The Forex Chartist Companion A Visual Approach to Technical Analysis

by Archer, Michael D.; Bickford, James Lauren

• ISBN13: 9780470073933
• ISBN10: 0470073934
• Edition: 1st
• Format: Paperback
• Copyright: 2007-02-02
• Publisher: Wiley

Summary

THE FOREX CHARTIST COMPANION The foreign exchange (Forex) market has quickly become the market of choice for traders looking to increase their profit potential. The combination of high liquidity and low transaction costs-as well as twenty-four-hour accessibility-has attracted the attention of both new and veteran traders. In The Forex Chartist Companion, authors and active Forex traders Michael Archer and James Bickford provide a visual window into the behavior of the Forex market along with detailed information on the mechanics of day trading, market entry timing, and much more. With this book as your guide, you'll not only become familiar with innovative software and charting systems that provide a graphical interpretation of the markets, but you'll also discover how to instantly see patterns throughout those markets. Divided into six comprehensive parts, The Forex Chartist Companion: Details Forex-specific charting techniques Illustrates the use of point and figure charting in conjunction with Forex trading Explores Forex swing charting Outlines a variety of Western and Japanese reversal charts-from pivot charts to Kagi charts Examines the actual trading system of veteran futures guru Charles Goodman Filled with numerous charts-annotated with Archer's insight into the material-and in-depth information regarding charting theory, The Forex Chartist Companion will help serious traders use technical indicators to enter this market with confidence and exit with profits.

Author Biography

MICHAEL DUANE ARCHER has been an active commodity futures and Forex trader for over thirty years. He has worked in various advisory capacities, notably as a commodity trading advisor and a SEC-registered investment advisor. Archer operates www.fxpraxis.com and is a professional Forex money manager. He is also the author of Getting Started in Currency Trading, which is also published by Wiley.

JAMES LAUREN BICKFORD began trading in commodity futures in the early 1980s. Since 2001, he has focused his investment efforts solely on trading spot currency pairs via online Forex dealers. Bickford's academic background is in computer science, mathematics, and statistics. By profession, he has been a software engineer for nearly three decades.

