To better explain the use of this tool in the FOREX market, we turned to the trader Tom Dorsi, which is very successfully used this tool for trading in the FOREX market. (general idea, see the "Tic-tac-toe once again in vogue in the number 15)
Eyb Kofnas:
Forex market is a rapidly growing market with the development of new lines - retailers with direct access - now in fact anyone in the world can trade in this market. The reason why we invited you to talk, due to the fact that the analysis of the schedule "tic-tac-toe" may be a useful analytical tool for trading in the foreign exchange market, and wrote a book on the diagrams tic-tac-toe, and called - "charting crosses -tack-toe, you could tell us about sveem look at the use of this tool in the foreign exchange market.
To get started, let's look at an example of graphics tic-tac-toe for the currency pair USDJPY:
Short position should be open in the first three-yacheechnom broadside with a protective stop-orderom a new peak - 132.58
Tom Dorsi: The trend is still ascending, but the last line "X" is more than 20 cells. In this case, we have opened a short position at the first broadside in the three cells with a stop on a new peak. This figure also signaled the sale and may be open short position in the deployment of an appropriate stop-order and a new peak.
The only problem is that the currency pair is still above trend line, and this, in general, can impede the opening short position. However, traders can sometimes deviate from the general rules and in this case, enter the short side.
Kofnas: Trader would open a short position, but must have been to place a stop order at 132.50?
Dorsi: Yes, which indicated a red arrow.
Kofnas: Now, let's be clear that the overall concept is to go in a short aside when the price is below the trend line, not above it. In the above graph, the market is so extended, that may well be wise to open a short position with a close stop order, but in fact it contradicts the basic rule for opening a short position. Therefore, the construction of trend lines is absolutely necessary.
Dorsi: Absolutely. Trend lines are very useful and necessary. The line on the graph tic-tac-toe should always be at an angle of 45 degrees for the bovine market and one for Bear.
Kofnas: What about the other indicators?
Dorsi: We use the index of the momentum created by us, which is just two sliding averages - one short and one long, and we observe that it moves above and below the long lines. However, this method is short, so I use only the schedule for tick-tack-toe in their trade. I am a position trader and will keep the position until you find that the situation has changed.
Kofnas: What kind of tactics you're using when you add positions?
Dorsi: We will normally begin, for example, with one lot. Then, as we get a further signal of purchase, we have to add lots and raise the stop order until the new sales generated signal. We analyze each transaction. Often have to derail a lot of stop-orders, to finally catch the trend. Unlike the stock market, there are only a few currency pairs, so you need to adhere to the program and continue to probe the market for search transactions.
Kofnas: Let's look at the schedule for the Japanese yen.
Figure 2. The signal at 117.25 purchase
Dorsi: This schedule would be a great deal when he reached base. This would be determined by the movement of 20 cells in one continuous direction. From this level to 20 or more cells down we can go a long way in the first broadside of the three cells in the deployment of stop-order at the new foundation. If the position will be closed to stop the order, the schedule will start to create a first signal from the base of the purchase, and this will be your next logical entry point. Because the schedule is the size of a turn in the three cells to change the column, the turn in three cells will be the first sign that shoppers again have the situation under control.
Kofnas: So, after a great column you can expect at least three cells and enters the fourth? This is the rule?
Dorsi: None. Point of action would have been spread in the three cells. Once the third cell, and has achieved a turn, begins operation. When the input made, immediately put a stop order. Let us go back to the original rule - go a long way only if the price is above trend line.
Kofnas: So, the currency trader will look at the trend lines, support and resistance, and must be capable of a technical discipline that is not normally associated with currency traders?
Dorsi: Yes. Currency traders are usually focused on the fundamental factors. In this case, the action takes place without the technical tools. The method should be logical, well-adjusted and based on the irrefutable law of supply and demand.
Kofnas: Let's look at the schedule for the Swiss franc to the size of a cell 25 points and the value of turn 2 cells.
Figure 3. The first signal is selling at 1.6825. Positions are added at each new breakthrough, where "0" is lower than the previous one.
Dorsi: Magnificent descending trend. The first signal to the sale of permits to enter the trend at 1.6825. Looks so that each subsequent sale of a signal added to one or more lots with the movement of stop-orders down to each subsequent sell signal.
This is an excellent example of how to use the trend of most of the building positions as the market moves in your direction. We could start with a lot, but now we will have four lots of stop order for all four lots at 1.6825.
If the market went down further to a new sell signal, we added a fifth lot and moved the stop-order for the double peak immediately below the level of 1.655. Let us consider that we have seven cells in the first column "0" gives the first signal to sell. Multiplying the size of seven cells in 25-point we obtain the expected reduction of 175 points. Subtract this value from the value of the vertices, which is 1.677, so the decline has already met the goal, but the position is still not closed and operating. Yes, it's a good deal. Now we multiply by two for the bottom side and three for the top.
Kofnas: Let's say we were at this point - 25 cells.
Dorsi: Good. Given that this was the first movement of the reasons we have, as you say, 25 cells. Multiplied by three and get 75, given the size of a cell that gives us the purpose of 1.709.
Now, to slow down or speed up the timetable, we can change the size of the cell. Sometimes we will use a standard cell size and reduce it to our points of stop orders.
Kofnas: Let's say, 25 cell size and magnitude of turn 2.
Dorsi: Good. Now we are turning into two cells, so we have to move to two, so get two, three, six, multiplied by the size of a cell and get the 1,651 goal. Look, that 1.64 is on the line? Schedule of tic-tac-toe is still a very viable approach. Traders trading on the forex market, should consider it more carefully, and if possible add it to your arsenal of technical analysis.
based on www.futuresmag.com
