Trading Techniques   

Tom Demark (TD) Moving Average

Thanks for the explanation Daemon!

Are you using this yourself?

 

yeah.. just stick to what usually works for you. This one's a little messy and tedious to chart and understand. Merry Xmas btw~

 

There's only one shortest distance between two points...

What's the point of deliberately complicating things by entertaining a lot of other 'indicators', especially indicatore that tell you yesterday's news?... :)

 

yeah.. just stick to what usually works for you. This one's a little messy and tedious to chart and understand. Merry Xmas btw~

 

giantlow... :)

Yea... way to go, man!

Nothing beats the virtue of simplicity, without the noisy bells and whistles...

 

Wah. too cheem for me. i guess i'll just stick to my normal price and volume charts. hahaha

 

Hi Giantlow,

this is what i understand of Thomas Demark's sequential countdown. It is a leading entry tool used to see a change in trend. So if u are doing a uptrend countdown, u are looking to sell, and vice versa.

Demark's sequential countdown has 2 parts. A trend count of 9 with lookback of 4bars, and a countdown of 13 with a lookback of 2.

The trend count of 9 needs to have 9 consecutive bars that closes higher(if it is a uptrend countdown) than 4 bars back. Meaning for each bar, look back 4bars and it must close higher than that.

The countdown of 13 is the same rule, just that it is lookback 2 instead and need not be in consecutive together.

The trigger for the buy/sell would be a close that's higher(if u are looking for a sell) or lower (if u are looking for a buy) that has a lookback of 2.

Time stop should be around 10bars away with the market moving about 1.5 average range in your favour.

With this there is also a 9-13-9 trend extension and a combo countdown along with his sequential countdown... which if u are interested you should explore his book: The new science of technical analysis.

 

I don't really understand it either. But my take is this -

If the TD Moving Average is constructed out of the Standard Moving Average, then this indicator is still a lagging one.

If you have found a set of TA or FA indicators that work for you consistently, my advise is just stick to them like glue!

 

I dun realli understand how it works. Any comments from the gurus?

 

My friend from the industry says the big boys are using this indicator.

Tom Demark describes his TD Moving Average study as "a means of identifying logical locations to either exit a trade or to place stop loss orders."

If the Moving Average of lows goes into effect, use the price level represented by the Moving Average to determine a place to exit the long position or to place a stop loss on a trade. If the Moving Average of highs goes into effect, use the price level represented by the Moving Average to spot a place to exit the short position or to place a stop loss on a trade.

The plot of the Moving Average remains in force for a period of 4 bars or until the required conditions are no longer valid. Note that once the lowest low in X bars condition is no longer true, the plot continues for a period of 4 bars.

Conversely, if the most recent high has achieved a value higher than the high of all previous 12 bars, then a 3 period Moving Average of the highs is calculated and plotted until either the condition is no longer true or for a period of 4 bars, whichever is less.