Winston Reed replies to: Andrews Pitchfork (Median Line)


{quote} I know, however what is the logic behind it in terms of microstructure ?

As far as I can see is that pitchfork takes and uses the basic principles of price action, namely:
– trend is your friend (since you’re trading in the direction of the pitchfork)
– using trendlines to breakout (expecting range/reversal)(as someone once said: trading the main trend already takes in 10% profit i.c.t. countertrend trading)
– furthermore using the pitchfork means you are using the ‘guaranteed trading rules’ 1. price will always go up or down 2. price always goes in a similar pattern 3. price never stays in a 10-pip range for 4+ days 4. price never keeps trending upwards without reversal
– you are minimizing trading risk 1. you are using a system (which in itself means you are trading consistantly, you anticipate mistakes beforehand by doing proper MM, planning etc) as the saying goes: being prepared is half the work.
– you are using price action techniques: 1. failed re-test to opposite side means trend continues 2. new higher high means trend continues 3. breakout to lower trendline signals reversal
– we are discussing the system here which stimulates our trading system and inspires us so for that I will thank you, Max

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