Profitable Trading Using Time Price Squaring

Published: 30th April 2010
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In this article we are going to discuss how to exploit the incredible power of squaring time and price.



Usually when someone mentions 'time and price squaring', what might come to mind is that of making the time match the price. For example, one might conclude that if we start at any given price or time and add 10 points to the price, we should also add 10 days to the time. While this is certainly a technique many use, that is not exactly what I had in mind.



Before I continue discussing this subject, I want to make sure that you are not about to stop reading this article at this point because you feel that it is impossible to get any real value or trading edge by 'squaring price and time'. So to assure you that I'm about to share some serious information with you that could drastically change how you look at the markets from here on out, let me provide you with some real tangible proof.



On YouTube.com, there you will find many videos that I have posted that demonstrates forecasting of market tops and bottoms using FDates (special calculated turn dates provided by our membership) and a very inexpensive software program called "The Square Timer" that performs support and resistance calculations (and time as well) based on W. D. Gann's 'Gann Wheel', also known as the 'Square of Nine'.



To see these videos and experience the proof for yourself, go to (see link following article at bottom). While you are there, why not subscribe to my channel and you will be notified each time I post a new market forecast on YouTube? Hey, who said you cannot get something for nothing these days?



Okay, now that I have captured your attention and interest, let us continue to the practical application of market forecasting using price and time squaring techniques.



To do this, I am going to use a few recent examples based on some of the videos I have posted. The market we will use for this example is the Australian Dollar currency futures market. The nice thing about using this as our example is that not only will you be able to use this information to trade the Australian Dollar futures, you will also be able to trade the AUD/USD Forex pair, or the ETF associated with the Australian Dollar, such as the FXA. In other words, once you know when to expect a future top or bottom to likely form, you can apply this knowledge to trade vehicles that are closely associated with your analyzed market.



Before we start, I must make an important disclaimer. No single method is going to work 100% of the time. When dealing with time and price squaring techniques, the object is to determine if the market appears to be trading with a particular 'degree'. Once you lock into what 'degree' the market is currently trading in, you can often use that for a period of time before the market makes a shift to yet another 'degree'. I know, this is not making any sense to you at the moment. Do not despair. Be patient with me as I share with you some approaches I use effectively for timing market turns using the Gann Wheel or Square of Nine calculations (using the Square Timer program naturally).



For every analysis, you need a starting point. So for daily time-frame price charts, I will usually start with 45-degrees as my starting degree for calculating potential support and resistance. From there, I will try 90-degrees. And in the event that both the 45-degree or 90-degree calculations do not provide me information for near-by support or resistance (they will produce price levels, but may be too far away from current price or the spacing of price levels are too close together for any real use), I will then use higher degrees like 180-degree (if the levels were too close in points using the lower degrees) or use the price itself as my degree setting. An example of doing that would be using 9.63 degrees or 96.30 degrees if the starting price happens to be .9630. Variations of the starting price as degrees have proven quite effective and is worth testing every time.



Now that we have discussed starting degrees for our calculations of price levels, where do we start in relation to time? That is really easy. The best place when calculating short-term support or resistance is to use the most recent market swing top or bottom. For major support and resistance calculations, find the most recent significant market top or bottom as your starting point.



If you have access to daily price charts, take a look at the Australian Dollar chart. I am currently looking at the June Australian Dollar futures chart for this example. On 4/13/2010, price made a swing bottom with a low of .9160. Since this was a bottom, I wanted to know where the next top would likely form. For 'time', I used our FDate turn dates as they are superior for this purpose. It gives you a time reference as to when you really want to start looking for resistance levels using the Square Timer. If you do not have the Square Timer program (available from our website), you could use a Gann Wheel (aka Square of Nine), although the Square Timer program will also provide 'dynamic levels' where support and resistance most often occur and trying to figure that out with the Gann Wheel would be most difficult and time consuming.



Okay, so we have our time reference and two days after the bottom low of .9160 was put in we want to see where the resistance levels currently are. This way, if price stops at one of our levels, we would make plans to sell this market in expectation of a top forming. Entering .9160 into the program and setting it to 2 bars (for 2 days) and to Bull (since prices were rising at the time and we are solving for a top price) and 45-degrees ( the degree I usually start with for daily price charts), we quickly see that there is resistance at the .9302 level. A top did occur on 4/15/2010 at .9304!



Based again on FDates turn dates, we are alerted that another turn could occur rather quickly. Two days later to be exact is when another bottom formed. Using 45-degrees did find support for this bottom off the 4/15 top. Nor did using 90-degrees or a variation of the price of that top. Now, you will find that using 30-degrees from the 4/25 top nailed the bottom exactly (.9100). And this is valid as W. D. Gann has taught in his courses about using various divisions of the circle (360-degrees), such as 30, 45, 60, 90, etc. In fact, I have had a ton of success using 22.5 (half of 45). When you think about it, 45 is half of 90 and 90 is half of 180 (another useful degree for longer-term charts such as weekly and monthly), and so 30 is clearly half of 60, etc.



