price to the high of $240. Nevertheless, a break below $200 may weaken the coin to a low of $160. Bitcoin Cash Trade Signal Instrument: BCHUSD Order: buy Entry price: $203 Stop: $175 Target: $241 Source: https://learn2.trade 
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