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Jaenisch, ron beyond the andrews pitchfork

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beyond the andrews pitchfork

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Jaenisch, ron beyond the andrews pitchfork

  1. 1. To contact the author ,go to www.Andrewscourse.com He can be reached via email at ronj@san.rr.com Copyrights Notice © Reinhart Industries Inc 2013 all rights reserved ALL RIGHTS RESERVED: No part of this material may be reproduced without written permission from the publisher and the author. No part of this book may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, photocopying, electronic, mechanical, or otherwise, without the prior permission of the publisher and the author. Library of Congress Cataloguing-in-Publication Protected by United States Copyright Law in accordance with title 17, United States Code
  2. 2. Table of Contents Introduction The Median Line The MLH lines The MMLH lines The SH line The inside SH The Schiff ML The Modified Schiff ML Modified Schiff Parallel Lines The Warning Lines Entering the Trade The Andrews Trading Rules The Real Andrews Rules The Set up Setup Entering the Trade Getting Started with No Capital Risk The Amazing Alan Andrews REQUIRED LEGAL STUFF
  3. 3. Introduction Welcome to the first book in the Andrews Babson Series. It was over ten years ago , when that Alan Andrews personally wrote , “An Inspiring digest of the course methods” on the title page of the author ’ s first course manual. Since then a lot Much has changed since then . The manual has gotten a lot bigger and now includes more rules and concepts. Many, like such as which pivots to use, for to name an example, which Alan had discussed with students at seminars and the kitchen table with students , but for some reason didn’t include in his written rules. At As of this writing , the Advanced Course includes over twenty five videos, which can be accessed over the internet by Advanced Course students. This book was written to give new and advanced traders insights that can be used in their trading with the easy - to - use Andrews techniques. It covers some of what is the material covered presented in Advanced Course. If you are new to the Andrews techniques, you will most likely find yourself feeling very surprised at how something as simple as geometry can find s the turning points in the various markets. Alan Andrews was a brilliant swing trader, who used a variety of setups. For many new traders , swing trading is too difficult. It is far easier to have a “setup . ” . That’s That was the motivation why for writing this book was written . It covers the various Andrews lines that are related to the pitchfork , . followed by a discussion of his rules. Then it gets into discusses an easy to spot pattern (a set up) that professional traders look for. As you read the book , you will recognize the set up setup pattern. What will be is new will be is seeing how Andrews principles are applied from entry to exit , without the use of the Elliott wave, Fibonacci , or any type of moving average - based indicator. The book goes delves into how to recognize a setup that is found in charts that are with intraday, daily , and weekly time frames. All the while , it the book takes leads you through the steps where so you can compare the standard way method of using the setup verses using the Andrews techniques. What the author will show is how the Andrews techniques get in the market ahead of the crowd , with the intent of capturing greater profits. Bonus: Link to a video that shows how to draw the lines with almost any charting software. When my friend , Dr. Alan Hall Andrews , sent out the course material, it would start he included with the following letter as an introduction : Welcome to the FFES (Foundation for Economic Stabilization) Case Study Course applying principles of mathematical probability to the production of profits from prognostication. The old Romans were wise enough to know that things change and fluctuate. They therefore recognized that the best way to know what would probably happen in the future was to study how changes took place in the past. To symbolize this, their two headed Janus was their chief deity with
  4. 4. one head confidently looking to the future as the other head had studied the past. While it is true that few things are certain to happen in the future at a definite time , such as the time that a certain person will die in the future, this mathematical probability has made tremendous profits for the insurance concerns that use it, as well as similar profits for investing individuals who employed it. What are some of the important profit making principles that you are now about to learn to use . ? One is the application to price fluctuations of Newton’s law of physics to which the late Roger Babson attributed his fortune of over $50,000,000 : t . T he Action and Reaction Rule that states these are equal and opposite. Another is how drawing a single line will enable you to know where the price of any stock or any future is now headed and the probable time it will reach there. Then there are principles that enable you to switch positions so near to the turning points or pivots that start each new trend , that you may be constantly either long or short making money whether the price is rising or falling. Also in each weekly letter on the right hand column you’ll see some abbreviations that are headed “reasons for actions taken . ” . As a course member now you’ll have the glossary of these abbreviations so you can now verify on your own chart that every change of position from long to short has a scientific reason. Have you ever seen elsewhere anyone making such information available ? . Many of our members have taken other courses and we hope you’ll find , as they have , that this is one of your s best in the best . Besides the above principles that are unique to this Course , you’ll also find what we have been informed are in better ways of using other well-known methods, and , as an example , we’ve added channel lines to the popular moving average method in a way that you’ll find helps eliminate some of the whip - saws the usual moving average followers frequently find troublesome. Then various members of the past have added improvements that bear their names, as you may do in this wide open field of probability applications to price fluctuations. So many investors have doubt as to the possibility of constantly predicting when and where prices will turn. Therefore , the Marechal Chart is a good starting point for your studies as he was one of the first to use mathematics to show what the DJI would do during the coming 20 years from the time he
