A better triple screen - page 3

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Phase 3 - triple screen

PHASE 3 - Lets see if our ladder is proped up in the right direction so its safe to climb.

Just a recap

Phase one - the steps (trend is formed)

Phase two - the ladder is formed with phase one extending above phase two

now we need a wall in the case of the AUDJPY to prop our ladder up and climb and collect the treasure (pips) as we go, as you can see in the picture our ladder is leaning nicely up against the wall.

Take a look at all three phases together in the picture below (the wall)

White trend lines are the steps

Blue trendline the ladder

Red trend line is the wall

that completes the triple screen system set up of course i have replaced the indicators used with the trendlines .

The secret is price action and understanding how that single wave from the screen 3/phase 3 ,the highest timeframe we use subdivides through each timeframe.

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[gbot]

Wti - example

Take a look at the triple screens of WTI

SCREEN 1

The trend is formed here quite clear to see the price making higher highs and higher lows.

Screen 2

Here we can see the trend from screen 1 moving faster and in the same direction .

Screen 3

The trend from screen 1 , moving faster the screen 2 and screen 1 and 2 going in the same direction as screen 3.

Two very nice trades here after the trend is formed with confirmation from the higher timeframes , a true triple screen set up.

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[gbot]

Phase 1 or the trend

LETS TAKE A CLOSER LOOK AT EACH OF THE PHASES

We need a method to be able to identify each phase with a fair degree of reliability , for example looking at phase one which is the steps of the ladder or the TREND how do we identify this , easy to say for an uptrend , new low ,high,higher low ,higher high, this is the definition of an up trend according to the text books the problem is none of the text books actually give a solid method of identifying the trend, think about it , if we view the market on our trading platform as bars and draw trend lines in what we think is the trend just by visual identification we could never be sure its correct so we need some kind of indicator to do the work for us that is consistent in what it is showing , thats exactly what i have ,now im not saying that it is the holy grail or anything like that but the indicators that i use have stood the test of time and do show the trend and each stage of the triple screen method i am discussing without any doubt im my mind and experience.

PHASE ONE EXAMPLE

Take a look at the chart called "trend" its a 60 minute chart of the AUDJPY , i have placed the trendlines where the indicators i use tell me that each swing begins and ends which makes the trend , so here we have an uptrend or our ladder and as you can see the last two swings up were our trades after the trend was formed.

Phase one gives us a lot of information , not only the trend but also the retracements which are pauses in the trend and these allow us to take entry into the trend should a new swing into the trend begin.

How do we know when the retracement has ended ? we dont need to worry about when the retracement has ended, its more important to be able to identify when the next swing up is beginning and take entry at this point which of course i will show in precise detail if there is sufficient interest in starting the trading group.

If the next swing up does not begin then there is no trade and this is extremely usefull as it avoids taking trades when the trend has ended, occasionally we do get a new swing signaled at the top of the trend which merely turns into a retest of the prior top or a failed retest and the market reverses either into a deeper correction or a reversal but the exit strategy will save any major losses and in most cases even the retest quite often yields some profit.

So far then we have used phase one or trend phase to show the steps of the ladder (trend) the retracement for the entry and the beginning of the new swing up giving us the entry point so it stands to reason that when the new swing up begins we can place a reasonable stop under the low of the point where the new swing began .

Quite a lot of information from one timeframe, trend,retracement,entry,stop and exit.

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