This is a simple pullback trade against the lower parallel and channel line to forecast the high probability large median line and warning line target. Let's see how this unfolds.
PS: The bigger trade was accidently dragged to the right when this chart was posted, so the entry was identical to the first one except for the extended target. Tks
评论
Timing_is_key
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Target reached! 2nd target has been adjusted to the 1st warning line as I expect that to get hit.
Sincerely,
TIK
Timing_is_key
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Warning line hit:)
Timing_is_key
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2nd Target Hit:) , Have a nice weekend
Timing_is_key
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Risk/Reward currently just under 4:1:) The bigger picture shows the GU being pulled into the light blue Median Line trans-versing the lower part of the chart. Remember, price has an approximately 80% probability of reaching the ML on any time frame:) Also lines up nicely with the first warning line. I am break-even now with an OCO either the Warning Line or Median Line, first in best dressed. let's see how this unfolds
Sincerely,
TIK
isomorph
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could you please explain where you get that statistic of '80% probability of reaching the ML on any time frame'? because AFAIK, the pitchfork tool, well, is anything but 50-50.
Timing_is_key
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Dr. Andrews taught several basic rules for trading with median lines in his original course. They are as follows:
1. There is a high probability that prices will reach the latest ML (around 80%* Verified by Tim Morge, 35 year veteran institutional trader and money manager, CTA, CFTC and NFA Registered & an original student of Dr Andrews and also Greg Fisher who also tested and verified the 80% rule in the grain market ( See; Using Median Lines As A Trading Tool, An Empirical Study, Grain Markets 1990-2005 pg 37. Part VII. Summary. Median Line Success.
2. There is a high probability that prices will either reverse on meeting the ML or gap through it
2. When prices pass through the ML, there is a high probability that they will pull back to it before continuing in the same direction.
4. When prices reverse before reaching the ML, leaving a “space”, there is a high probability that price will move further in the opposite direction than when it were rising toward the ML
5. There is a high probability that prices will reverse at any ML or extension of a prior ML
An entire trading plan can be devised around these simple rules. Timothy Morge has modified Andrew's second rule slightly. When Andrews was a trader he mostly followed daily stock charts and it was a common practice for gaps to form on these charts. With intraday charting and 24 hour markets gaps are much less common especially in Forex. Mr. Morge changed the wording of this rule to “there is a high probability that prices will either reverse on meeting the ML or zoom through it”. A zoom bar is a wide range bar that moves quickly through a median line with good separation (meaning the bar closes well off the ML). When a zoom bar or a gap occurs, passing through a median line – price will often retest the median line before continuing in its original direction.
I hope I have answered your question
Sincerely,
TIK
isomorph
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yes, thank you very much. that was very useful as i had no idea. i am not going to experiment more with the pitchfork. what do you think of Schiff's and Modified Schiff's pitchfork? why so many variations of the pitchfork? do they all work the same?
Timing_is_key
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When you have a steep standard pitchfork you may find the price action following is outside the set ie (Upper ML & Lower parallels ) In these cases Andrews used Schiffs & Mod. Schiffs to catch the price action, experiment with both, once you see one being respected you can focus on that one.
Tks
isomorph
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forgot to add....
furthermore, if we apply your 80% prob rule to the smaller pitchfork on your chart, it would mean then that price is supposed to reach the red midline in a bull move with an 80% probability. of course, we don't know over what time horizon, maybe in 2 days, maybe 2 months. who knows. so i don't really see how this is useful in an intraday context where one needs to correctly assess the intraday context in order to make 20 to 80 pips regularly (depending on the volatility context for that day, of course).
Timing_is_key
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With regard to the 80% probability rule to the smaller red pitchfork, There are obviously times when we fail to reach the median line as is the case above, The great way we can use this is summed up in rule 4. above and I quote: When prices reverse before reaching the ML, leaving a “space”, there is a high probability that price will move further in the opposite direction than when it were rising toward the ML.....So my reasoning for this trade was. 1. We have an 80% probability of reaching the LARGE lower Median Line & 2. When we broke below the lower parallel it confirmed Rule 4. We thus had 2 ducks in a row. I was looking for a pullback to the lower parallel so as to get a great Risk/Reward which I got.
With regard to second part of your question regarding time in a trade, If you where to use an opposing fork in the direction of your trade, the slope of the Median Line is a great way to anticipate how fast of a move to expect, a big deviation from this slope would indicate either a sideways move or a reversal, Therefore, part of your trade plan could include "If a trade is not progressing as I thought it would ( moves away from the ML slope) or becomes stale I will go flat the market". If you where to draw an even smaller fork beginning with the top left handle of the "M" Double Top formation you will notice the market followed this line beautifully and never really deviated. Thus we had an approximate time frame for the move to end also lining up with the LARGE Median Line & smaller warning line.
Thanks for your questions, they are quite valid and gives me the opportunity to explain my methodology.
Sincerely,
TIK