  5. 5. copyrighted his chart. Of the two kinds of change in the Universe, flowing change and random change, we are indebted to Newton's invention of the Calculus that enables us to find out in advance the conditions that flowing change will produce in the future. His discovery of the natural law that Action and Reaction are equal and opposite in the field of physics also has been applied in the Course to the random changes of price movements in free markets. This application of the Action-Reaction law enables you to learn in advance where the probable reversals of price trends will come in the future. We owe this application to the late Roger Babson, who credited this law as the basis for his fortune of over $50,000,000. When we speak of any scientific law, we mean a statement that a relationship has been observed among certain given conditions. We mean “if these conditions now, then those conditions will follow, and can be expressed mathematically”. We have “order” through which we can know the outcome from these conditions. We can therefore take advantage of this knowledge, and thereby progress and profit. So Newton was one of the great discoverers of this “orderliness” that underlies all of the Creator’s work, even if we are often slow in discovering it. Newton’s Laws therefore as stated above, have benefited the users in both flowing and random changes. The definition of randomness implies that future conditions are unascertainable, because there seems to be a lack of order underlying such change. Such has been the almost universal belief, still prevalent with most people as far as price prediction is concerned. Marechal, also by mathematical methods of his own , was the first to demonstrate that there is also order underlying the so-called random changes in price fluctuations. No professor in any university, no government economist, has ever been able to produce a similar chart showing as Marechal’s famous chart, copyrighted in advance, what the Dow Jones Industrial Stock averages would do 18 years ahead. As one of many other examples of this mathematical orderliness regulating the flow of stock prices, the writer received from this remarkable man , now approaching 90, several months before President Nixon’s election, an accurate prognostication of what the DJ Industrial Averages would be the day after Nixon’s election. Many others , such as classmate Dewey’s Foundation for the Study of Cycles , have shown the “order” underlying stock and future prices. For example , the recent rise in price of Copper futures was predicted by the cyclical studies of that Foundation several years before the advance took place. So now and during each of the past ten years your Foundation for Economic Stabilization has presented this Case Study Course on the predictability of prices, summing up the results of thirty years of research and inquiry among successful investors. Feel free to write whenever you have questions and I am confident you’ll be happy you’ve joined this wonderful group of investors who want to become “Good Stewards” as in the parables in Luke 19:11 on and Mathew 25:14 on , if my memory is correct. You investors are the life-blood of the economy. Without you there’s there’d be no banks, chains or factories, etc. where a person could choose jobs, nor would the government be able to collect the
  6. 6. taxes they now get. Your importance has been neglected, too long. Then came the most important part : From then on , for a one year , , the course newsletter would arrive on Monday morning the course newsletter would arrive . In it were the “orders indicated . ” T t his was the section of the newsletter that we students were to read to the broker on Monday. Initially, m M any of the students did not i nitially follow the directions to blindly invest , and watched for several months as the $5,000 grew many times over in the weekly course letter. Every week , the course letters arrived on Monday morning with the verbatim directions to give verbatim to the broker. In addition , the weekly course newsletter also contained Andrews ’ notes as to why the trades were taken, along with a discussion of the use of course indicators and rules , pertaining to trades that were in play at the time , and when a new trade was on the horizon. In his writings , Alan always reminded the reader that the techniques, rules , and trades were all based upon probability and science. Essentially , that there was nothing magical about what he did.
  7. 7. Table of Contents Introduction The Median Line The MLH lines The MMLH lines The SH line The inside SH The Schiff ML The Modified Schiff ML Modified Schiff Parallel Lines The Warning Lines Entering the Trade The Andrews Trading Rules The Real Andrews Rules Trading with a Special set up Setup Entering the Trade Getting Started with No Capital Risk The Amazing Alan Andrews REQUIRED LEGAL STUFF Additional Resources
  8. 8. The Median Line This was a line that was suggested by a student as once when Dr. Andrews was he discussed discussing Roger Babson and the Action - Reaction Method. Dr. Andrews believed that prices made it to the median line 80% of the time. At the live seminar , Alan told us that the value of the median line is that it showed what revealed the trend was . A great benefit is that the median line it gives provides the trader with a tool from what that is essentially hidden geometry. To draw it the median line , the the extremes of three consecutive pivots are used. The median line is calculated by finding the mid point of the distance between the last 2 pivot points and drawing a line from the first pivot through the midpoint. Alan Andrews wrote” t Alan Andrews wrote, “T he MLs enable the user to be one of the few who can tell where the prices are headed, and the place they will reach about 80% of the time, and when approximately that place will be reached. Slopes of alternate MLs of comparable length indicate the trend.” The other two lines are covered next.
  9. 9. The MLH lines For some reason , Dr. Andrews decided to label parallel lines with an H. These lines are easy to identify because the starting points are the pivots that are the ones from which the ML does not come. Andrews wrote , “MLH are places beyond which each day you place a buy or sell order before the market opens the next day if prices pass through that MLH .” The egg chart above was an example on a monthly chart he gave in his sixty pages. Fortunately , in the private sessions the information was clearer in the private sessions , as you will see in the Entering the Trade section.
  10. 10. The MMLH Alan Andrews wrote: Use the MMLH as the buy/signal when you expect a reversal because of a P5, or because prices are at an RL, WL, major ML extension, etc. Also use MMLH as a stop loss right after entry. If prices cross an MMLH and then move along it, enter when prices reverse by use of an SH. In some markets drawing MMLH from end of ranges is best to reduce whip-saws, but use closes to draw these MMLHs between usually. Converging lines that meet prices have high probability of trend reversal. MMLH lines can be drawn through the daily range after a gap. Two to four days is usually a maximum between 2 and 3 for an MML. P1 can be 1 day or more back from 2 and 3. The author has found that the MMLH is over used a i s a tool that is over used and leads to large losses by novice traders. However, if it is used in conjunction with the setup described in this book, then massive over trading is typically avoided. The mini - median line was a used by Andrews in lieu of having intraday charts. Instead of using alternating highs and low pivots for the points from which to draw the median line from , he used alternating closes. After P p rices broke br eaking beyond the MMLH this would signal a buy and then the stop loss is
  11. 11. past the other MMLH.
  12. 12. The Sliding Parallel Line The sliding parallel is a line that is drawn outside of the MLH after the MLH has been penetrated and the price continues as if nothing has happened.
  13. 13. This author has found that placing stops right outside the SH lines leads to whipsaws. It is not unusual for prices to go outside of the lines and then go back inside again.
