Post
by marmayogi » Tue Dec 29, 2015 1:02 pm
Trade Zone
Many methods Gunn, used them in their trading and technical analysis, have gone unnoticed after his death. In the study of his old charts and records some of these methods have been disclosed. Do not know why Gunn does not mention them, unless it is believed that they required a lot of time to test and confirm its reliability. Notwithstanding this reason, we believe that some of these methods are interesting and useful for trade and market analysis.
One of these techniques — «Zone System». This is a fairly simple method, and certainly he deserves attention. As you can see on the graphic example below, which is taken as a timetable for the May wheat, the Zone system uses an angle of 45 degrees [1 x 1], the delayed up from various points of the earlier motion under consideration. These zonal lines will divide the continuing movement of three important sections, or zones, which, after it had been established, will not be changed. Initially, other lines will also be used, but after a while, some of these lines will be discarded, and you can select a main unit that will remain the same throughout the market movement. Experience, as in most cases, to generate trial and error. As with most systems, the Zone System works best in a trending market (bullish or bearish), but not at a bleak side market in periods of consolidation. As soon as the movement is gaining momentum, and the trend has been established, the main zonal divisions become final. The ideal shopping zone, established in the early movement, will not change as we move the market. The same is true for areas of sales. This means that you had to buy the May wheat (see the example) at 472 and it turned out, it would be a good buy, given the subsequent increase in prices. You’ll have similar results if you buy at 492 or the subsequent movement in the area shopping. Shopping should be implemented as the market moves down to the shopping area. You should sell when the market moves in the area of sales. If you are a short-term trader, then you must buy in the area of buying and hold until the price reaches the area of sales. At this time you should sell and go into the short side. If you are a long-term trader, you have to buy whenever the market enters a zone of purchases, adding to your position, while the general movement will not be completed. The implementation of input and output can be used by different methods. It is assumed that you will use the graphical
system of «one on one. In this case, the angle of 45 degrees defines a zone. If you are using a different unit price and time, it may be necessary in the other corner, but not 45 degrees, to set the correct zone. Zone system can be used in conjunction with a mechanical method of Gunn and an indicator of the trend line.
These methods can be used for both short-and long-term time scales. Must be remembered that this is just one more technological tool, which is designed to help you analyze the market. It should be used in combination with other methods of technical analysis that will allow you to trade successfully.
Pyramid market
Communication costs and time
Analysts methods Gunn spent years studying old charts and records in the search for the secrets of Gann, and countless people continue to claim they have found new nuances technology Gunn, who escaped from the others. Perhaps someone and found
Don Hall has published a book and developed a system called the pyramidal point (Pyrapoint), which seems to be based on the principles of Gunn. The purpose of this article is to take one of the ideas used in the work of Don, and present it from different points of view and do on the basis of this conclusion.
Geometric Gann angles are a trend-lines drawn from obvious top or bottom under some angles. The most important angle is 45gradusov, which means that the slope of the line is one unit price per unit of time. (Note: Depending on the size chart, the line might look like, and maybe no, held at an angle 45gradusov). Many analysts Gunn used the phrase «the square of time and price» in the method of the Don, it is expressed as follows:
Price = Time squared or P = t 2
This relationship between price and time can be represented graphically, as shown in the diagram below. Values of time 10, 20, and 30 are marked by arrows.
For clarity, let’s take a visible top or bottom, which arose at the price of 400. According to the theory, the essential point is a mathematical bunch. Start a new curve of time in this time point, and it will give us the expectation of future top or bottom, which should appear on this curve. This principle can be expressed as, «When the price meets time, change is inevitable.» This ratio «price meets the time» shown in the following diagram.
Since the visible top or bottom in P, if the price meets the curve at point (A), then it will do so at 18 bar. Time point (A) equals the square root of the price at the point (A). Price point (A) equals 324. The square root of 324 is 18.
If the price meets the curve at point (B), then it will do so at 20 bar. Time for a point (B) equals the square root of the price at the point (B). Price point (B) = 400, so the time for B = 20 bars.
If the price meets the curve at the point of ©, then it will do it at 22 bar. This is a very interesting concept!
Remember that the price and time are related by the formula: P = t2 or t = square. root (P)
The slope of the trend line
Now we will go further and determine the slope of the trend line obtained using the relationship of price and time. Let’s look at the following model:
As was shown in the previous section, the next time the curve will need to go t bars to achieve the price P. At time t +1 price meets the curve at the price of P1. Now, let’s find the slope of the trend line that connects the P and P1 (shown in blue).
P = t2
P1 = (t + 1) 2 = t2 + 2 t + 1 = P + 2 t + 1
Slope = (change in price) / (change time)
Price Change = P1-P = P +2 t +1- P = 2t +1 = 2 t +2-1 = 2 [t +1] -1
Changing the time = t + 1
Therefore, the slope of the P and P1 = (2 [t +1] -1) / (t +1) = 2-1 / (t +1) = 2-1 / sq. root (P1)
If we give all the prices to a three-digit numbers, then they will be in the range [100 ... 1000]. With price limits in the slope formula, we can get a tilt range as follows:
For the price P1 at 100, the slope of the rising trend line to 100 = 2 — 1 / 10 = 1.9
For P1 of 1000, the slope of the rising trend line to 1000 = 2 — 1 / 100 = 1.99
The slope of the rising trend line in the middle of this price range is 2 — 1 / sq. root (500) = 1.96
Let’s call this trend line line in 45grad. Because we expected the slope, using one unit of price change from P to P1 with one unit of time t. For this line of 45o, the slope is mainly equal to 2. I think this explains why Gann used 2 cents as a range of price grid on its daily charts. This arrangement of the scale naturally gave Gann angles in 45grad. with a slope of 2 cents per day bar. I showed that 2 is the slope of the rising trend line at 45o, which is obtained from the ratio of price and time specified in the formula: P = t2.
