Stocks & Commodities V. 29:9 (12-22): TD Sequential And Ermanometry by Andrew Coles, PhD

Stocks & Commodities V. 29:9 (12-22): TD Sequential And Ermanometry  by Andrew Coles, PhD
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Stocks & Commodities V. 29:9 (12-22): TD Sequential And Ermanometry For Intraday Traders by Andrew Coles, PhD

You can automate time-based techniques to apply to intraday charts. In the first part of this series, we discussed Fibonacciís bar-counting technique and the Lucas number series. This time, we will examine two others: the TD Sequential and Ermanometry.

by Andrew Coles, PhD

You can automate time-based techniques to apply to intraday charts. In the first part of this series, we discussed Fibonacciís bar-counting technique and the Lucas number series. This time, we will examine two others: the TD Sequential and Ermanometry.

Time-based techniques are effective and can be applied to intraday trading, but unless they are automated, they require a great deal of tending and tracking on the part of the trader. The Fibonacci and Lucas techniques, which we explored in the previous issue, can be mechanized (as seen in that article), but they will not continue to plot without further input. This is also true of William Ermanís Ermanometry, which we will look at later in this article. Meanwhile, Thomas DeMarkís TD Sequential can be automated without requiring further input, as we will see here.

TD SEQUENTIAL

In his book Day Trading Options as well as in various articles, Thomas DeMark demonstrated that his TD Sequential and TD Combo bar counting techniques are equally effective on intraday charts. However, there are many trading platforms that have not coded the indicators, and their manual calculation still presents a challenge for a busy daytrader.

Itís beyond the scope of this article to discuss DeMarkís two indicators in detail. Suffice it to say that TD Combo anticipates price exhaustion within trends, as does the countdown component of the TD Sequential. The setup component of TD Sequential focuses on the momentum component to define price ranges. Thus, if a directional move continues after the momentum component is complete, TD Countdown and TD Combo can be applied to identify areas of trend exhaustion. However, as Jason Perl stresses in his recent book about DeMarkís indicators, the momentum component is still important, since how the market responds to a setup determines whether it is range-bound. Each time price completes a setup, the price extremes are identified by a support and resistance line known as the TD Setup Trend (Tdst). If price fails to break through the Tdst, there is an opportunity to take a contrary position insofar as the market doesnít have the momentum to start the countdown phase ó that is, to break through the Tdst into a new distinct trend. This means that a mechanized version of the setup is capable of creating many interesting signals of its own.




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