  14. 14. The Inside SH This is a line that requires a vigilant chartist but can pay off big. As you can see As can be seen , the ISH is parallel to the SH and there are three ISH lines in the SPY chart. As prices went lower , they kept making lower pivots. Each resulted in an inside SH being drawn. After three were drawn, in this case prices broke to the upside.
  15. 15. Once again , it can be seen that after three inside SH lines were broken , the trend took off to the upside.
  16. 16. The Schiff ML The normal Schiff ML is a line the author rarely draws. This That is why the commentary and charts below are from Dr. Andrews Below . Below is a modified Schiff ML. As you can see As can be seen, the starting point is not under the top close of September 12th September, but at the half way mark of the line sloping from that high to the low close on Oct . ober 23. And it bisects the distance between the close of that date and that of the next P of high close on Nov ember 13th. You notice Not ice that the low on Dec . ember 16 th reversed the trend when it nearly touched the modified Schiff ML. Next , you see that there is always a reversal or gap when prices reach any of the WLs. Note that the usual Schiff ML calls the first low P on Nov ember 28 th and the modified ML indicates the low area on Dec ember 16th. But However, prices tend to pivot when meeting any of these ML s . But doesn’t the slope of coming trends more closely follow or H that of the mod . ified ML. Where only Schiff MLs were used on the July Lumber 1982 weekly range chart , you see some profit - making signals by drawing the H and the WLs from the usual Pivots of the Schiff MLs. And , as Mr. Schiff told members , “ U u se the weekly charts for overall picture but zero in with the daily charts . ” . Notice the probability that there will be a good profit from the reversal each time prices reach an H or a WL , as well as when prices again reach the original ML. For example , prices climbed back to the 7 in two weeks to the Schiff 5-6ML , whereas if the ordinary ML had been used , there would not have been any sell signal due to prices reaching the ML as they did at 7. The dotted line is for the H or the WL, and the dash ed line for the ML. Notice Note how prices dropped back to the parallel of
  17. 17. that nearly horizontal H from 7 for a one week rise , signaling a big drop ahead which that carried prices below WL#1 and almost to WL#2 and then a before ma k d ing e a 5 P Elliot rise to above the horizontal H of Schiff ML5-6 and then started starting a new ST of 5Ps from 9 to 10 and reversing at the WLs repeatedly , for good profits each time.
  18. 18. The Modified Schiff ML The modified Schiff ML is one a line that the author draws under various conditions , such as those where the median line + H lines are too steep and will most likely not contain the price movement. The three points for the median line are used and the modified Schiff median line is drawn by first drawing a line connecting pivot A to pivot B and an additional line from pivot B to pivot C. A line is drawn connecting the mid points of the two lines. It is then projected into the future.
  19. 19. The Modified Schiff MLH This line is the parallel line from the Schiff ML that is drawn from the extremes. As you look at Consider these two lines you will and it soon notice becomes evident that one is a continuation of a line from points A and C and the other is parallel to it and drawn from point B.
  20. 20. The Warning Lines These lines are parallel to the median line. If the distance from the median line is equal to one unit , then the distance from the parallel to the warning line is always one unit, as is the distance between subsequent median lines. Andrews liked to use the warning lines on monthly charts for finding pivots. Entering the Trade W hen it comes to technical analyses , t T here are primarily five approaches for entering a trade , when it comes to technical analyses . A n example using Action /Reaction is given i I n each of the four main categories an example using Action /Reaction is given . 1) Theme. This is when a fund manager or investor buys bonds or anything else in order to bring the portfolio into balance. Balance is different for each investor. A theme investor may be a personal investor who is knowledgeable about a specific company or industry and places an order based on specific beliefs about the company or industry.
  21. 21. 2) Reversal point. Prices are forecast to go to a specific reversal point, which could be a major reaction line , and a trade is put on at that point. To see an example that was posted on August 16 , 2012 , on CNN , go to http://ireport.cnn.com/docs/DOC-829743 . If you bring up a chart on TCX , you today you will see today that the low noted as R5 on the chart was not surpassed and prices went up over 100%. With this particular pattern , a reversal point would be the Andrews reversal point, which is noted on the chart. Readers , that who understand the golden pivot rule , explained in the Advanced Course manual , know how to recognize and forecast the location of this point. Some traders wait for further validation by waiting for break away pattern. 3) Break away. For the standard head and shoulders users, t T his occurs for the standard head and shoulders users by waiting for prices to break below the neck line.
  22. 22. An MMLH , according to the Advanced Course rules, is available for use by traders a A fter prices turn where they should according to the Advanced Course rules . , an MMLH is available for use by traders.
  23. 23. The MMLH is a tool that is used for a break away trading style. Prior to using it, h H owever , it is imperative that prior to using it the chartist first identifies that the pivot is in place and that the use of this tool is warranted. 4) Pull b B ack. After the down move that occurs past the MLH , the market will often pull back towards the MLH. 5)
  24. 24. 6) Andrews Dynamic Entry Method. This method was pointed out by Dr. Andrews in a seminar the author taped and assumes knowledge considerably beyond what is contained in this EBook. It is discussed at live Advanced Andrews Course seminars and in one of the Expanded Andrews course videos. This approach requires on - going analysis every few bars by the chartist. But the results are well worth the effort. In many cases, this method I t seeks to enter the trade as close as possible to the price reversal of the major trend in many cases . It uses the same indicators as the voting method that will be described later. To see an example , one would look at the entry near the second shoulder. If prices reversed according to the golden pivot rule , then an MMLH may be used for an entry. If they did not , the potential trade may be ignored or a break away past the MLH or a pullback may be taken as the entry of the trade.
