How to Trade with the TD Sequential (Tom Demark)

What is the TD Sequential?

The TD (Tom Demark) Sequential is a powerful tool designed to identify the exact time of trend exhaustion and price reversal. It is a counter-trend tool that aims to solve the problem of several TA indicators that are profitable during trending markets but perform very poorly in ranging markets. TD Sequential can be used in any timeframe and in any market conditions. However, it is more reliable on H4 timeframes, and above.

Read more: The TD Sequential and How to Trade it

Exact Swing Points -Support & Resistance

■ By Adrian Jones

Learn a Swing Trading strategy that’s so easy even a beginner trader could be trading it in no time! In this article, you will learn how to determine where exactly the support and resistance points and the swing points are on a chart. This is a particularly important lesson! Just about every system or method of trading at least takes note of where the key support and resistance levels are. I’ll discuss a double use for this method of identifying these points.

Now, how do you know where support and resistance really is?

The problem with Support and Resistance (S&R) is that it is not a definite number. It is not an exact point on the chart at which price will, without any hesitation stop.

In fact, S&R is actually an area – it is not an exact number as we would all like to think.

The dilemma, of course, is that in order to do our calculations we need an exact point. You can’t enter $50.10/20 area when using Fibonacci or working out your stops and limits. You need an exact number even though S&R is not an exact number.

Try telling your broker that you want a stop loss at somewhere between 50 and 55 and watch him burst a blood vessel. This is what I want to concentrate on in this lesson. This is a technique I have found to be particularly good at not only identifying strong S&R points but also swing points. In order to find S&R, we must first identify market swing points. There are various ways of doing this but I am going to use the one I have used for years.

■ Swing Up

Read more: Exact Swing Points -Support & Resistance

The Full Technical Analysis Guide

Technical analysis is a trading method that aims to forecast the future price movement of a financial-traded asset based on past market data such as price movement and volume.

1. Introduction to Technical Analysis

Technical analysts use charts, patterns, indicators, and oscillators in order to identify similarities in the current and past market activity that can suggest future price movements. Technical analysis can be applied to all financial asset classes and assets such as stocks, indices, Forex pairs, and commodities. Technical analysts focus on two major aspects:

(i) What is the current price of a financial-traded asset 

(ii) What is the history of price movements of this financial-traded asset

Technical analysis cannot predict the future, but it can help investors to evaluate the possibility that a certain trend will continue or reverse. Furthermore, and most importantly, technical analysis can help investors to identify the perfect timing to enter/exit the market.

Major Assumptions of Technical Analysis

Technical analysis is an excellent tool for timing our entries in the market. These are the three general principles of technical analysis:

(i) Price action discounts everything

All known news and updates are instantly incorporated into the prices of financial assets. That can be particularly true for highly liquid and efficient financial markets, such as the Foreign Exchange market.

(ii) Price movements are not totally random

(iii) Price moves in trends

The prices of financial assets tend to follow the same direction for long periods of time. This happens as fundamental news and economic events also follow a particularly positive or negative direction for long periods. The macroeconomic circle generates long-term trends in the financial markets.

(iv) History repeats itself

Financial assets tend to react exactly the same if the market conditions are exactly the same. This can be explained as human behavior tends to repeat itself. If humans trade the global markets, and human behavior repeats itself, then the behavior of financial markets should also repeat over time.

(v) There is no particular time frame when you trade the market

Technical analysis can be applied in multiple timeframes.

Read more: Technical Analysis Guide

4 MAJOR TYPES OF TECHNICAL ANALYSIS CHARTS

There are four major types of Charts:

1) Line Chart

A line chart represents the daily closing prices of financial securities. It is used for the observation of long-term trends but also to make comparisons with related financial variables. For example, observe the price of an oil company compared to the price of oil during a particular period of time.

2) Bar Chart

A bar chart is commonly used for the observation of short-term and mid-term price movements. It incorporates opening, closing, high and low price on a daily basis. The left dash represents the opening price, the right dash represents the closing price -while the upper edge of each bar represents the daily high and the lower edge represents the daily lows.

If the left dash (open) is lower than the right dash (close) then the bar will be colored black. If the left dash (open) is higher than the right dash (close) then the bar will be colored red or white. In simple words black bars represents upward closing prices and red (or white) bars downward closing prices.

Read more: Major Types of Charts

Major Technical Analysis Indicators

• What is a Technical Analysis Indicator?

Technical analysis indicators are mathematical calculations based on price volatility and volume activity. These indicators are used to evaluate the price trend but also to generate trade signals through price crossovers and divergences.

• Oscillators

Indicators formed in a bounded range are called oscillators. Usually, an oscillator ranges between 0 and 100.

Here is some key information about MACD, RSI, and some other commonly used technical indicators.

1) MACD (Moving Average Convergence Divergence)

□ Type: Momentum Oscillator & Trade Signals Machine

□ Asset Classes: All Asset Classes

□ Chart: M30 and above

MACD is one of the most important technical analysis tools used for the analysis of a wide variety of financial assets (Forex pairs, Stocks, Indices, Commodities, Cryptocurrencies, etc.). MACD is a trend-following momentum oscillator which transforms two trend-following moving averages into a single momentum oscillator by subtracting the longer moving average to the shorter moving average.

Tips when trading with MACD:

(i) Prefer to use the MACD using its standard settings (12,26,9)

(ii) Divergences between the price chart and the MACD histogram can provide very important price reversal signals

(iii) MACD signals are more reliable in longer timeframes (H1 and above)

Read more: Technical Analysis Indicators

Elliott Wave Principle and the Stock-Market Cycles

An American accountant called Ralph Nelson Elliott studied the stock-market volatility during the 30s and concluded that certain price movements (patterns) tend to repeat themselves during different time frames. Until then investors considered market fluctuations as random events. Elliott supported that the stock market is moving in a recognizable pattern and that was called "Elliott Wave Principle".

The most crucial step in implementing the Elliott wave principle is to identify the pattern upon the market is moving today. Wave patterns consist of two phases: an impulsive and a corrective phase. Impulse phase is composed of five sub-waves (graph 1, 2, 3, 4, 5) and move in the same direction of the main trend. Corrective phase is composed of three sub-waves (graph a, b, c), and it moves against the main trend. In the graph below the basic Elliott Wave Pattern is presented.

Graph: Elliott Waves

Read more: Elliott Wave Principle