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Advanced Technical Tools

Video Transcript

In this Track 'n Trade 5.0 Futures trading training video, I want to start by demonstrating for you how to draw some of our advanced charting tools. The first one I want to show to you is just a simple Elliott Wave.

If we come over here to the Feeder Cattle contract you'll notice that this is a market that has made a nice little Elliott Wave pattern. Elliott Wave of course, is just a recurring price pattern that we find within markets. What we do is we use it to outline the fact that markets have a tendency to move in 3 advancing waves with 3 reclining waves. This is a way that we would outline that. So that's the first one, step 1, then we click, that would be 2. Then, we go three, four, five, which is our 3 advancing waves and then A, B, C. That helps us outline that this is an Elliott Wave with our 3 advancing waves and our 3 declining waves.

Here's another example right here, we could come down right here. Here's x, this would be 1, 2, 3, 4, 5, A, B, C. It's just a pattern that we find that's very prevalent within markets. Knowing that they move forward in three advancing waves and three retracing waves can be very helpful and this is a nice way to outline those different recurring price patterns. Now, of course, if we have the third tab selected the Preferences for each individual drawing or each individual Elliott Wave tool could be used and selected over here.

For example: If you wanted a different color on one of them, you could change the color. I'm going to come in here and I'm going to delete those off of the screen for now. I can click on them and just hit the Delete key on the keyboard, or of course, I can right click and hit Delete from the right click menu.

The next tool is a Dart Tool. Now, the Dart tool is this little tool right here. What we do is we come in- and what you find is most of these little turning points, you find these little dart formations like this. We use this tool to kind of highlight the little dart formations that we find at these turning points. You can use this tool to highlight, or outline the little dart formation that we find. I will often times use these to identify areas where I want to use different trailing stop locations. But usually these little formations are found at the top and bottom of each one of these little turning points. So, you can go through and highlight your little dart formations like that, using the Dart tool.

Now, I'm going to come in and of course, I'm going to Delete these off of the keyboard using the keyboard.

The next tool I want to show you is the Gann Fan. Now, the Gann Fan is a fan that is designed to help you identify a properly trending market. You'll notice that if I just click and drag the trendline of the Gann Fan, it can go in any direction like this. But Gann's theory was that markets moved in 45 degree angles. So, if you're using this and you have your left mouse button held down, hold down the Control key and watch what happens to the Gann Fan. If I hold down the Control key, it automatically locks it to a 45 degree angle. Then, you can see that this market was traveling in a nice 45 degree angle between the 1x2 and the 1x2.

Of course, Gann's theory was that any market that's trading between the 1x2 area is a strong trending market and a nice market to be trading in. Once it broke below the 1x2, this is a signal that the market has changed from a strong Bullish market to a weakening Bearish market. So, that's the Gann Fan is for and that's how you use it. I'm going to hit the Delete key on the keyboard.

The next tool I want to draw for you is a simple Andrew's Pitchfork. The Andrew's Pitchfork is a wonderful tool, it's kind of tricky to draw. It's based off of a 3 point triangle, just like the 123 tool. We start with the low point, we go up to the high point, click again, draw back down to the low point. Notice this draws a nice little triangle formation. When we click the final times, the third time, what this does is it gives us a set of tines that come out. We can move those tines up the trend with the market.

The Andrew's Pitchfork has a number of different features. You can come in here and you can turn on Fixed Width, Extensions, or you can turn on Sliding Extensions, where we can come in and then slide these out to whatever the working lines are. Areas of Support & Resistance within the trendline itself. We can also turn on Distance Markers, which I have turned on. You can see that this one is labeled 100 and 125. I have those set to user definable fields. I can come in here and set any number I want. Let's say I want 200, and that tells you the 200 far, and of course that's measured from the 1st point to the center point, right here. This distance here. 1, 2, and then 100% is the same distance then 200 would be this distance right here, times 2.

If we want to, we can use the Fibonacci number of course, rather than the user definable fields, and then it tells us the Fibonacci numbers. Then, of course, the projections.

The next thing we can do is we can do the Schiff Pitchfork. The way we get a Schiff pitchfork is- see these distance markers right here: 1, 2.. depending on whether this market is following the trend of the original Andrew's Pitchfork or not. If it's kind of weak and it's going sideways, we might want to put on a Schiff. So, we right click on one of those squares. That gives us an Add Schiff Medium, so we click that, and you'll notice that it then puts in another Andrew's Pitchfork using the different areas of support and resistance coming off of the Schiff area. Of course, we have the Schiff colors set to Fuchsia, so you can see that on the screen as a different one from the original. That's how you do that. If you want to do a Schiff the other way, you would right click on this distance marker, Add Schiff Medium, and of course, now it jumps up to the upside. We have the different text styles that we can change here. That's the Andrew's Pitchfork, I'm going to come in here and delete that off of the screen.