  25. 25. 7) The author tested out a voting methodology. This is a technique that is used by firms that manages assets of well - healed clients. The theory being that near each major pivot , the markets announce ahead of time that a major reversal is about to occur and then , when it does , other Andrews indicators light up. One of these is prices bouncing off of a specific type of reaction line. The highest certainty is when a high number of these things are true. When five or more of these things have occurred , then the probability of a strong long - term price reversal occurring there is very high. When tops or bottoms occur , there are often less than five true conditions . In most of those cases , the counter move is not very strong. This is covered in detail in the Andrews Expanded Course. The chart with the R5 on it is a TCX ; , it was posted back in August , 2012 , to the email group. This one was rated a 5 because five of the potential nine conditions were true. There after , prices went up substantially and have had not gone below the low point marked R5 a year later. To see an example that was posted on August 16 , 2012 , on CNN , go to http://ireport.cnn.com/docs/DOC-829743
  26. 26. The Rules for Trading Andrews Lines After a course was ordering ordered the course from Alan Andrews, he would send out about sixty pages. One of them contained the rules that follow. The author spent time with Alan Andrews going over the concepts and rules. What was It was most enlightening was going through the writings of Andrews as he was observing and trading various markets. It became evident that a more effective set of rules could quickly be derived from that material. This is now available as the Expanded Andrews Course. What was learned privately from Dr. Andrews directly has been put in the videos and the manual of the Advanced Andrews Course. Rule #1. Where Prices Are Always Headed Rule. You course members are among the fortunate few to be who are able to draw a straight line and know that prices are headed toward that ML. Very few investors have ever applied this ML principle of statistics to price fluctuations, and we've never seen this in any books on investment. So very few know that prices are always headed toward the newest ML. Rule #2. The Rule of Coming Opposites Applies All Through Life. E.g., "Blessed at are they that who mourn (when the price of their stocks fall), for they shall be comforted." For the value of their savings that they had put into stocks will fluctuate up again. Rule #3. "Turn Your Mind About," or "Rethink, For All Good Is At Hand." We should mentally prepare ourselves for the coming reversal in prices , and other affairs. Here's one way , for example, that you members who know the ML rules can use: When prices are skyrocketing upward, we do this preparation by thinking "If prices pivoted here today at this price, I'd draw a new ML bisecting the distance between today's price and the price from which the rise started." And we know now that if this is a major pivot, prices will fall rapidly to this new ML. Profits from such drops are big and quick. Rule #4. Rule for Anticipating Major P's. If , after a decline , you can count four previous P's, the fifth one is highly probable to will probably be the one from which a new trend starts. Rule #5. Rule for Easily Detecting The Major P from which you can make a quick, big profit is to watch for the EP , IEP , and SEP formations. Rule #6. The other reversal rule is that Prices Tend To Reverse At Or Near Any ML, as well as at any extension of each ML. And also at any MLH or extensions of MLH. Rule #7. The Penetration Rule is that whenever prices gap past , or plunge through any ML, there is a high probability that they will quickly return to it temporarily , and then resume the trend they had before they gapped or plunged through. Rule #8. Price Failure Rule . ; When prices fail to reach the ML , as shown by a space between the P of reversal and the ML, the probability is that this price reversal will go further than it did on it ' s approach toward the ML. Rule #9. The Price Failure Rule is negated when the next price trend is also a failure fails in to reach
  27. 27. ing the ML. This is almost invariably a signal (a shakeout) of a big, fast move in the direction indicated by this last "space." Rule #10. Reliability of ML and (3) as CLs on weekly and monthly range charts is good for the MLs but as since significant Ps may be hidden in any weekly range, you’ll have to make allowance that this might happen s . The Real Rules of Alan Andrews . Alan Hall Andrews is best known for being the inventor of the Andrews ’ pitchfork and the concept that prices make it to the median line 80% of the time. This enables the forecasting of the slope and duration of trends in futures, stocks, commodities , and other data that appear s to be random. During a civil engineering class at the University of Miami, Professor Andrews diverged from the class topic and discussed how geometry may be used in the stock market for forecasting. His students showed such excitement in for the topic , that he spoke to the dean about developing such a course. The dean responded with a denial negatively , suggesting that one could never earn a living with such an education , because there was no career path that was tied to the course. After his retirement, Dr. Andrews started teaching the Action - Reaction Course privately. His course objective was to teach by doing. He knew that the his students ’ interest in market analysis by his students would increase when they saw consistent profits in their accounts. Every Friday he would go to have copies made of a newsletter he had typed up the day before. Besides providing an explanation of the techniques he was using , his newsletters included What was a unique about feature : his newsletters was that his gave his students the a script to be read to their th e students’ broker s on Monday morning along with an explanation of the techniques he was using . In addition to this, at least once a month he would go into detail about a specific technique , citing rules. In addition to this, at least once a month he would include significant detail, with rules about a specific technique. You can It can clearly be see n , in the excerpt s from his newsletters that follow , ( cut out sections cut out ) that the orders were given in advance and the profits were significant. These excerpts are from the nearly 1 , 000 - page Andrews Expanded Course, which contains years of newsletters and
  28. 28. all of the documentation that this author has from Alan Andrews. It is from the Andrews’ original writings s in the nearly one thousand - page , expanded Andrews course that the Real Andrews Rules have been compiled.
  29. 29. During the time period from May 1970 to September 1970, it shows an increase from a start of $5,000 to nearly $20,000 from a start of $5,000 . When Alan started writing his newsletter , he would use what was called onion paper at the time. This ultra-thin paper enabled him to make multiple copies at the same time , on a typewriter. His course took a momentous leap After with the advent of the Xerox copy machine was the way to make copies, his course took an important leap . As a result of the The duplicator copy machine , he was enabled him able to draw charts and send them to his course members, along with the orders indicated. What this This student of his found important were the explanations he would give when he did not follow his “course rules” to be of great interest and significance. . This was very normal. For example , there was the SH , or Sliding Parallel Line rule.