Table of Contents

Acknowledgments	p. xv
Introduction	p. xvii
Forex-Specific Charting Techniques	p. 1
Streaming Data	p. 3
Overview	p. 3
Tick Chart	p. 3
Spread Chart	p. 4
Conclusion	p. 5
Activity	p. 6
Overview	p. 6
Activity Bar Chart	p. 6
Composite Activity	p. 8
Time of Day Activity Chart	p. 8
Day of Week Activity Chart	p. 9
Equi-Activity Chart	p. 10
Activity Mercury Chart	p. 10
Uptick-Downtick Mercury Chart	p. 12
Conclusion	p. 13
Direction	p. 14
Overview	p. 14
Direction Chart	p. 14
Direction Mercury Chart	p. 16
Activity-Direction Mercury Chart	p. 17
Conclusion	p. 18
Forex versus Futures	p. 19
Overview	p. 19
Pip Differential Chart	p. 19
Activity versus Volume and Open Interest	p. 22
Conclusion	p. 22
Arbitrage	p. 23
Overview	p. 23
Transitivity	p. 23
Triangular Arbitrage Chart	p. 24
Equilibrium	p. 25
Major Currencies	p. 28
Observation	p. 28
The Mundo	p. 29
Overview	p. 29
Forex Beta	p. 29
Mundo Line Chart	p. 31
Weighting	p. 32
Mundo Bar Chart	p. 33
Observation	p. 33
Range Charts	p. 34
Overview	p. 34
Range Bar Chart	p. 34
Composite Range Charts	p. 35
Time of Day Range Chart	p. 35
Day of Week Range Chart	p. 37
Average Interval Range Chart	p. 37
Observations	p. 38
Absolute Momentum	p. 39
Overview	p. 39
Absolute Momentum	p. 39
Time of Day Momentum Chart	p. 40
Day of Week Momentum Chart	p. 41
Conclusion	p. 42
Two-Dimensional Momentum	p. 43
Overview	p. 43
Two-Dimensional Momentum Chart	p. 43
Islands	p. 45
Smoothing	p. 47
Observation	p. 47
Moving Trend Analysis	p. 49
Overview	p. 49
Linear Regression	p. 49
Ordinary Least Squares Method	p. 50
Coefficient of Correlation	p. 51
Trend Oscillators	p. 51
Moving Slope Oscillator	p. 52
Moving Correlation Oscillator	p. 52
Moving Trend Index	p. 52
Observations	p. 54
Point and Figure Charting	p. 55
History of Point and Figure Charting	p. 57
Overview	p. 57
History	p. 58
The Point and Figure Algorithm	p. 59
Overview	p. 59
P&F Anatomy	p. 59
Box Size	p. 59
Reversal Amount	p. 60
Unraveling Bar Quote Data	p. 61
P&F Algorithm	p. 61
Time Representation	p. 62
Trend Lines	p. 63
Support and Resistance	p. 63
Trend Lines	p. 63
Buy Signals	p. 65
Sell Signals	p. 65
Double Tops and Bottoms	p. 67
Overview	p. 67
Double Top Pattern	p. 67
Double Bottom Pattern	p. 68
Double Top Signals	p. 68
Double Bottom Signals	p. 70
False Signals	p. 72
Signal Percentages	p. 72
Observations	p. 74
Triple Tops and Bottoms	p. 75
Overview	p. 75
Triple Top Pattern	p. 75
Triple Bottom Pattern	p. 76
Triple Top Signals	p. 76
Triple Bottom Signals	p. 78
False Signals	p. 79
Signal Percentages	p. 79
Observations	p. 81
Triangles	p. 82
Overview	p. 82
Ascending Triangles	p. 82
Descending Triangles	p. 83
Symmetrical Triangles	p. 83
Triangle Signals	p. 84
Ascending and Descending Frequencies	p. 84
Symmetrical Frequencies	p. 87
Observation	p. 87
Pattern Frequencies	p. 89
Overview	p. 89
Box Size = One Pip	p. 90
Box Size = Two Pips	p. 92
Box Size = Three Pips	p. 93
Inverse Patterns	p. 94
Usage	p. 94
Breakout Analysis	p. 96
Overview	p. 96
Preceding Columns	p. 97
Succeeding Columns	p. 100
Observations	p. 102
Count Methods	p. 104
Overview	p. 104
Horizontal Count (Buy)	p. 104
Horizontal Count (Sell)	p. 106
Vertical Count (Buy)	p. 107
Vertical Count (Sell)	p. 108
Observations	p. 109
Plotting Point and Figure Charts in Real Time	p. 110
Overview	p. 110
Tools of the Trade	p. 110
Trading Platform	p. 110
Trading Goals	p. 111
Starting the Process	p. 111
Real-Time Example	p. 111
Performance Evaluation	p. 114
Forex Swing Charting	p. 115
Fibonacci Primer	p. 117
Overview	p. 117
Fibonacci the Man	p. 117
Fibonacci the Series	p. 118
Fibonacci the Ratios	p. 119
