Trident trading system
What is hard is to do good all one's life and never do anything bad”»
(Mao Tze Tung)
Charles Lindsay, American analyst, developed a method to identify the target of a movement and the buy and sell levels. The method is called Trident Trading System (TTS)
First, it is necessary to identify a particular price sequence which we call P1-P2-P3 the following graphic clearly shows the sequence where P1 is a minimum, P2 a relative maximum and P3 a reaction level.
The P1-P2 and P2-P3 movements are defined price swing, and may concern to intraday, daily, weekly, monthly or yearly charts. Lindsay’s system, when P1, P2 and P3 are identified, try to identify the future level P4 establishing a general relation like this: P1 + P4=P2 + P3. The P4 level is the target of T movement (T = P4 = P2 + P3 – P1)
This system doesn't take into consideration all the corrections that lead to P4 and it is based on empirical observations over time. When the target P4 is established, it is necessary to find a system that identifies the correct entry level on the market.
Lindsay considers as a first good entry level the result of the expression (P1 + P2)/2. Generally prices tends to react violently near the 50% retracement from the max. In case of defined uptrend, Lindsay suggest to open longs positions just next of the P1 + (P2 – P1) / 4 level. Specular considerations are obviously valid for the bear market.
This system considers even the Critical Price (CP); that is: CP = (P3 + T) / 2
If the price movement doesn’t violate the Critic Price either upside or downside, according to the orientation of the principal trend, it is a sign that the market is about to reverse the trend