  30. 30. Chart A shows an excellent , recent example of this recently . According to Andrews “course rules , ” after prices make a pivot , a median line with parallels is drawn. If it is noted that prices spent time outside of the parallel , then an SH is drawn. This SH is a line that is parallel to the median line and is drawn from the outside point. In chart A , the SH point is noted with <<. The Sliding Parallel (SH) can be clearly seen in Chart B. The Andrews rule set say s that a stop is placed beyond the SH Line. Andrews wrote in his course rules , “Frequently, after crossing a lower MLH, prices continue to rise
  31. 31. along the MLH before the further drop that was signaled by passing through. So here you can use a sliding parallel through the bottom of the range of the most recent day as a sell signal if prices drop through that SH.” Chart C shows the incredible surge that occurs as a result of stops being hit when prices first broke br eak up through the SH line. It is marked as break 1. O ver thirty years ago , Andrews wrote in his weekly course letters , over thirty years ago, that the way to trade it is to wait until the second break of the SH , , as since this is a more advantageous price point. As can be seen on Chart C, prices did break the SH line a second time in early July, which gave a buy signal according to what most would consider Andrews ’ real rules. These are the real rules because they are the ones he actually followed. Another important real rule is concerns what to do if prices do not make it to the median line. Many think that one simply buys and sells as prices break out of the pitchfork or what he would refer to as the MLH. But nothing could be further from the truth ― , with some exceptions. Alan discusses it in a video that Advanced Course members see, and it is a good concept that may be discussed in a future article. Combining the Andrews Lines with the W.D. Gann Head and Shoulders Pattern
  32. 32. By Ron Jaenisch of Andrewscourse.com Both WD Gann and Alan Andrews used geometry and pattern recognition. Numerous articles and books have been written about both. Even though some of the techniques of Andrews and Gann are well known, there has been little discussion in combining the techniques. The advantages are significant. Gann techniques have a high probability , and Andrews gives one the ability to enter the market with lower risk and significantly better risk - reward ratios. Alan Andrews stressed the importance of being a good steward of one ’ s funds. A ccording to his writings , t T o make the funds grow was doing God ’ s work , according to his writings . To that end , Andrews stressed the importance of taking high - probability trades near the start of a long move. In this article , the focus is upon a very well - known Gann pattern that is used by traders , worldwide. It is widely known for his its head and shoulders technique. As can be seen in chart #1 , the pattern is visible to the naked eye as prices are making the second shoulder. It is when prices break below the neck line that the Gann rules trigger an entry signal is triggered by Gann rules .
  33. 33. In chart #2, one can see that by using the neckline as a centerline and the tip of the head as the action line, the equidistant reaction line becomes the target under Gann concepts. The entry point is the break of the neckline and the target line is the trade exit point. For many traders , it is the right shoulder that becomes the risk or stop - loss area. For advanced Andrews and Gann traders , the static equidistant target line is not a probable turning point. Using the entry point of prices going through the neckline , is responsible for the trade having a much less favorable risk - reward ratio , than is possible by using Advanced Andrews concepts.
  34. 34. With the Advanced AndrewsCourse.com techniques , one can often enter the market near the second shoulder with an indicator like the golden pivot rule near the second shoulder . Then , initially as a protective stop , utilize the down - sloping blue line in the Modified Schiff ML , as seen in Chart #3. But what about the target for the trade? By utilizing an effective understanding of the proper use of the Andrews concepts and the proper interpretation of price actions interaction with the Andrews Pitchfork , the trade would exit for different reasons. In many cases , this enables the trader to exit past the target line.
  35. 35. Andrews held that most moves had five or more pivots. The pivots in the down move are labeled in Chart #4. As you can also be see n , the normal Andrews pitchfork is drawn. If prices show divergence in their relationship to the Andrews lines, the move is often over. Note that in chart #4 prices went past the red median line as they made pivot 3 but could not reach the same line at pivot #5. The Andrews technique signals an exit. Since many traders look for long signals in longer time frames, below there are are two examples with weekly charts in SPY below . The same trading logic was applied, and , as you can see a s can be seen , the Andrews exit can occur prior to the Gann target.
  36. 36. The end result of the extra work of including the Andrews lines and Advanced Andrews Course concepts is that one can achieve a more favorable risk - reward ratio. Andrews hidden geometry techniques can be used by themselves or to enhance Gann and other technical analysis methods
  37. 37. Getting Started with No Capital Risk According to the Author of the best seller , “ The Black Swan ” , the risk is greatest when it appears that there is no risk , is when risk is greatest . This is the point where what the trader or investor perceives to be a white swan is really a black swan. He suggests that it is more productive to handle various risks in innovative ways that lead to better long - term results , than to look only for situations that have no risk. Even putting assets in cash has risk. carries a risk if inflation erodes the value of the money over time. In this case it is inflation risk, where the use of the money will turn less valuable over time. Perhaps this is why strong markets are known to climb a wall of worry. They go up for reasons unknown to most investors, in de spite of the fact that the risks are known by many the risks known by many . In this chapter there will be a discussion of ways to eliminate various risks in trading and the investor will be shown and encouraged to utilize tools that result in no initial risk to their trading capital , initially . There are various strategies that the investor or trader can use to deal with the various different risk factors . ; f F or example, by using a trading simulator after developing a trading strategy, it’s time possible to trade without capital risk by using a trading simulator . The obvious benefit is not risking you simply risk your time not your capital , only your time . Probably the most important reason is that it gives you the opportunity to test various strategies and learn what the ir weaknesses are . Performing tests on historical data by developing the method on an early time period and then testing it on a later time period is not only interesting but useful to see what might have occurred in the later time period. When that system development stage is completed , it is vital to do what is often referred to as real time paper trading. With the advent of the internet , the paper trading has turned evolved into using parallel trading simulators. Investopedia.com is one of many free services that give traders the opportunity to invest parallel to the actual market in a manner that requires the trader to do everything that would normally be done on the actual market but , in a zero capital - risk environment. There are other free services that permit parallel trading so that the trader can properly prepare and have a clearer sense as to when it is proper for him he is ready to use risk capital in trading. How long should one prepare by trading parallel to actual market activity trade as part of proper preparation with a simulator trading parallel to actual market activity ? The amount of time and trades will vary , depending upon a variety of factors . T t he first of which factor is the frequency of trades, but , in any case , it would take a minimum of six month for a new trader and a bare minimum of fifty buy and sell transactions. During that period , it is common for the trader to find good reasons to modify something that is involved with trading. At that point, the clock and number of trades need s to start all over again. For some traders , it means back to the original testing time period to see how the trading method would have worked out years ago. Some investors find that they need to do this a few times in order to have a model that fits their preferences and style. This makes perfect sense because if one puts capital at risk during this time period , it is most likely lost.
