When I post Andrews charts I am often asked how one can learn this method. I have never taken formal trading to learn it. There are sources on the web that offer courses. So how did I learn this? I was on a List for TradeStation Coders.. and one person on that list was Timothy Morge. As much as we tried to code up the perfect indicator and system... Timothy Morge was always able to show a chart that made our attempts look like school boys trying to re invent the wheel. He did not give us/me any lessons but did provide some guidance... so some of us started learning this method via the 'School of Hard Knocks' .... yup ... the hard way... just 'Do it'.
Basically the method is a 3 click method, meaning you choose 3 points to anchor the Andrews Forks. ( now this sounds easy... but the more relevant these points are the better the projected Forks will capture price) Some of the things he mentioned in posts were.
1) Draw a lot of Forks
2) If the chart does not make sense ... erase everything ..start over.
3) Forks drawn today will be relevant in the future... so watch for this.
4) Keep it simple.. if you are making this too complex... it is ... and no one will understand it... not even you.
5) Andrews Forks are compatible with any wiggly line indicator or additional indicators that you so choose.
6) Look for confirmation or confluence on the chart for ... these areas are where turning points are highly likely.
7) Use lots of data references. (he was often critical of my Zoom in charts where I used much less data than he showed..) yes... show lots of Data in your charts.... then draw the Forks.
8) The Forks 'must' capture price... (when the Fork is draw they must somehow encompass the price bars)
9) There are exceptions to all the rules... be flexible in your thinking and what you do.
10) Believe in yourself... don't listen to other Opinions.
More could be added ... but I would like this to be somewhat brief.
Let's have a look at this link... shows the how this method can be applied to chart data. Pay close attention to how flexible the author is in choosing which Fork is relevant and which is not.... you do need to make some decisions with this process.
http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:andrews_pitchfork
A quick clip with Timothy Morge sharing the basics and some other interesting facts.
http://www.youtube.com/watch?v=_z0WhROsQP0&NR=
and.. you can find much more if interested ... I will leave that to you.
http://www.youtube.com/watch?v=E4yJd9q8VQw
http://www.youtube.com/watch?v=kvJPhhhomKY&NR=1
This can be charted in any way you so choose... simple charts or once you learn more, make them more involved... you need to choose your method of doing this... no one can guide your hand or eye... just doesn't work that way.
So now let's have a quick look at some charts that Cool_Beans is looking at.
First the GSPC (yahoo SPX equivalent)
Right now I a looking at the far right of the chart, using that Fib tool.... I am expecting a bounce. How big...? that will be determined by the market. Right now Bears are dreaming of a crash for Monday.... with Oscillators at the low like this... I just think it's unlikely. Monday will be here soon enough and show us what it will do...trade in that direction.
The QQQ chart.
QQQ seems to be much stronger than the SPX. Again I expect an upward move in the QQQ...enought to move back into the Gap area.
So we have a Down Trend and we are cautiously set up to trade Long with the Counter trend... this applies to both charts. I like to be aware of the Main trend .... but this should not disallow Counter Trend trades. These are most often shorter in duration and swing moves fail at resistance or Fib levels.
Hopefully this article was informative and in some what helps with your TA.
Good luck in the coming week... hope you are all on the correct side of the trade.
Oh... here's what Cool_Beans did on Friday... bit of a sluggish day. Trade entry/Trade exit... and back to Cash... which is a trading position.... New set up Monday morning.... good luck.
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