Four Steps Trading Course
is common to all markets - they go up and they go down. Before you snicker
"hey, no kidding !!”, stop and consider how useful it would be if one
knew when a market was tired of moving higher and was about to turn and go lower
for a while.
respects, markets are no different than people in their basic actions - after
all, markets are created by people making buying and selling decisions.
people for that matter, rarely, if ever, move in the same direction for an
extended period of time. After a bit they all become tired, or exhausted, of
moving in the same direction so they turn and go the other way.
terms of a basketball which is thrown into the air. Obviously, like a rising
market, the ball cannot be expected to rise indefinitely. There will be a point
at which the rise of both our basketball and our market will slow their
respective ascent and begin to fall back in the other direction. When the
turning point of the ascent nears, the upward momentum will begin to decline and
then cease altogether as the maximum point of the ascent is reached. At sometime
during this process the market and the basketball will begin to slow and
therefore exhibit signs of exhaustion.
mind at this point that the ball is still rising and the uptrend is still
intact. However, both the rise of the ball and the trend are beginning, however
imperceptibly, to exhibit signs of exhaustion. The market and the ball have used
most of their internal energy and their trip higher is about to end.
obvious to the casual observer that our basketball is slowing its ascent and
will soon begin moving in the opposite direction. However, at this point the
same casual observer would have a difficult time visually determining the
approach of exhaustion in our rising market situation. The dynamics are
obviously much different between our two hypothetical situations at this point.
it may be difficult for the casual chart observer to note the market exhibiting
signs of exhaustion, there are multiple methods of mathematical calculation and
chart pattern recognition which are of assistance in pinpointing market
We will be
demonstrating and providing four separate indicators which will definitively
identify exhaustion points on any market in any time frame. These are the JFC Reversal Indicator,
JFC Exhaustion Indicator, JFC Real Time Pivot Indicator and JFC Cluster Indicators.
are all specifically designed to identify market exhaustion and thus the short
term trend of the market. However, it is here that similarity of the indicators
ends. Each indicator makes the determination of exhaustion using its own
specific computerized series of equations.
identification of the short term trend of the market is arguably the most
difficult task for the day trader. It is necessary to keep the long term picture
in mind but also critical that the “noise”, or random movement, of the
market be filtered out of the decision process.
we have previously in our decision defined the longer term trend for the day in
question by using the JFC Market Direction and JFC Directional Day Filter indicators. With
this fact in mind, we now have to only determine exhaustion from one side of the
market on a majority of our trading days.
On the uptrending days we will be looking only for
exhaustion on the market pullbacks which inevitably occur. By using this
approach, we will be able to accurately identify the completion, or exhaustion,
of these corrections of the market and thereby give us an excellent point at
which to enter the market in the direction of the predominant trend.
mentioned above, this is not a simple task. For this reason we use multiple
approaches to pinpoint exhaustion. The
key to using these indicators for this purpose is to use all four of these tools
in combination with each other as price activity unfolds.
us that when more than one method is used to identify the same situation the
higher is the likelihood than a turning point can been identified. For this
reason we recommend that you not rely solely upon a single exhaustion / short
term trend indicator for the determination of the short term trend.
research has shown that the use of multiple indicators used concurrently
dramatically increase the accuracy of this critical determination.