  38. 38. Even with a rare white swan trading system that has nothing but winning trades, weaknesses , such as distractions or other events that cause improper action , can hinder the trader and cause result in losses. A nything , from bad price data to spilling coffee on a keyboard , Events can be an event that cause s improper action can be anything from bad price data to spilling coffee on a keyboard . To prevent market moves surprising you and destroying excessive capital, place a stop order.
  39. 39. The Amazing Alan Andrews Alan Andrews liked to enter a position at the start of a new trend, ideally at the end of a correction. What did Andrews use to determine if a move had ended? It appeared appear s that he would look at a chart and somehow just know. When the author asked him to explain how he knew, he would drew dr a w several lines and show ed how the market had set things up for a reversal. He showed how he did this with multiple charts and , in most cases , the logic for finding the reversal points varied slightly. Doing this on historical charts with perfect 20/20 hind sight is easy , but what about doing this as when the market was i s reversing? To relieve convince doubters , he demonstrated his uncanny ability each year during a period of several months each year . His objective was to turn $5,000 into $50,000 by trading futures. To make it a bit more real for give those observing actual experience , he sent out a newsletter on Friday s . It contained contain ing a script to be read to the broker on the following Monday ( the orders indicated section). In this his newsletters , he also explained the signals used and exactly what the logic was behind the orders. You can It can clearly be see n , in the two excerpt s from his newsletters , ( cut out sections cut out below) that the orders were given in advance and the profits were significant. These excerpts are from the nearly 1 , 000 - page Andrews Expanded Course, which contains years of newsletters and all of the documentation that this author has from Alan Andrews. It is only available to a limited number.
  40. 40. I n this demonstration , he was up by more than 400% o O ver the period of a few months . he was up over 400% in this demonstration. There were actually other time periods where whe n he did much better. How Andrews would enter the trades. An examination of Andrews’ s writings in his newsletters shows that he used various entry techniques. When he would use the MMLH entry technique for a period of months , he may have been doing it to demonstrate that this is one method that can be used constituently. What he indicated to me was that the entry technique used was secondary to the primary analysis. In his primary analysis , he would draw a number of lines to determine if the change in trend was at hand. He would also look for specific patterns. He knew that all tops and bottoms were not exactly alike and that the patterns the markets generated alternated. This is why he would not expect the a stock, Forex , or futures price s to make it to the median line in every case. This author believes that Alan Andrews intuitively knew when prices would reverse and not make it to the median line and reverse . He would take trades at points that he knew would reverse earlier sooner . Was there a method to his know - how that he revealed in his weekly news letters? Research has found that when prices are in a counter trend movement for a few weeks, the area where the counter trend move will end is forecastle with the Andrews ’ Ore formula. This was discussed in
  41. 41. his newsletters in 1974. In the above Hewlett Packard Chart, median lines are drawn when prices made a temporary up move, which was against the overall trend. In case A , price s made it up the median line drawn and , in case B , prices did not. At the end of each of these moves, the reversals were signals which Andrews described. In the case where they made the median line , they were entirely different than in the case where they did not. In both cases , they were served as his indicators , that show ed ing him that the counter trend move was over. Alan treated counter trend moves differently than with trend moves. With what you have learned in this book, you could most likely verify that the A and B points are probable reversal points according to the Babson Action / Reaction method. To quickly find all of the links below , go to www.andrewscourse.com and click up on the Video page link. To see the original Andrews’ original papers , go to: https://www.youtube.com/watch? v=MnrxXMCwhOI To see Dr. Andrews and Ron Jaenisch , go to: https://www.youtube.com/watch?v=wgRkVFb3iLU
