The King's Trader Education

The Trading Plan
The Simpleton's Fibonacci
Fibonacci 101
Fibonacci 102
Fibonacci 103
Practiical Candlestick - Basic Patterns
Steve Nison - Interview with Father of Candlesticks
Steve Nison - Favorite Candlestick Signal
Practical Candlestick - Seedwaves
Practical Candlestick - OBV
Practical Candlestick - Harami
Pivot Points
Basics of Bollinger Bands
Distribution/Accumulation Zones
Donchian Channels
Elliott Waves
Market Structures
Multiple Moving Averages - "The Rope"
Three Price Break
Elements of Gann Angles
Gann Percentage Pivots
Gann on 1929
Options - Basics
Options - Indexes and ETFs
Options - Greek
Options - Covered Calls
Options - Spreads
Options - Straddle
Options - Strangle
Options - Calendar Spreads & Options Repair Strategy
Sector Trading
Swing Trading
Position Trading
TICK & TRIN Tutorial
TICK & TRIN - Sustained Reversal

Trader Training - Free Educational Trading Articles:

The Simpleton's Fibonacci

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Dominant Trading Range: (DTR)

Dominant Trading Range - is just that. By far the greatest trend, it is established by the most dominant Market Structure High –and- the most dominant Market Structure Low. These of course are the strongest areas and boundaries of resistance and support.

DTR is computed using Daily basis data only. To compute it I want to go back to the major Fibonacci ordinal pivot of “89” to plot the dominant trend. I use 89 days for all indices, stocks and the OEX. The only exception is made when I am plotting futures. This is because futures contracts only trade in real volume, about two to two and one half months out. For futures, I use the previous major Fibonacci ordinal interval of “55” and if I can go longer than that, for instance towards the contracts expiration, I do.

In all other instances for STOCKS and the major indexes use 89 days of data.

Let’s take a look then as far back as we can on the current futures contract for September 2001.

There wasn’t much trading or liquidity in this September contract really until April 30th. And even then, it is sporadic and noisy, even on a Daily Basis. The true market structures don’t occur until much later. This chart goes back to early June, it is more than the 55 days I know, but nevertheless it illustrates my point.

1. The DTR Market Structure High is 2022.50 on June 8, 2001.

2. The DTR Market Structure Low is 1471.00 on August 22, 2001.

3. This is a MSL failure as I spoke of in earlier chapters.

*These calculations can be made live using our online Trading Range Calculator at http://www.kingcambo.com/rangecalculator/

So, my DTR resistance pivots for now are from the most recent close 1681.67 and 1811.33. I go only two waves out for now because bigger moves are entirely unlikely and we can always look to them if some catalyst occurs. This is more often true for indexes and futures thean it is for stocks. But, you see my point.

On the other hand, the DTR support pivots were 1811.83, 1681.671, 1471.00, 1260.33 in that order. All but my R3 had been tested and violated at that time. This made that move to 1260.33 seem all the more likely.

I will have firmly in my mind now, that regardless if a strong wave of buying comes, I am going to find some definite resistance for now at 1681.67. This would be an enormous jump, and would take place over days or weeks.

I also know that because of repeated support pivot failures, the current trend is very likely to take me as low as 1260.33 before I see strong support.

This is working with DTR. Knowing the STRONGEST points of resistance as well as support.

Mapping It Out Into Useable Perspective:

So I have before me all the tools of working with Trading Range. What I want to do now is to set myself up for the coming trading session. I am going to use Thursday September 6, 2001 to create a working example for you. Let’s assume we are in the middle of the day, in this case 12:32PM (first MSL forms) so we can plot all four of the principal ranges:

1.) First, where are the futures and where are they going? I get this plotted every morning:

So now before me is a complete road map on where I believe the futures to be heading for TODAY.

2.) I also want to know where the MAJOR averages are going to have range pivots. COMPX, INDU and SOX.X, or others I may normally track: * there is no PTR for the indexes themselves, just on the contracts for those indexes

Nasdaq COMPX

DOW - INDU

Continue to page 6...

"It takes a man a long time to learn all the lessons of all of his mistakes. They say there are two sides to everything. But there is only one side to the stock market; and it is not the bull side or the bear side, but the right side. It took me longer to get that general principle fixed firmly in my mind than it did most of the more technical phases of the game of stock speculation" ----from REMINISCENCES OF A STOCK OPERATOR