Letters To S&C by Technical Analysis, Inc.
GOODMAN WAVE THEORY
I read Duane Archer’s article in the December 2010 issue of Stocks & Commodities (“Goodman Wave Theory”) and couldn’t help but notice the similarities between the Goodman wave (Gwt) and AB=CD or Abc pattern. What are the significant differences between them and the advantages of one over the other? I recognize that the Gwt has a number of additional rules whereas the AB=CD pattern boils down to about three or four. I guess I’m wondering why I would go for a more complicated system unless it offers significant trading advantages over one I already use. Could you ask the author for his thoughts?
Author Duane Archer replies:
GWT is both a refinement and expansion of the old 50% measured move [AB=CD] rule.
The propagation principle is an expansion allowing the creation of several templates for forecasting. The intersection and 3-C rules are refinements for delimiting possibilities and zeroing in on legitimate trade candidates.
These are the three primary principles of Goodman wave theory, but there are quite a few more principles and rules. My article in the December 2010 issue was simply meant as an introduction.
ERRATA: December 2010
Traders’ Tips (MICROSOFT EXCEL)
I was recently contacted by a reader who had been playing with the settings on the “TradingIndexesWithHullMA” spreadsheet that I contributed to the December 2010 Traders’ Tips column. The reader noticed there were buy and sell plot anomalies when he used settings that caused more frequent trades.
I have found and fixed a problem in the formula controlling the active position (column AE). This necessitated changes to rebalance formulas in other columns in the “One Symbol Trading Model” area of the spreadsheet.
The revised spreadsheet can be downloaded from the December 2010 Traders’ Tips area at Traders.com. —Editor