[blackcat] L3 Tom Demark Sequential within Highlights

Level 3


Magic Nine Turns formerly known as Tom Demark Sequential ( TDS ) is a soft built-in technical indicator for many stocks software, but before using it, you must understand its market meaning and confirm whether it is suitable for your own trading style. TDS adopts the left-hand trading concept of "buy when the market is fearful and sell when the market is greedy". The premise of making profits lies in the grasp of the reversal point. Because DeMark believes that the market will make a sound when it is about to reverse, and what we have to do is listen carefully. But that's not necessarily the case. First of all, grasp the essence of the reversal is to buy the bottom and escape the top, that is, to earn the 20% of the money that is the hardest to earn in the world. Let’s not talk about whether it can be accurate or not. Buying the bottom and escaping from the top is just one of many positions opening modes. Taking a partial generalization will lead to a statistically shortened time for this mode to be effective in the market. Secondly, the market is a fusion of human nature and natural laws. When human nature is extreme, "the market does not necessarily play cards according to the rules, that is, it may not make a sound when it is about to reverse." In contrast, the strategy of taking advantage of the trend lags behind the Magic Nine Turns of Demark , but its core is "follow up after the market does sound a reversal". "Irregular" market movements.


Only by understanding its principle can it be transformed. The magic nine turns strategy can be divided into three parts: structure, crossover, and counting. structure means
1. Buying structure: For 9 consecutive days or more, the closing price of each day is lower than the closing price of the previous 4th trading day. The Demark buying structure is established. If the counting is interrupted, the counting needs to be reset.
2. Selling structure: For 9 consecutive days or more, the closing price of each day is higher than the closing price of the previous 4th trading day. The Demark sell structure is established. If the count is interrupted, the count needs to be reset.

Crossover requires that the high price on the 8th or 9th day in the Demark structure must be higher than or equal to the previous low price on the 3rd to 7th days. It can also occur on any subsequent day, whether or not the day is structurally consecutive. There are two situations in which a Demark structure can be cancelled: the first is to recycle, and the second is to cancel if the closing price on a day is higher than the highest price in the buy structure before the structure is completed and the trading signal is not generated. The structure starts over. After the structure is complete, start counting. Starting at 0, the count is incremented by 1 each time a day's close is below the low of the second prior trading day. When the count reaches 9 or 13, a buy signal is issued. The number of days in the count phase does not need to be consecutive. Two cancellation cases for counting:

1. Before the structure is completed and the transaction signal is not generated, if a reverse structure occurs, the original structure is invalid, and the structure is restarted;
2. Counting recycling: After the structure is completed, if the same direction structure is found, the original structure is replaced.

The above is the basic structure of Magic Nine Turns, and there are 2 problems in use:
1. A high-low 9 or a high-low 13 cannot be produced at all tops and bottoms because the market trend does not conform to the Demark structure.
2. Because the market structure is nested, some Demark structures that reach high-low 9 or high-low 13 are just relays, not reversals of the trend.

If the above problems can be solved, the magic nine-turn can achieve the real magical effect, but from the description I just described, readers may realize that it is not easy to do these two things. Today, the magic change I'm talking about is aimed at the second article. Hi-Lo 9 and Hi-Lo 13 are not reversals but relay issues. The main idea of ​​the solution is not to use high-low 9 or high-low 13 as the final reversal signal, but to use these 9 and 13 as the "anchor" for the final signal generation. Simply put, the counts of 9 and 13 are unconfirmed signals. Only signals that are overbought or oversold and 9 and 13 have appeared are confirmed signals. This can add additional constraints to ensure that 9 and 13 do indeed appear in the oversold signal. Sell ​​overbought territory. Of course, there are many signal processing techniques here. We can either keep the original intention of Demark to the maximum extent, or completely transform it into a "right trading" strategy. In practice, I believe the latter is better, but sensory the former is better. I choose the former this time. It is also worth noting that even if I increase the confirmation constraint, there is still the possibility of transactions on the relay point, and to improve this requires a deeper change to the Demark sequence.

The constraints I added also come from Demak, which is referred to as Demak constraint, or can be understood as the RSI indicator of Demak's version. This is an oscillator that oscillates between 0 and 100. I can artificially set overbought and oversold areas, such as >70 overbought, <30 overbought, and highlight these areas and match them with Magic Nine. The signals are logically ANDed. The result obtained is the confirmed result.

Only numbers other than 9 and 13 use normal fonts, red represents low digits, and green represents high digits;
The numbers 9 and 13 are highlighted with red and green labels, red means low 9 low 13, green means high 9 high 13, note that these labels are all unconfirmed buy and sell signals;
BS red and green labels indicate confirmed buy and sell signals. The premise is that there will be a high and low 9 or a high and low 13 nearby, and the BS must appear in the overbought or oversold area to increase certainty;
Oversold and overbought background color, yellow with 85% transparency indicates entering the oversold area, and purple with 85% transparency indicates entering the overbought area.

This is a Level 3 free and open source indicator.

Feedbacks are appreciated.

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