[richbois]

Hi Fellow Traders,
Thales asked if I would start a thread on the Taylor Trading Technique here at TL where those interested in incorporating the Taylor Method into their trading could share their experiences, ask questions, and learn from each other.
In the interest of full disclosure, all should be aware that I do offer a service based on TTT. Basically Taylor showed us how to start our trading book for an instrument, I took his method, added a few of my own refinements, and offer a nightly spreadsheet based on that information. However, this thread is not meant to be a solicitation for my service, nor is to be limited to those who subscribe. This thread is open to any and all traders either already use Taylor's Book Method, or those interested in learning more about the method. All are welcome here. I merely wish to help those interested in Taylor, and discussing the way Taylor should be used.
One thing is of utmost importance - Thales and Rigel have mentioned in other places here at TL that most traders who try and fail to succeed with Taylor do so because the trader makes continued attempts to "re-phase" or "shift" the cycle to "fit" current price action. I want to make clear that according to Taylor, the cycle does not shift, and therefore, we want to keep the discussion based upon the cycle as you or I have in our trading book, and we do not want the thread to turn into a debate about changing the day of the cycle. We can all have a different day and find a way to trade it profitably. That's right, we can have two different trader's trading the same instrument using Taylor, and yet each may be on a different day of the cycle. The reason this can be is that Taylor, in the end, is based upon following the market as it cycles from a trading cycle low to trading cycle high, so the focus is always on recent daily highs and lows. There is another thread here at TL on Taylor where people debated the shifting of cycles. If you subscribe to the notion that Taylor's Method is better when a shifting cycle approach is applied, then may I politely ask you to refrain from posting here, and instead participate in the other TTT thread.

So lets use this thread to discuss Taylor as Taylor himself understood his Trading Technique.

[richbois]

For those who follow the GBPUSD, here is a good example on how to trade a Buy Day.

GBPUSD had closed near the highs on Friday. We know that a Buy day means that we will get a decline from the SS day high. Market oppen and tried twice to get above the Previous Day High and Failed. That was the entry point to short.

At this point we need to worry about taking profits. As we can see on the attached chart TTT MA Decl, which is the average decline on Buy Day for the last 20 cycles, was at 1.5039, and the Previous Day Low at 1.5022. This would the place where the longs would do battle and the trade should normally end.

Now that we know that the Buy Day Low could be also in, Long positions could also be taken.

This was a good example of how we can go short on Buy Days and also where a long position could be taken at the BDL.

[DugDug]

Hi Rich, as a new person to looking at TTT (recently downloaded and tried to read and understand it ), and while I dont want to confuse matters, are the names - buy days and sell days, and short sell days - confusing? ie; a buy day is a good day to short....

Do you think for ease of trying to get the head around it, I called it just day 1,2,3 in the cycle. Whilst still understanding the actual process? Or do you think it would actually cause me to miss something in the ideas. (I dont want to shift the cycles )
(kindof like trying to avoid the old double negatives that sometimes cause the mind to stop and confuse itself).
thanks.

[brownsfan019]

As someone that knows zero about Taylor, I have to agree with DD that it's a touch confusing to say we are in a 'buy day' and the best trade was a short that was simply a failed test of a previous high...



So if the goal is get get all on the same page, incl those like myself that know zero, there's some education that needs done to explain how a short is the best trade on a buy day. If that is not the goal, then you might want to specify who this thread is for.

[richbois]

I must agree with you all about the confusion about the name of the days.

However I am trying to keep it the way Taylor designed it.

There is a reason for the names for each day.

The premise is that the markets are manipulated.

The Buy day is day 1 of the cycle. In order for them (manipulators) to buy they must take the price down to a level that is acceptable to them. This is done on the SellShort day and ends on the Buy day.

So, in the perfect world, the low should be made early on the Buy day and then a rally begins. Once they start the ball rolling they expect the masses to keep pushing the prices up.

The goal is normally reached by the end of the Sell day, where they unload their positions.

At this point the masses are still pushing the prices up on the 3rd day called the SS day (SellShort Day), and who is selling to the masses ??? Yes, the manipulators. At this point there is no more buyers and the price starts to drop, therefore making a perfect SS day.

By the way, they usually cover their positions before the close of the SS day.
At this point, the masses are catching up and going short - on the start of the Buy day. This is when the manipulators are accumulating their long positions.

