This overview covers a very basic, but powerful reversal trading pattern. There are two versions of the pattern. The primary pattern is called a Gartley. The second pattern is a variation of the Gartley and is called a Butterfly. The Gartley pattern is named after H. M. Gartley who wrote a book in 1935 called “Profits in the Stock Market”. Pages 200-250 of his book display a library of patterns that cover all the patterns in the market ever discussed. You may have heard the phrase “Gartley 222” when referring to this pattern because the pattern is found on page 222 of H. M. Gartley’s book.
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Category 1
Only trade in the direction of the trend (Trend is determined by a rising or falling Point Of Control/POC)
Trade setup #1a: In a down trending market, when the current session opens below the previous day’s Value Area/VA enter a short trade at the previous day’s lower VA and again at the previous day’s POC/HVL placing a protective stop for both trades 1.5 points above the previous day’s upper VA.
Trade setup #1b: In an up trending market, when the current session opens above the previous day’s VA enter a long trade at the previous day’s upper VA and again at the previous day’s POC/HVL placing a protective stop for both trades 1.5 points below the previous day’s lower VA
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Every off-floor trader would like to get a feel for how things really are on the exchange floor. Mastering Market Profile may help you get it.
Worried that you’ll never be able to compete with the floor traders? After all, they’re right there in the middle of the action. They’re privy to information that off-floor traders see late or maybe never. Once you start using Market Profile, however, you may find yourself with more information than the floor trader. No longer will floor traders, decked out in their colored jackets, frantically gesturing and scrambling to make themselves heard and seen by other traders, seem chaotic, intimidating, or bizarre. Instead, with the use of Market Profile, you will see the order in the markets.
J. Peter Steidlmayer developed Market Profile in the 1980s in conjunction with the Chicago Board of Trade. Traders who use it say that they get an in-depth understanding of the market, contributing to improved trading. Many factors can be monitored from Market Profile.
Market Profile is not an indicator in the typical sense. It does not provide buy/sell recommendations but acts more like a decision-support tool. It organizes the data so that you can understand who is in control of the market, what is perceived as fair value, and the direction of the price move. It is possible to extract enough information from Market Profile for you to position your trades more advantageously.
Market Profile is useful for the pit trader as well as the offfloor trader. The indicator can help the off-floor trader get a better sense of the market; prior to the introduction of Market Profile, only floor traders had access to this information. Although all references here refer to using futures contracts, Market Profile can be used just as effectively for other tradables. Software vendors such as Cqg and WindoTrader provide Market Profile displays for equities.
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The Bank for International Settlements, the world’s most prestigious financial body, has warned that years of loose monetary policy has fuelled a dangerous credit bubble, leaving the global economy more vulnerable to another 1930s-style slump than generally understood.
“Virtually nobody foresaw the Great Depression of the 1930s, or the crises which affected Japan and Southeast Asia in the early and late 1990s. In fact, each downturn was preceded by a period of non-inflationary growth exuberant enough to lead many commentators to suggest that a ‘new era’ had arrived”, said the bank.
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The recent breakdown in long-dated bonds was interesting and potentially significant, but the action at the short-end of the market has been even more interesting. What we are referring to is the extraordinary divergence since mid March between the yield on a 3-month T-Bill and the yield on a 2-year T-Note, with the 3-month yield falling from 4.85% to 4.55% in parallel with a rise in the 2-year yield from 4.55% to 4.97%. The following chart illustrates the divergence.
(http://www.bloomberg.com/markets/rates/index.html)
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Part 1: http://tradinglib.com/indicators/murrey-math#more-53
Murrey Math Reversal Percentage Moves
- The following notes are observations regarding the Murrey Math Price Percentage Moves (MMRPM). The MMRPM statistics are a key Murrey Math factor to consider when evaluating a trade. The MMRPM statistics are also key in understanding the importance and function of the Square in Time.
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The Gimmee bar comes from one of the oldest formations known to traders, the reversal bar at the end of rising or falling prices when a market is seen overall to be going sideways. Although the recognition of reversal bars is ancient, using them in combination with Bollinger Bands is not ancient. Until the advent of computers, it was much too difficult and time consuming to calculate the bands. Virtually all software worth anything these days can put the bands on a chart for you, so we’ll not waste time here with the mathematics. Suffice it to say that the bands are so constructed that when set with a 20 bar moving average of the close at two standard deviations, approximately 96.5% of all closes will be contained within the bands. Here’s how the bands look. How to trade the Gimmees will follow:
GIMMEE BARS ARE NOTHING MORE THAN REVERSAL BARS THAT TAKE PLACE ONCE PRICES HAVE REACHED THE UPPER OR LOWER BANDS IN A SIDEWAYS MOVING MARKET.
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Standard & Poor’s, Moody’s Investors Service and Fitch Ratings are masking burgeoning losses in the market for subprime mortgage bonds by failing to cut the credit ratings on about $200 billion of securities backed by home loans. The highest default rates on home loans in a decade have reduced prices of some bonds backed by mortgages to people with poor or limited credit by more than 50 cents on the dollar and forced New York-based Bear Stearns Cos. to offer $3.2 billion to bail out a money-losing hedge fund. Almost 65 percent of the bonds in indexes that track subprime mortgage debt don’t meet the ratings criteria in place when they were sold, according to data compiled by Bloomberg.
That may just be the beginning. Downgrades by S&P, Moody’s and Fitch would force hundreds of investors to sell holdings, roiling the $800 billion market for securities backed by subprime mortgages and $1 trillion of collateralized debt obligations, the fastest growing part of the financial markets.
“You’ll see massive losses from banks, insurance companies and pension managers,” said Joshua Rosner, a managing director at investment research firm Graham Fisher & Co. in New York and co-author of a study last month that said S&P, Moody’s and Fitch understate the risks of subprime mortgage bonds. “The longer they wait, the worse it’s going to be.”
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Although the Federal Reserve left the target federal funds rate unchanged at 5.25% today, it made some important adjustments to the wording of its statement on the stance of monetary policy. The changes in language suggest an improved forecast for real GDP growth and a tougher standard for assessing inflation risk.
First, instead of dwelling on the fact that real GDP growth slowed in the first quarter, The Fed said growth “appears to have been moderate during the first half” of 2007. Given that the Fed, like everyone else, knew real GDP growth was 0.7% in the first quarter, calling growth in the first half “moderate” implies the Fed is forecasting strong growth in the second quarter. Otherwise, growth would not be “moderate” in the first half, but rather “slower than trend.”
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Welcome to the 4 Hour MACD Forex Strategy. This strategy is aimed at simplicity as well as high probability trades. I have been in the equity market for almost ten years now and in the forex market for two years. I learned very early that forex trading is not for the shaky ones. One must have a tested and definite trading strategy as well as well organized discipline to follow the strategy and execute the plan as to the letter. One must be exact and precise.
Therefore I paper traded for almost two years and read everything I could lay my hands on. I bought books and courses. I attend a 5 day live web seminar. All this did not help me at all as it did not fit my style of personality and I just did not seem to connect with all this different strategies. Over two years of watching the graphs with different indicators, moving averages etc. I started to get a feeling for the movement and motion of the market especially the EurUsd around certain moving averages.
It wasn’t till late last year that I discover a setting with the MACD that gives easy to read signals on a regular basis on a 4 hour timeframe. I like the 4 hour timeframe as one are not glued to the screen full time. Read the rest of this entry »