The next tool that I want to show you is the Fibonacci Ruler. The Fibonacci Ruler can used in a number of different styles and methods, there are a lot of different trading strategies for using the Fibonacci Ruler. But the Fibonacci Ruler is basically a tool that you use to measure distances and time.

We can come in here, and notice I laid this in here from the bottom of this point to the top of this trend. That's from A to B. So, now what we do is we click on it, and notice that all the settings from here we can come in and we can say we want the ABCD projections. We click on that, and what that does is it puts in our C and our D point. If I slide C up to that first pull down, or the first pullback, the market- what you can see is at 38.2. I can slide that up there and now you can see that our projection point is up to the D line. So, if we go from A to B back to C, the D line is a projection point and it tells us where we anticipate the market going to.

Now, we can come in here of course and we can lay this at another area, at another low point. This is A on that one, we put the B at the top of this one here, we slide the C back, and of course, that would give us another projection out to the D line. Now, this market of course, didn't quite make it out to that full D line before it started to retrace, but that's the concept of this tool, is to be able to measure it. A, B, C, D. It gives us kind of a projection out into the future where we anticipate prices being.

We also have Time Zones. Time Zones also tell us where there are particular turning points in the market. Here you can see that the turning point happened exactly on the 13th day. This one happened right here on the 34th day. You can see that the 55th day, right here, was also an active time period for us. If we slide out a little bit further the 89th day is also another time frame, which becomes another time period for turning points, off of these different trend lines.

Another thing that's very powerful with this tool is the ability - I'm going to turn off the ABCD tools. Another thing that's very powerful is the ability to see projections and retracements. (I'm just deleting some of these other tools off of the screen). So, if we lay this over the top of the chart, again, going from the bottom of the original trend up to the B point, we can see that we can have areas of retracements. Notice that retracements would drop down off the bottom and do our same Fibonacci calculations down off the bottom, if the bottom was actually dropping lower. But this market is actually going higher, so we're going to turn off the retracements and turn on the projections. The projections then project out kind of a grid- out across the market that shows us where we can anticipate important turning points in the market.

You can see, we have crossovers here. We have another crossover here. We have another crossover here. These are important turning points for us, and projection levels of where we anticipate markets moving to and through. So, that's how that tool is used.

The next tool I want to talk to you about, is the Fibonacci Arc. The Fibonacci Arc is a Support & Resistance tool, it's drawn simply by going to the lowest point of a trend and drawing up to the highest point of a trend. What you'll see is this is an area- an arcing areas of support and resistance on the upside which correspond to arcing areas of support and resistance on the downside. As this market retraces back down through its time zones, we would notice then that we have areas of support or turning points around these different arcing areas. So, you can look at them as areas of support and resistance.

Now, the next one is the Time Zones. The Times Zones, we can draw either while we have the Fibonacci Ruler, you'll notice that I had the ability to turn Time Zones on with the Fibonacci Ruler or, we can just draw those independently.

For example: I might want to see Time Zones while I have my Fibonacci Arc up. So, I have my Fibonacci Arc up and I want to draw my time zones, I can see time zones in relationship to the Fibonacci Arc. You can see that I have a very significant time frame right there where it's on the 89th day, and that's a turning point for us. You may also see another turning point here on this day. This one was just off by a couple days, wasn't it? But it's right up close to the 34th day, we saw a nice turning point. Then, we see this using areas of support and resistance along this time line and combination of the two tools. So, that is the Fibonacci Arc.

The next tool I want to show you is the simply a day calculator. All we do with this one is click on it, and stretch it across a certain period of time. You can see what this does for us, is it tells us that this was 65 trading days, and 11 of those were higher while three of those were lower. We actually had 3 lower points. Then, through this time period it was 65 trading days and 93 actual days. So, that's the day calculator.

The next tool is the Arc tool. Sometimes we have markets that move in rounding tops and rounding bottoms. We want to be able to highlight those different areas and just indicate them. Sometimes they're called cups and handles. Here's a tool that can help you identify that this is just kind of a rounding top formation, or you can do a rounding bottom formation. Here's another one down here, here's a rounding top formation.

If your top is not perfectly round, you can come in here and notice we have these little triangles in here, and we can kind of bend our top to meet the market, so that we can adjust that. It kind of gives us a nice little areas of support and resistance. We can see that the breaking of a rounding top and bottom is an indication the market is changing from bullish to bearish or from bearish to bullish.


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