Fibonacci the Equations	p. 120
Binet's Formula	p. 122
Interpretation	p. 122
Resources	p. 124
Swing Charts	p. 125
Overview	p. 125
Definitions	p. 125
Box Size	p. 126
Reversal Amount	p. 126
Swing Reversal Algorithm	p. 127
Time Alignment	p. 128
Practical Examples	p. 129
Composite Swing Charts	p. 132
Usage	p. 132
The Measured Move	p. 134
Overview	p. 134
Testing Approach	p. 135
Cluster Charts	p. 135
Average Retracement	p. 137
Decile Divisions	p. 139
Practical Examples	p. 141
Conclusion	p. 146
The Fifty Percent Principle	p. 147
Overview	p. 147
Testing Approach	p. 147
Initial Results	p. 148
Increasing Tolerance	p. 150
Improving The Third Wave Forecast	p. 152
Overview	p. 152
Methodology	p. 153
Multiple Regression	p. 154
Quartiles	p. 154
Practical Examples	p. 157
Fifty Percent Principle	p. 160
Fifty Percent Examples	p. 160
Forecasting The Fourth Wave	p. 162
Overview	p. 162
Testing Approach	p. 162
Practical Examples	p. 164
Improving the Forecast	p. 164
Three-Wave Trending Cycles	p. 165
Trending Example	p. 166
Three-Wave Nontrending Cycles	p. 166
Nontrending Example	p. 167
Extending the Forecast	p. 167
Estimate Charts	p. 168
Live Usage	p. 170
Cycle Frequencies	p. 171
Overview	p. 171
Two-Wave Cycles	p. 171
Three-Wave Cycles	p. 173
Four-Wave Bull Cycles	p. 175
Four-Wave Bear Cycles	p. 177
Usage	p. 178
Bull Cycles	p. 180
Overview	p. 180
Ideal Bull Cycle	p. 180
Objective	p. 181
Initial Results	p. 182
Praxis	p. 183
Caveat	p. 185
Further Studies	p. 185
Bear Cycles	p. 186
Overview	p. 186
Ideal Bear Cycle	p. 186
Objective	p. 187
Initial Results	p. 187
Praxis	p. 188
Caveat	p. 190
Swing Properties	p. 191
Overview	p. 191
Wave Anatomy	p. 131
Simple Ratios	p. 192
Swing Averages	p. 192
Swing Data Preliminaries	p. 194
Bivariate Data	p. 195
Swing Volatility	p. 197
Swing Velocity	p. 199
Swing Summary	p. 200
Overview	p. 200
Selecting Swing Parameters	p. 200
Composite Average Estimates	p. 202
Caveat	p. 207
Other Reversal Charts	p. 209
Western Reversal Charts	p. 211
Overview	p. 211
Geometric Chart	p. 211
Trend Outline Chart	p. 213
Pivot Chart	p. 215
Observation	p. 216
Japanese Reversal Charts	p. 217
Overview	p. 217
Renko Chart	p. 217
Kagi Chart	p. 220
Three-Line Break Chart	p. 224
Goodman Swing Count System	p. 227
History	p. 229
Charles B. Goodman	p. 229
The Right Brackets	p. 230
Later Developments	p. 230
Ordinal Principles	p. 233
Ordinal versus Cardinal	p. 233
The Measured Move	p. 233
Congestion Phase	p. 234
Equilibrium of Buyers and Sellers	p. 235
Cardinal Principles	p. 238
Overview	p. 238
Price Surge	p. 238
Multilevel Matrices	p. 239
Compensation	p. 241
Carryover	p. 241
Cancellation	p. 242
Intersections	p. 244
Five Points of a Goodman Wave	p. 245
Double and Triple Intersections	p. 246
Goodman versus Elliott	p. 247
Overview	p. 247
Propagation	p. 248
The Return	p. 249
Charting Study	p. 251
Overview	p. 251
Notation	p. 251
Matrix	p. 251
Propagation	p. 253
Simple/Complex	p. 254
Fat/Thin	p. 255
Goodman and Computers	p. 255
Appendixes
World Currencies	p. 259
Exchange Rates	p. 264
Euro Currency	p. 267
Global Banking Hours	p. 269
Monthly OHLC and Activity Charts	p. 271
Daily OHLC and Activity Charts	p. 282
Time of Day Charts (Activity)	p. 293
Time of Day Charts (Range)	p. 297
Time of Day Charts (Momentum)	p. 301
Day of Week Charts (Activity)	p. 305
Day of Week Charts (Range)	p. 311
Day of Week Charts (Momentum)	p. 317
Comparative Statistics	p. 323
Unraveling Bar Quotes	p. 325
Visual Basic Source Code (Point and Figure)	p. 331
Visual Basic Source Code (Swing)	p. 338
Resources	p. 341
Index	p. 349
About the Authors	p. 361
Table of Contents provided by Ingram. All Rights Reserved.