New article Thomas DeMark's contribution to technical analysis has been published:
article details TD points and TD lines discovered by Thomas DeMark.
Their practical implementation is revealed. In addition to that, a
process of writing three indicators and two Expert Advisors using the
concepts of Thomas DeMark is demonstrated.
It has been argued that technical analysis is both science and art.
The reason behind this duality lies in individual points of view of
various traders and analysts. For example, the exact same trend line can
be drawn completely differently. Such uncertainty is frowned upon in
commodities trading where accuracy is the key. Any trader who ever
attempted to generate a trend line and discovered that there are few
ways to do it, has encountered this problem. Such disorder doesn't
contribute to the creation of accurate trading systems that could
analyze markets with trend lines. There are some other problems caused
by this multiplicity: discrepancy when searching for a local
extremum, divergence and convergence based on a trend line that wasn't
properly constructed etc.
But not all have accepted such overly flexible approach to technical analysis. For example, Thomas DeMark managed
to find an analytical approach to this issue and suggested ways of
solving it. In his book called "The New Science of Technical Analysis"
he described his methods of a more accurate analysis of a current price
situation. In this article, I will tell you about his two findings — TD
points and TD lines. By all means, this is not the only subject of the
Thomas DeMark's book: he also covers market periodicity, the Elliott
Wave Principe and many more.
This article also presents and explains the process of writing three
indicators and two Expert Advisors created on the basis of Thomas
DeMark's ideas. I believe this article will appeal to many traders, in
particular to Forex newbies.
The first invention of Thomas DeMark simplifies the process of
finding price extremums for building trend lines. He decided to use a
daily chart to find candlesticks whose maximum prices would be higher
than maximums of a day before and a day after a defined day (I
will be using this word to refer to a candlestick used to determine the
presence of a TD point). If this condition is met, then a TD point can
be built on a chart based on a maximum price of a defined candlestick.
Accordingly, if a minimum of a defined day is lower than a minimum of a
previous and following days, then a TD point can be build on a defined
candlestick based on a minimal price.
Fig. 1. Bullish and bearish TD points
Author: Ivan Morozov