nikoschopen
2,824 posts
msg #41467
- Ignore nikoschopen |
2/21/2006 9:29:01 PM
LSS, which stands for Long, Short, and Sell short, is based on George Douglas Taylor's "book Method". For Taylor, the three days consisted of a so-called buy day, a sell day, and a short-sell day. On the buy day, the low was made first near the prior day's low and the market would rally. On the sell day, there would be a lot of trading activity near the prior day's high. On the sell-short day, the high was made first providing the opportunity to sell before the market broke. Finally, with prices trading near the short-sell day low, prices would be manipulated lower to provide another buying opportunity for the smart money on the third day. Well, at least, that's the theory.
This filter, by itself, is not very useful. However, when used in conjuction with your preexisting filters, it will enable you to find potential areas of support and resistance as well as the anticipated range for the next day based on recent price actions.
There are four key calculations involved in calculating the buy and the sell zones:
1) The rally number (RN): today's high minus yesterday's low
2) The decline number (DN): yesterday's high minus today's low
3) The buying high number (BH): today's high minus yesterday's high
4) The buying under number (BU): yesterday's low minus today's low
______________
SELL ENVELOPE
1) The rally number
set{RN, high - low 1 day ago}
set{3RN, sum(RN,3) / 3}
set{RR1, 3RN + low}
2) Today's high (RR2)
3) The buying high number
set{BH, high - high 1 day ago}
set{3BH, sum(BH,3) / 3}
set{RR3, 3BH + high}
4) LSS pivot breakout buy (RR4)
2 * Pivot Point - Low
5) The average of the above 4 numbers
______________
BUY ENVELOPE
set{DN, high 1 day ago - low}
set{3DN, sum(DN,3) / 3}
set{SS1, high - 3DN}
2) Today's low (SS2)
3) The buying under number
set{BU, low 1 day ago - low}
set{3BU, sum(BU,3) / 3}
set{SS3, low - 3BU}
4) LSS pivot breakout sell (SS4)
2 * Pivot Point - high
5) The average of the above 4 numbers
Explanation: Buy and sell envelopes are both comprised of 4 numbers, which are possible support and resistance numbers where the stock should stop advancing or declining based on recent price action. Averages, on the other hand, are used to figure out the anticipated range for the next day. You simply take their difference to come up with the number.
NOTE: Nine columns are added. Columns 1-4 (RR1 - RR4) refer to resistance numbers; columns 5-8 (SS1 - SS4) to suport numbers. The final column, range, refers to the anticipated range for the next trading session.
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