You can obtain this result for the slope of the descending trend line from P1 to P:
The slope of P1 to P = (- 2 t — 1) / (t — 1) = (- 2 [t - 1] — 3) / (t — 1) = -2 — 3 / (t — 1) = — 2 — 3 / (square root of (P) — 1)
For the price P equal to 100, the slope of the descending trend line and 100 = -2 — 3 / 9 = — 2.33
For P equal to 1000, the slope of the descending trend line to 1000 = — 2 — 3 / 99 = — 2.03
Again, the slope of the descending trend line approaches the value — 2. Consequently, — 2 is a good approximation to the slope of 45o for the descending trend line.
Application of the pyramidal points
Now let’s see how the above calculations can be applied to the price chart. I used these calculations to develop a tool for analysis in ESPL, which holds the horizontal lines at the settlement price levels, and nearly vertical curves through the calculated time intervals. This forms a trapezoidal grid similar to the previous illustration. (Don Hall calls them «squares»). Diagonal lines connect the corners of the trapezoid for the trend line support and resistance.
Below is a daily chart JNPR with the start of construction of a trapezoidal grid at the highest peak. All price levels, time intervals, and trend lines are constructed mathematically on the basis of two initial values: price — $ 244.50 and the date — 16.10.2000g.
The graph is represented much more than can be explained in this article. However, we point out the main characteristics. Horizontal price lines are designated on the left, which is the degree of rotation around the Square of 9. This is described in the book of the pyramidal points, but it is not possible to explain in this article. Note that in this example, the time line is almost vertical. This is some kind of construction method, described in the book, which uses a vertical line. The curve of time generates the left and right sides
trapezoid, and price levels form the side of the base and top.
Time: Time is measured by time curve, which relates to price. Remember: When the price meets time, change is inevitable. Note for the first time, when the line is designated 12 in the base and 16 at the top. If the price meets time to 720 horizontal, then the time for change would be the 12th bar from the top. If the price meets time to 540 horizontal, then the time for change would be the 13th bar from the top. For the 360 horizontal change in the time it would be in the 14th bar. For the 180 horizontally, the time change would be in the 15th bar. At 0 tench, it would be at 16 bar. That is why the top line of time is marked 16, and the bottom line is marked 12. Starting with 16, for each 180o reduction through time is reduced by one bar, or 180o for each increase, by increasing the time at the bar. Please note that the market has really felt the change when the price met with the curve of time, marked from 12 to 16!
Price 12 — 16 temporary lines used to obtain predicted values for the following time lines, which is labeled 25 — 31. As the price meets every curve of the time, the new curve of time is calculated based on the price. Each of the curves of time demonstrates excellent correlation with the change in the market when the price meets the line of time.
Price: visible maximum — $ 244.50 is the basis for the calculation of horizontal price levels, which are shown. Remember: the market is looking for these price levels, and you can calculate these costs in advance. Notice how the market fell to 540 horizontal, up to 180 horizontal, fell to the 900 level, up to 540 level fell to 1080 levels, and rose to the 720 level.
Trend lines: the descending trend lines in 45o, shown in red create a price channel, or as Don calls him — «road pricing». Emerging trend lines in 45o, shown in green create a «road pricing», which goes in another direction. Red lines — a resistance line above which should close the market to change direction from bearish to bullish. Green Line — is a support line, below which should close the market to change direction from bullish to bearish. We used the rising trend line drawn below the lows in an uptrend, showing support, and the descending trend line drawn above the highs in an uptrend, to indicate resistance. The advantage of the above tools is that the diagonal trend lines are computed in advance, and the market seems to agree on their movement with them. Price should be up and down the channels. The more you study the examples, so I think the more you will enjoy this tool.
Intraday charts
Technique pyramidal points can also be successfully applied to intraday charts. The size of the price range that is used on the daily chart, it will be too large for use on the intraday chart. No problem. Don points out that there are squares within squares. All you need to do — is to divide the price range in half, quarters, or eight parts. The time interval is calculated from the price, and will not change.
One point that needs to be clear: If the calculated interval is 11 bars, as the price is 121, what is the intra-day time frame should I use? If you use 1-minute bars, we have the curves
time 11 minutes. If you are using 2-minute bars, the curves of time would take place in 22 minutes. At 5-minute bars, the curves of time are carried out in 55 minutes. The choice of intra-day format of bars depends strongly on the time interval calculated for the next time curve.
To solve this problem, I displayed a 1-minute chart and use the cyclical instrument to measure the rhythm of the cycle from base to base, from the top to the top and from the base to the top. When I found the width of the cycle, which seems appropriate to catch the multiple turning points, I found the number of minutes in the cycle. I use this formula to assess the use of intra-day time frame.
Within-day time frame bar width = cycles per minute / sq. root (P)
Example: At 1-minute chart JNPR I found a cycle in 65 minutes, when the price was about $ 133. Therefore, the time format bar = 65 / sq. root (133) = 5.6 minutes in a bar. Thus, 6-minute schedule or, possibly, 5-minute chart should show good results using a tool of pyramidal points. In the study of 5-minute chart we really find excellent correlation. In this example, I used a smaller price intervals for the separation of 180o-s intervals in eight parts.
Look at the graph, and you will see how the price moves up and down trend channel. Notice how the trend changes occur at or near vertical curves of the time, and how the market is looking for horizontal price levels. This is a detailed diagram of the price movement is calculated in advance of the visible peaks reached January 12, at 9:35 am.