My first post here after learning about TZ’s after the FF shakeout. So far I’m impressed with this idea of being able to visualise a logical framework from which to make trade decisions based on hard stats. I’m not sure if anyone has touched on what I’m about to raise, but it seems to me that we are dealing with two different animals when looking at TZ’s.
TZ’s that form at tops and bottoms of ranges or price extensions ought to be treated differently to those termed as Mid TZ’s and here’s why ! Generally (there are odd exceptions) TZ’s that form as Mids can only occur after a Top or Bottom TZ is in place. So Mid TZ’s are either breakouts or continuations in price extension in the current direction after the turn. A lot of the time, these breaks continuations will have momentum. Does that make sense ? Now lets take that a step further, Mid TZ’s are derived using the same formula/code as Top or Bottom TZ’s, but here’s the kicker with Mid TZ’s, If there is a momentum price move, then the H value of a Mid TZ has no real purpose other than to alert us to an opportunity. What I propose is to give a Mid TZ a purpose. In a momentum move price does not like to hang about, so we can take advantage of this situation by reducing the number of confirmation candles in Mid H down to 3. In essence we are anticipating a continuation of price extension and because we are dealing with momentum, if price stops moving and forms a PTZ that does not clear after H +3, then we want to exit the trade anyway because directional momentum has dried up.
Just a starter…food for thought !
Chart shows 60 pips minimum with little initial stop risk and after 2nd MidTZ, trade becomes risk free as trail stop takes over.
- This reply was modified 6 years ago by neville.