Article on TD Sequential.
Tom Demark Sequential Indicator
- Thread starter chiefraven
- Start date
The sequential and countdown indicators are spelled out in the book and online from what I understand. I follow a trader who uses this as part of his analysis and he is quite successful. I believe he does not use it on individual stocks but on sectors and indexes because his results on stocks were not good. This could be due to the higher volatility of individual stocks. Also for a better picture of the overall market he looks for clusters of sequential buys or sells across a number of sectors. I have also noticed that some people who use it will use different MM techniques which sometimes include reversing on failures.
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Active Trader mag noted years ago he also worked with Paul Tudor Jones;
aparently not for long.
13 is a fibo number;
so no wonder some find some of it useful
Mr Demark clearly likes it complex
LOL, you got that right!Quote from murray t turtle:
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Active Trader mag noted years ago he also worked with Paul Tudor Jones;
aparently not for long.
13 is a fibo number;
so no wonder some find some of it useful
Mr Demark clearly likes it complex
The first time I saw it explained, I was like ... wha??#!!!
...... and then when I realized that it wasn't infallible I pretty much tossed it with the bath water.
It seems that traders will continue in their search for the grail, no matter what. It's just human nature, and I wouldn't have it any other way.
But I think I can do better than this (no offence to Mr. Demark and his followers, but I just can't keep track of all the counts on all the markets AND trade them too).
I'll admit it, it must be me.
Always one to play the devil's advocate, I looked-up some of the rules on Yahoo and this is what I found .... whew!, sounds like quite a receipe to me!
***
The innovative approach proposed by Tom DeMark has changed the cyclical analysis to a precise and scientific technique based on some mechanical calculations. These allow us to identify in the cycles very significant price tops and bottoms, which can become trend reversals in the market.
By those instruments the trader can choose a certain market position by minimizing the risk .
There are two Trading Systems: the âSEQUENTIALâ and the âCOMBOâ.
They provide two indicators to enter into the market. The first entry signal comes during the first cycle creation ; it is weak and it is considered a set up for the second stronger entry signal coming during the creation of the second cycle.
The first indicator is verified when the calculation produces 9 (sometime 8 ) consecutive bars.
The second one is verified when the calculation produces 13 (sometime 12) NOT consecutive bars .
We have seen that the best time frame to consider is the âdailyâ (medium period) , which give a lesser margin of error .
Possible future set ups, that we can see during or after the count of 13(12) bars, can make stronger the first set up. For example, DeMark says that a very strong entry signal is verified when we have a setup formation of 9(8) bars after the count of 13, that is 9(8)+13(12)+9(8) bars.
In other words, to enter into the market after that configuration is not very risky .
If after the 13 bars what we are expecting does not happen, it is highly probable that the cycle will continue to grow. Therefore we will need to wait for a new set up and a new counting of 13 bars.
In any case we must always check both, the counting of the âbuyâ indicators and of the âsellâ indicators and evaluate at each time what it is the best thing to do. Because sometimes an entry signal coming from one side can be neutralized by an entry signal coming from the opposite side.
***
The innovative approach proposed by Tom DeMark has changed the cyclical analysis to a precise and scientific technique based on some mechanical calculations. These allow us to identify in the cycles very significant price tops and bottoms, which can become trend reversals in the market.
By those instruments the trader can choose a certain market position by minimizing the risk .
There are two Trading Systems: the âSEQUENTIALâ and the âCOMBOâ.
They provide two indicators to enter into the market. The first entry signal comes during the first cycle creation ; it is weak and it is considered a set up for the second stronger entry signal coming during the creation of the second cycle.
The first indicator is verified when the calculation produces 9 (sometime 8 ) consecutive bars.
The second one is verified when the calculation produces 13 (sometime 12) NOT consecutive bars .
We have seen that the best time frame to consider is the âdailyâ (medium period) , which give a lesser margin of error .
Possible future set ups, that we can see during or after the count of 13(12) bars, can make stronger the first set up. For example, DeMark says that a very strong entry signal is verified when we have a setup formation of 9(8) bars after the count of 13, that is 9(8)+13(12)+9(8) bars.
In other words, to enter into the market after that configuration is not very risky .
If after the 13 bars what we are expecting does not happen, it is highly probable that the cycle will continue to grow. Therefore we will need to wait for a new set up and a new counting of 13 bars.
In any case we must always check both, the counting of the âbuyâ indicators and of the âsellâ indicators and evaluate at each time what it is the best thing to do. Because sometimes an entry signal coming from one side can be neutralized by an entry signal coming from the opposite side.
SOME RULES
CORRECT ACTIVATION OF A BUY SETUP PHASE
On the fifth day preceding the first day of setup, the daily closing bar needs to be higher than the daily closing bar of the day before the first day of Setup.
CORRECT ACTIVATION OF A SELL SETUP PHASE
On the fifth day preceding the first day of setup, the daily closing bar needs to be lower than the daily closing bar of the day before the first day of Setup.
CANCELLATION
Cancellation means that the setup can be removed. As a consequence, the entry signal counting goes back to its zero setting.
This can happen when:
REVERSE SETUP: it can occur when a contrary setup takes place after the setup and before the completion of its counting phase.
LOWEST - HIGHEST SETUP: it can occur after the setup and before the completion of its counting phase. This means that a daily closing bar lower than the lowest closing bar of the setup occurs during the successive phase of the counting for the SELL signal.
Or a daily closing bar higher than the highest closing bar of the setup occurs during the successive phase of the counting for the BUY signal.
RECYCLE (optional)
The setup is replaced by a subsequent setup going in the same direction. This only involves the zero setting of the counting that might have started. The RECYCLE happens under the following conditions:
A SETUP in the same direction of the first one takes place.