However, when I did not get the low level using my standard 45 or 90 or variation of the starting price, I simply did not trade it. And since it was a lower bottom anyway, I do not like to go long when lower swing bottoms are forming. So what I suggest to you is to go with your comfort level. If you want to use all the variations, more power to you. For me, I have no problem walking away from a trade unless I get a real solid price and time hit using my starting degree values.



Continuing from our example of the Australian Dollar, we start with the low price of .9100 and look for the next resistance level for when we expect a swing top is likely to occur. Again, we are alerted to look right away based on FDates. Price had already move up past the resistance levels produced with 45-degrees so I knew to test a different level. So I tried 90 which was way too big. And last, I tried using the starting value of 9.1 (converted from starting price .9100) and sure enough .9283 was listed as a direct square hit. Because the levels were close in points spacing, however, the dynamic values are ignored and only the "***" levels (Square Timer way to represent static levels that never change over time) are looked at. Each of these levels are 30-31 ticks apart, so still a bit close for my liking. However, because I also found resistance at the .9284 level using 45-degrees from the 4/15/2010 top previously made, that was enough for me to call the sell on our trading forum.



What you learn from this particular example is that you are not glued to using only the most recent top or bottom. In the above case, I was able to get more than one confirmation by using the last bottom and the last top together. One I applied 45-degrees and the other a variation of the starting price. One thing I must make clear here. The 'variation' of the starting price as your starting 'degree' setting is usually only applied to the most recent turn prior. So if you are solving for a top (resistance), use the most recently confirmed swing bottom using the 'variation' of price technique. Otherwise, stick with 45, 90, 180, etc. on all tops and bottoms.



Continuing with the AD$ example, we are now starting from the newly formed 4/21/2010 swing top high of .9282. Again I start with 45-degrees and find support at .9121. When the market closed that day high off the lows at .9117, just 4 ticks off support, I was certain that we'd see higher prices the next day. We did and on 4/26 prices rose to .9262.



Did we have resistance at .9262 the next day? Yes we did! Applying the 45-degree calculation to the .9117 low, the resistance result on The Square Timer program was .9264. The high of the day .9262! Now why would I be calculating resistance the very next day after making the swing bottom off support? Because the next day was within 1 trading day of our FDate. It is important to understand that nobody can predict with 100% accuracy the exact day 100% of the time. So to be perfectly reasonable, a day off is acceptable. So anytime trading is going on within a single day of a turn date, I am going to calculate for support or resistance and then be on the lookout if price happens to hit and hold one of those levels.



In this case, when it did hit the resistance level as already explained (and you can watch this yourself on YouTube), I alerted my members (and those watching the YouTube video) of a potential SELL opportunity. Today, as I am writing this article, price did a nose dive confirming that top and allowing me to lock in profits as soon as price hit the first support level 70 points/ticks lower (within minutes). Again, the support level I was watching today was .9106 based on 45-degrees off the .9262 top made yesterday. That support level caused prices to stop dropping and to rally back up again. However, later in the day that level was taken out (remember, support or resistance will eventually be taken out). Now I know to expect prices to likely continue lower towards the next turn date around 4/30/2010. Since today is 4/27/2010, we now have that information here in advance and should start looking for support (if prices are dropping into that time period) or resistance (if prices happen to rise into that time). Thus, if price stops at support or resistance around 4/30/2010, you would have another trading opportunity!



So let me summarize what we have just discussed. You always start with TIME. In the case of myself and my fellow FDate members, we use FDates for the 'time' factor. Whenever price is making a new high or new low within one day of the 'time', you start to calculate support or resistance depending on which direction price happens to be moving at the time.



For calculating support or resistance, we will employ the technique of squaring time and price using the Square Timer program (or Gann Wheel, but much harder and time consuming to do). If using a daily time-frame chart (which is what I normally start off with), start calculating with 45-degrees then 90, then a variation of the starting price if it is the most recent top or bottom. If price makes high or low come the close at your support or resistance level, you are likely to see a bottom or top form there. Remember, you need BOTH the 'time' and the 'price' to come together (within a day) to keep your risk super low and to increase your potential for profit. If you do not get this, there is nothing wrong with waiting for another day.



I hope that you can see how powerful and valuable time and price squaring really is. I have perfected this approach by using it for years and learning its strengths and limitations. Never expect to get an answer every single time. If it does not all come together as described in this article, move on. If you really want to take your trading to a whole new level, consider joining our trading membership and using FDates for your 'time' factor. What I have taught you here is only one of several techniques I have taught my fellow members for precision timing trades.



My YouTube video link can be found at http://www.YouTube.com/users/amazingaccuracy.




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