So, all this explains why the Names exist. In a perfect world we buy on Buy days , Sell on the Sell day highs, and Sell Short on the SS day. etc.

Since Taylor wrote his book in 1948-50 the trading world changed because of the computers.

And secondly the world of trading is not perfect.

Now let’s take today's GBPUSD example. The markets closed Friday on the SS day highs. We know we need a decline on Buy days. So if the decline is not accomplished on the SS day then it is delayed to the Buy day. Either way at some point, on the Buy day, there will be the Buy Day low. That is the start of the cycle and the place to buy.

Firstly, we need to concentrate on the previous day's action. The high, the low, and the close.

The High or the Low will be the 1st place of battle. Based on the type of day that we are expecting, we should be able to anticipate which will be battled first. On GBPUSD Friday’s close was near the highs, so therefore that should be the 1st place to be tested. We know that today is a Buy day, so the test should fail in order to get a decline. As this happened, that was the place to short until the Buy Day Low is in place.

Then the word BUY starts to make sense.

The main difference between us and Taylor is that now markets are open 24 hours a day, and most of us are intraday traders.

I hope i made some sense of all this.

[DugDug]

Thanks Rich,
in terms of the names I guess then they key to remind ourselves is that we wish to align ourselves with the manipulators and not the masses. So we need to put ourselves in their shoes I guess. (my suggestion of renaming was not to change anything but to help give me the "aha" moment)

I think that this alignment causes issues with many traders as this I implies a bit of anticipation and targeting which is always something people warn against, with sayings such as - you cant predict the future. So we all wish to react, and read the market rather than anticipate it.
However by aligning ourselves with what the market is actually doing - in terms of a cycle - then we are listening to the cycle and going with the cycle - rather than just blindly watching and reacting.

The other thing I have always rallied against is the name a market manipulator - always has negative connotations. Would it be considered similar to thinking that they are just the big players - the market movers/the big volume. (I hate the use of the word smart money)

(always interesting for me, coming from some longer term trend following to where I always say "I have no idea where the market will get/go to, I just let the market take me for the ride", as opposed to trying to short term trade the mini trends)

[richbois]

Originally Posted by DugDug »

Thanks Rich,
in terms of the names I guess then they key to remind ourselves is that we wish to align ourselves with the manipulators and not the masses. So we need to put ourselves in their shoes I guess. (my suggestion of renaming was not to change anything but to help give me the "aha" moment)

I think that this alignment causes issues with many traders as this I implies a bit of anticipation and targeting which is always something people warn against, with sayings such as - you cant predict the future. So we all wish to react, and read the market rather than anticipate it.
However by aligning ourselves with what the market is actually doing - in terms of a cycle - then we are listening to the cycle and going with the cycle - rather than just blindly watching and reacting.

The other thing I have always rallied against is the name a market manipulator - always has negative connotations. Would it be considered similar to thinking that they are just the big players - the market movers/the big volume. (I hate the use of the word smart money)

(always interesting for me, coming from some longer term trend following to where I always say "I have no idea where the market will get/go to, I just let the market take me for the ride", as opposed to trying to short term trade the mini trends)

I usually use the name Big Boys myself, but in the explanation above I used Taylor's words just to drive the point home.

TTT is a form of antipition but not at the extent of predicting the future. TTT gives us an idea of what may/should happens the next day together with some levels where this turn my occur. Taylor would then look at the ticker tape and watch the action in order to confirm the move.

Taylor was very strong at tape reading.

In today's world we have charts with different time frames to help us in this tape reading.

Therefore with the tools that you currently use to trade, TTT is there to help you be first on the side of the Big Boys and than the levels come into the picture.

I find that TTT does help the Day Trader since the trade doesn't last more than 36 hours in principle. As a Day trader on indices, most of us are out by the close. As far as FX and Commodities then yes trades may last 24-48 hours depending of the move and how good was your entry. I my case I sleep better when in cash.

[DugDug]

Absolutely the idea of anticipation still needs to be separated from the belief in prediction.
You still clearly need to wait for the actual trigger, that you anticipate COULD happen.

Interestingly enough this could still be used in longer term trend trading (discretionarily applied as opposed to purely systematic), as it could probably help improve entries, and possibly minimise some slippage, and whipsawing stops.
(I actually find I sleep better with my longer term positions, the shorter term trading recently has my brain ticking over way too much at present..... and big boys....that brings up whole other connotations. )
thanks.