The high-low value of the second Setup (the difference between the highest maximum and the lowest minimum of the Setup) is greater then the true range of the first Setup.
But ânot too much,â says DeMark: in the sense that the true range of the second Setup is smaller then the true range of the first Setup multiplied by a value between 1.618 and 3.
When one or both conditions b. and c. do not take place, the second Setup must be ignored, i.e. the first Setup and the subsequent counting for the entry signal both go on living.
COUNTING FOR THE ENTRY SIGNAL
The 13th bar price needs to be higher than the 8th bar price
According to DeMark, the closing bar value of the 13th or subsequent yellow bar needs to be higher than the bar closing value of the 8th yellow bar for the SELL signal; or lower for the BUY signal.
Then DeMark states also that the value of the 13th or subsequent yellow bar needs to be higher than the closing value of 2 previous daily bars for the SELL signal; or lower for the BUY signal.
ENTRY SIGNAL
It takes place directly on the 13th (or 12th) bar.
We have an entry signal when, after the counting for the BUY Signal is finished, a counting yellow bar is made on the opposite direction, that is to say on the counting for the SELL Signal. In the same way we have an entry signal when, after the counting for the SELL Signal is finished, a counting yellow bar is made on the opposite direction, that is to say on the counting for the BUY Signal.
We have an entry signal when, after the counting for the BUY Signal is finished, a Setup bar is made on the opposite direction, that is to say in the Setup SELL. In the same way we have an entry signal when, after the counting for the SELL Signal is finished, a Setup bar is made on the opposite direction, that is to say in the Setup BUY .
Further complicated rules can be used to understand when it is the right time to enter into the market. But we use Sequential and Combo according to the analysis of the multi-cycles, which we consider an effective tool.
***
I honestly can't believe the guy wrote this with a straight face!
CORRECT ACTIVATION OF A BUY SETUP PHASE
On the fifth day preceding the first day of setup, the daily closing bar needs to be higher than the daily closing bar of the day before the first day of Setup.
CORRECT ACTIVATION OF A SELL SETUP PHASE
On the fifth day preceding the first day of setup, the daily closing bar needs to be lower than the daily closing bar of the day before the first day of Setup.
CANCELLATION
Cancellation means that the setup can be removed. As a consequence, the entry signal counting goes back to its zero setting.
This can happen when:
REVERSE SETUP: it can occur when a contrary setup takes place after the setup and before the completion of its counting phase.
LOWEST - HIGHEST SETUP: it can occur after the setup and before the completion of its counting phase. This means that a daily closing bar lower than the lowest closing bar of the setup occurs during the successive phase of the counting for the SELL signal.
Or a daily closing bar higher than the highest closing bar of the setup occurs during the successive phase of the counting for the BUY signal.
RECYCLE (optional)
The setup is replaced by a subsequent setup going in the same direction. This only involves the zero setting of the counting that might have started. The RECYCLE happens under the following conditions:
A SETUP in the same direction of the first one takes place.
The high-low value of the second Setup (the difference between the highest maximum and the lowest minimum of the Setup) is greater then the true range of the first Setup.
But ânot too much,â says DeMark: in the sense that the true range of the second Setup is smaller then the true range of the first Setup multiplied by a value between 1.618 and 3.
When one or both conditions b. and c. do not take place, the second Setup must be ignored, i.e. the first Setup and the subsequent counting for the entry signal both go on living.
COUNTING FOR THE ENTRY SIGNAL
The 13th bar price needs to be higher than the 8th bar price
According to DeMark, the closing bar value of the 13th or subsequent yellow bar needs to be higher than the bar closing value of the 8th yellow bar for the SELL signal; or lower for the BUY signal.
Then DeMark states also that the value of the 13th or subsequent yellow bar needs to be higher than the closing value of 2 previous daily bars for the SELL signal; or lower for the BUY signal.
ENTRY SIGNAL
It takes place directly on the 13th (or 12th) bar.
We have an entry signal when, after the counting for the BUY Signal is finished, a counting yellow bar is made on the opposite direction, that is to say on the counting for the SELL Signal. In the same way we have an entry signal when, after the counting for the SELL Signal is finished, a counting yellow bar is made on the opposite direction, that is to say on the counting for the BUY Signal.
We have an entry signal when, after the counting for the BUY Signal is finished, a Setup bar is made on the opposite direction, that is to say in the Setup SELL. In the same way we have an entry signal when, after the counting for the SELL Signal is finished, a Setup bar is made on the opposite direction, that is to say in the Setup BUY .
Further complicated rules can be used to understand when it is the right time to enter into the market. But we use Sequential and Combo according to the analysis of the multi-cycles, which we consider an effective tool.
***
I honestly can't believe the guy wrote this with a straight face!
Are there any facts substaniating that DeMark is the man behind SAC, as claimed by traders monthly?
seems hard to believe, does anyone know for sure??
i can't imagine anyone working for SAC on proprietary anything would have a website and write books--- seems fishy.... but what do i know?
thanks,
surf
seems hard to believe, does anyone know for sure??
i can't imagine anyone working for SAC on proprietary anything would have a website and write books--- seems fishy.... but what do i know?
thanks,
surf
Tom DeMark has been working for 30+ years with some of the biggest including Tudor Jones and Steven Cohen as well as giving seminars to major money center banks/trading houses and exchanges.
Too complicated - for some who want a "free lunch"
Doesn't work all the time - what does.
+ + +
But while entries are important it is money management that makes money.
Too complicated - for some who want a "free lunch"
Doesn't work all the time - what does.
+ + +
But while entries are important it is money management that makes money.