Square The Range Trading System is a thoughtful ‘system’ or systematic analysis of past patterns recreating themselves into the future. If you take the time to think about your charts you will greatly benefit from reading this simple book.
Introduction:
I have always said that every future fluctuation in a chart’s pattern can be seen in a past movement and it is only the angular displacement of the current pattern which tricks the eye into not being able to discover the identical past movement. Cycles are not evenly symmetrical like a sine wave that we often use to represent them. There is the problem of ‘left hand I right hand translation’ where the amount of time of the advance is different from the amount of time of the decline. These types of patterns are often described as ‘saw’ waves or irregular fractal patterns.
Patterns also can be plotted in a different plane and this appears to distort the original pattern. This is the reason no moving average system works or any MACD or oscillator type overbought I oversold system. The ‘fractal’ patterns are exact and although you can often ‘see’ the pattern with the eye, the various legs can still be compressed or expanded and while the overall pattern remains the same shape, trying to buy or sell at a particular leg pivot is still difficult.
In this work I reveal a method that should enable you to precisely find these pivot points and many times trace them back to the origin fractal to get a feel for the length and time duration of the upcoming move. The difficulty academics have with the market is the ‘regression to the mean’ tendency of the market to vary about a central point. In the past the ‘random walkers’ always used moving averages to supposedly prove that the gains and losses of the market evened out and fluctuations were therefore random.
This has largely been disproved with fractal studies but still the vast majority of institutional investors and academics are still in the dark concerning cyclic influences in the market. For example we all know that if you flip a coin (US) 1000 times you should approximately get 500 heads and 500 tails and this is simple statistics that no math teacher will refute. But what if there were peculiar fractals present in the coin flips that no one noticed.
What if there were a pattern of ‘heads’ from flip 37 to 46, and the next eight ‘tails’ and then seventeen heads etc. This pattern would eventually return to the starting point and the average would come out 50/50. Of course a normal computer run of 100 trials of 1000 flips might pick up this fractal pattern but the more difficult fractals have reinforcing feedback loops so a run of 5 heads might generate 5 times 1.2 tails and that might generate 0.8 heads times the last series and each series affected the next and yet the entire series would return to average out.
Even advanced computer runs might not pick this up. This is similar to a fraction like 1/7 which repeats 0.142857142857142857 but is again modified by another repeating fraction so the actual mechanism can’t easily be found. This is what happens in the charts of stock price patterns where each fractal recreates itself but modifies itself at the same time. Our principle of time and price being the same thing is proven with the observed fact that a $50 high spins out 50 unit time periods and a break to $17 would spin out 17 unit time harmonics and each high and low spin out harmonic cycles that eventually return to a common denominator and the pattern repeats as the different individual cycles merge into one new cycle.
Imagine if you will, a ‘timing line’ drawn down from a stocks high of let’s say $40, and when that timing line hits ‘zero price’ it turns back up and eventually the current pri~e hits that trendline at a future price level that is quite different from the initial $40 but none the less may cause a top to form again in the stock. By following that timing line down and up you can ‘see’ the origin at $40 and without that timing line you would have no way of connecting the $40 top with the recent top. If this timing line is a simple 45 degree angle the patterns can be fairly easy to see and the repetitions are very similar.
If however, the angles are Fibonacci ratios or strange fractions, then the future high or low caused by the timing line can be hard to visualize as coming from that origin point. In many of my newsletters I show the backwards zero angle approach of taking today’s high and assuming it could be a square out and if so I expect to go backwards with a 1 point per day timing angle and find a similar pattern. This was true at the top in late April to May 2011 when the 1371 top pointed backwards 1371 days to the top in July 2007 and the same fractal ‘crash’ repeated. These kinds of 1 to 1 timing line pointers are easy to apply and use but what I will teach you in this book are the very sophisticated and advanced angles that are specific to each and every chart and will always work whereas a simple 1 to 1 angle will often fail.
Scaling of your charts WILL be a problem but won’t negate the validity of the method, but only cause a bit more work and testing. If you always test your charts with several of these methods you will be able to narrow down to a precise day or two where the big turning points will occur. By the time you finish reading Square The Range Trading System you should be able to know where the turns are but unless you use common sense and develop a strategy you can still be unsuccessful. When forecasting a date to precisely time a change in trend, it is essential that you let the chart validate the change.
In other words if you predict the exact hour of a high or low, look at the 15 minute chart for that hour and let the 15 minute pattern reverse for a bar or two to give credence to the predicted 60 minute expected tum. Also, only trade at your exact calculated support and resistance that appears during the forecasted period and not just at the market. 99% of trading consists of getting in at the right price and the right time. If you spend a little time studying your charts you will see that all the future pivots come from the past so you literally have months to years to get prepared for today’s trade. There is no need to watch the news or act impulsively.
Contents:
- Time & Price Vectors
- Square The Range
- 360 Degree Time and Price
- Ratio Timing Line Square Outs
- The Nodal Pivot
- Scaling
- Final Concepts
- Step by Step Review
Square The Range Trading System By Michael S. Jenkins PDF