  42. 42. See the massive Andrews library of Andrews today: https://www.youtube.com/watch? v=qbGbS49bn08 If you like what is in this book, go to our site for more information. Join the free email group by clicking upon the NEW? link at the Andrewscourse.com website. REQUIRED LEGAL STUFF General Terms of Use THE INFORMATION PROVIDED IN THIS DOCUMENT IS FOR EDUCATIONAL PURPOSES ONLY. IT IS PROVIDED AS GENERAL MARKET COMMENTARY, AND DOES NOT CONSTITUTE INVESTMENT ADVICE. NEITHER THE AUTHOR NOR ASSOCIATES, DISTRIBUTORS, HEIRS OR ASSIGNS SHALL ACCEPT LIABILITY FOR ANY LOSS OR DAMAGE, INCLUDING WITHOUT LIMITATION, ANY LOSS OF PROFIT, WHICH MAY ARISE DIRECTLY OR INDIRECTLY FROM USE OF OR RELIANCE ON SUCH INFORMATION. THERE IS NO WARRANTY OF ANY KIND. Required Risk Disclosure – The Term “Securities” Shall apply to ALL Financial Instruments. SECURITIES TRADING OR INVESTING CARRIES SIGNIFICANT RISK AND MAY NOT BE SUITABLE FOR EVERYONE. THE POSSIBILITY EXISTS THAT YOU COULD SUSTAIN A LOSS OF SOME OR ALL OF YOUR INITIAL INVESTMENT; THEREFORE YOU SHOULD NOT INVEST MONEY THAT YOU CANNOT AFFORD TO LOSE. THE TRADING STRATEGIES DISCUSSED MAY NOT BE SUITABLE FOR ALL INVESTORS DEPENDING UPON THEIR SPECIFIC INVESTMENT OBJECTIVES AND FINANCIAL POSITION. INVESTORS MUST MAKE THEIR OWN INVESTMENT DECISIONS IN LIGHT OF THEIR OWN INVESTMENT OBJECTIVES, RISK PROFILE, AND
  43. 43. CIRCUMSTANCES AND USING SUCH INDEPENDENT ADVISORS AS THEY BELIEVE NECESSARY. THEREFORE, THE INFORMATION PROVIDED HEREIN IS NOT INTENDED TO GIVE INVESTORS SPECIFIC ADVICE AS TO WHETHER THEY SHOULD ENGAGE IN A PARTICULAR TRADING STRATEGY. IN ADDITION, THE INFORMATION PROVIDED HEREIN HAS BEEN PREPARED FOR INFORMATION PURPOSES ONLY AND IS NOT AN OFFER TO BUY OR SELL, OR A SOLICITATION OF AN OFFER TO BUY OR SELL THE SECURITIES MENTIONED OR PARTICIPATE IN ANY PARTICULAR TRADING STRATEGY. MARGIN REQUIREMENTS, TAX CONSIDERATIONS, COMMISSIONS, AND OTHER TRANSACTION COSTS MAY SIGNIFICANTLY AFFECT THE ECONOMIC CONSEQUENCES OF THE TRADING STRATEGIES DISCUSSED AND INVESTORS SHOULD REVIEW SUCH REQUIREMENTS WITH THEIR LEGAL, TAX AND FINANCIAL ADVISORS. FURTHERMORE, SECURITIES TRADING ENTAILS A NUMBER OF INHERENT RISKS; BEFORE ENGAGING IN SUCH TRADING ACTIVITIES, INVESTORS SHOULD UNDERSTAND THE NATURE AND EXTENT OF THEIR RIGHTS AND OBLIGATIONS AND BE AWARE OF THE RISKS INVOLVED. THE INFORMATION OR DATA PROVIDED HEREIN IS BASED ON INFORMATION GENERALLY AVAILABLE TO THE PUBLIC FROM SOURCES BELIEVED TO BE RELIABLE. NO REPRESENTATION IS MADE THAT IT IS ACCURATE, COMPLETE OR CURRENT OR THAT ANY RETURNS INDICATED WILL BE ACHIEVED. CERTAIN ASSUMPTIONS HAVE BEEN MADE IN THIS ANALYSIS, WHICH MAY IMPLY PROJECTED RETURNS WOULD BE ACHIEVED. CHANGES TO THE ASSUMPTIONS MAY HAVE A PARTICULAR IMPACT ON ANY RETURNS.
  44. 44. Required Disclaimer CFTC Rule 4.41 HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN ACTUALLY EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVERCOMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.
  45. 45. Additional Resources The second book in the series is Power Trend Investing. It presents Shows the combination of an easy to use Elliott wave method and a specific Andrews set up setup . The third book in the series is Roger Babson’s Action Reaction Technique. Covers It c overs AR techniques. To join the free yahoo based discussion group, go to Andrewscourse.com and click upon…. NEW? After this book is written we will create a video produced that covers the material in this book and more. …………........... A private discussion group where in which stocks with the patterns shown in this book are discussed is available, contact ronj@san.rr.com for details. ……………………. What is covered in the Advanced Andrews Course , by Ron Jaenisch? Please go to the Andrewscourse.com web site for details. This covers the many aspects of Andrews and Babson techniques and presents them in over 25 videos. The large color manual has additional techniques and goes covers from the beginning to advanced level s . The manual has in it contains the one rule that is used for finding all third (#3……expanded or not) waves , while the third wave is in progress. Being a reader of this book entitles you to a discount. Ask for the Power Trend Discount. …………………… Advanced Andrews Course Mention that you own this book and you will get a discount off of the course price. The Course has everything that you need to trade with the Andrews and Babson techniques. We start with the basics and get expand into very advanced techniques. This course covers levels 1-3. Level 1 .... All the Basics of the Andrews and Babson Techniques . (material in the first 3 E books and much more including the golden pivot rule, two vital videos covering pivots etc.) . Level 2 .... Applying the Andrews and Babson techniques to Various Markets. Level 3 .... Setups and techniques only found in our course , that resulted from many private conversations with Alan Andrews and our own computer - based research.
  46. 46. This is done with The course consists of over 25 videos (bite size-15-20 minutes each) presented over a period of three weeks. In the mail Y y ou also receive an extensive color manual i n the mail . Some of the videos have show Dr. Andrews teaching a seminar. More are available fro f or viewing at live events. Many of the techniques in the advanced course are not available elsewhere and may have been learned at the kitchen table with Alan Andrews. To keep things running well , you are invited to be in a private email group where in which you and other Andrews Babson students can ask questions and get answers with charts. Every week several examples are sent to the private group members. Often examples that are sent out are include trades that someone in the group has made. The intent is to show working examples. Some course members in the email forum have over 10 years’ experience with the methods. Our PT3 software as is a complimentary a gift to you, plus over and some twenty videos that are only seen by course members. You are also able to attend a special , free , live free get - together held once a year. In our discussion group , over 30% of the focus is up on intraday charts because of the quick learning factor. You see the results quickly. Now T t he course now includes about 20 videos. What do recent course grads say? From India ... Ever since I joined with Ron Sir, I have has ha d some really successful trades, even a basic understanding of the subject has helped me a lot. Imagine what studying the Comprehensive would do. :) From Erich (an American living in Europe who took the level 1 basic course over 10 years ago and we gave him credit for prior payments towards the advanced course ) . Erich : , As you can see As can be seen the videos are very new, compared to what you received years ago. Please let me know what you think and how it compares. Night and day. The old paper slides hit on the concepts. The videos give the actual execution. If I'd had these videos years ago, or the time and resources to attend your actual classes, my long time dream of trading as you do would have happened years ago. Still, all things happen for a reason. I enjoy trading more than anything and to actually know what I'm doing, minimizing risk, is the final step. One learns best from the best. Thank you for teaching this so long that I still have my chance to learn
  47. 47. from you. From Richard down under ......... wow is an understatement . , If i I had only one thing to trade it would be (Signal description deleted). Now if other lines come in at this area it just adds to the strength I am doing minimal trading atm . With all the course lines I have learnt I am spending the next few months letting the market teach me so to speak. But the (Signal description deleted) is my bread and butter it is so simple and you quickly know when you are wrong and can get out with minimal damage Hi Ron, Can you hook me up on the direct charts list please, love the charts. Thanks for the video the other week, great stuff. Thanks, u the best David From the Middle East ..." " I have been getting good results so far. Trading much improved-thanks." I in Brazil " So far 1've traded using Andrews-Ron lines learned from the videos and although I've done some mistakes and learned from them I had a profitable month without much effort. Thank You very much!" A in Colorado ...." " I have been going through the video’s slowly and trying to take notes. I am really enjoying them. I can see that you have done a tremendous amount of research on this material. Thanks you for making this material available." "Your Video on Gold was one of the best I have seen from your work. Regards" Alaa ..... , England From India ...........
  48. 48. Truth is, just been part of your yahoo mail group is a big return on my investment. "Hi Ron, Thanks so much for the Andrews Expanded Course, really incrediable and loving it. Just wondering if there is any other videos I have not viewed for the course, I've seen the group on Ewave. The recent Babson vids looked pretty interesting too. Appreciate how much you've helped me, it really means a lot." David (From NZ) From HH in South Africa, " Thanks Ron, Great videos" ........(regardIng the techniques) " have been using them - fucking beautiful" (excuse the language)." Peter in Sacramento, "Thanks for the video, in fact thanks for all of them. This last one you were clearer and more enthusiastic than some of the others, which made it all the more valuable." Q:There is free material on the web.......what is the difference? A: A lot ........ The Andrews Expanded Course This course, contains contain ing the ORE indicator and many other publicly unknown indicators, is also available. This is the store house of the written insights, newsletters , and documents that we have been able to amass over the years. There are a limited number of copies that will be published. In addition to the three massive volumes there are also a large number of videos. The content is offered with this course, where in which we interpret what Andrews ’ wrote wr itings and give offer our insights. The Expanded Course includes videos where in which wave theory and course techniques are combined to find the end of corrections and the start of powerful moves. The Expanded Course contains many things . One of them is , including the weekly explanations of trades by Dr. Andrews as he made the trades. The huge benefit of this is that you get to see what Andrews actually used , in terms of indicators , , to produce success on a consistent basis. The Expanded course includes videos where in which you learn about combining Andrews and the Elliott wave. As a bonus , we include over 20 expanded course videos They cover what we have discovered in the written material and the application of the techniques. The videos cover material not covered in the Advanced Course Videos. The price varies , depending upon how many copies are left. For example , the first purchaser will have paid less than the final , 100th purchaser , etc. At It is possible a t any time that a trading firm ,
  49. 49. that sees see ing the value in the indicator , may purchase all remaining copies of the course. Video Original works before we copied it. Video ....Part of what you get. For more info contact Ronj@san.rr.com The course is available only to owners of the Advanced Andrews Course. Babson Professional Course This takes what is taught in the Andrews Courses as a base and adds upon it. The focus is to enter as close as possible to the major pivot extreme, which is the start/end of the trend. This will be at points that are later used for center lines. Included in this course is are the Sand Bar technique, the double Xtr , and the Wash Out Technique, NTN , and , most importantly , a review of the ORE. Intraday techniques are used in conjunction with other time frames for optimum results and very favorable risk - reward ratios. Trader Trainer Course Share your Andrews/ Babson know - how with others, we refer red to you by us . Travel to clients who would like one - on - one, private training. After spending several weeks in San Diego, you will have the opportunity to train others in the course methods. We will refer new course members to you and you may also bring in new course members. The Expanded Course is a limited edition; it has techniques not found elsewhere (such as the ORE indicator) and also has several videos covering how the course methods interact with the various Elliott wave points. …………………. All charts on our website and in this book are courtesy of eSignal-Qcharts. This firm has an interesting service that comes with their data feed , it that can save you hundreds in monthly data exchange fees just for data for the asking. We have an arrangement with Scott Fitzgerald, a sales rep . I that i f you call him at 1.800.322.0940 and mention the Andrews Course , you will get pricing receive a discount that is at least $25 off the monthly service charge , listed on their website. Hint: You do not need to actively trade or make a purchase from us to take advantage of this, just have an
  50. 50. account with one of the many brokerage discount firms like such as interactive brokers.

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