There has been much debate about what the post-PC era is, when it will arrive, or whether it’s already here. But key pieces of new data, emerging last week, are making the case that we crossed the imaginary line from the “PC” era to the “post-PC” era at the end of 2011. According to analysts at Canalys, two major computing milestones were achieved at the end of this year: smartphone shipments outpaced PCs for the first time ever, and Apple became the world’s largest PC maker, if you count iPads as PCs (as well you should).

Combined, what these numbers tell us is that the post-PC era is happening now. Right now. And maybe we need to think about how we define “PC.”

In Q4 2011, vendors shipped 158.5 million smartphones, up 57% on the 101.2 million units shipped in Q4 2010. For the year, there were 487.7 million units shipped, up 63% on the 299.7 million units shipped in 2010. Meanwhile, the global PC market grew just 15% in 2011 to 414.6 million units. The smartphones have won.

The funny thing about that PC shipments number is that, on its own, it doesn’t paint the most accurate picture of today’s PC landscape. There weren’t 414.6 million desktop, notebook and netbook computers shipped in 2011 – those were at 112.4 million, 209.6 million and 29.4 million, respectively. The 414.6 million number includes 63.2 million in “pad” shipments, Canalys’s preferred term for tablets. That means 15% of the “PC” shipments in 2011 were tablets, largely Apple’s iPad. In Q4, tablets were 22% of the total PC shipments. And the tablet segment of the market grew 274.2% year-over-year.

Also in Q4 2011, Apple became the leading worldwide “PC” vendor (if you count the iPad as a PC) with 15 million iPads and 5 million Macs shipped, representing 17% of the total 120 million client PCs shipped in Q4. It overtook HP (now #2), Acer, Dell and Lenovo in the process.

Overall, the PC market grew 16% year-over-year, Canalys noted last month. Without tablets, it declined 0.4%.

Of course, there’s still the question of whether or not tablets should be broken out into their own computing category, positioned against the traditional “PCs” when tracking device shipments. For what’s it worth, I think it’s fine to count tablets as PCs – after all, PC means “personal computer,” not “machine running Windows.” The fact that we still equate the word with a desktop, monitor, keyboard and mouse combo is a testament to the empire Microsoft built, and is now losing.

Case in point: netbook shipments dropped 25.3% from 2010 to 2011. Desktops grew a paltry 2.3% and notebooks grew just 7.5%. This is end of the “PC” era in action. While the 209.6 million notebook shipments still make that the largest category of “PCs,” the growth trends here, if sustained, dictate that’s its only a matter of time before the shift to tablets becomes even more pronounced.

Think about it: what’s the first “PC” you’re going to buy for your kid, as a new member to the post-PC computing generation? If you respond “notebook,” I’d say you’re lying. That kid is getting an iPad, even if they end up stealing yours. If not an iPad, then they’re getting a phone.

And smartphones are PCs, too. The most affordable ones.

This past quarter, smartphone shipments overtook PCs, a hugely important milestone that speaks volumes about the state of modern-day computing. The computer-in-your-pocket has moved from being “a niche product segment at the high-end of the mobile phone market to becoming a truly mass-market proposition,” explains Canalys of the change.

In Q4, Apple broke records by shipping 37 million iPhones – the most ever shipped by a single vendor in a quarter. Previously, Nokia held the record with 28.3 million phones shipped in Q4 2010. What a difference a year makes.

But Canalys cautioned that it expects to see smartphone market growth slow in 2012, as vendors exercise “greater cost control and discipline” to focus on profitability. This is the only discordant note to the report. Smartphone growth slowing? No offense to the analysts, but I’ll believe that one when I see it. Just watching Apple’s sales alone, it’s clear you can’t underestimate its power to deliver record-breaking numbers. In addition, just because vendors like HTC and Motorola are going to launch fewer smartphone models in 2012, that doesn’t (necessarily) mean they’ll sell fewer overall phones. If anything, the companies are hoping that their increased focus on “hero” devices will help them increase sales.

One thing is clear, however: that post-PC era everyone’s been talking about since the day the phrase slipped off Steve Jobs’ lips has arrived. We’re living it. Anyone who wastes their time debating its existence (tablets are PCs! phones are PCs!) is arguing semantics. The shift itself, whatever you want to call it, is happening.

So perhaps “post-PC” isn’t the best terminology. If everything’s a PC, then maybe what we’ve achieved is something more akin to “PCs Everywhere.” Not as catchy, though.

Photo credit top: Lokesh Dhakar, flickr; bottom: agirregabiria, flickr

Cloud storage platform Box (which you no longer have to refer to as Box.net as it now owns Box.com!), has seen incredible growth over the past year, both on the consumer and on enterprise side. Much of the growth has been driven by mobile, with the company seeing a 140% increase in mobile customer implementations each month in 2011, leading the total number of new mobile users to jump up by 171% monthly.

By year end 2011, Box’s total mobile user count reached 1.9 million, up 9 times over 2010. But nowhere has mobile’s impact been more felt than in the enterprise, where iOS and Android especially have driven business adoption of not just mobile apps, but the cloud in general.

In terms of mobile platform adoption, there were more than 1.2 million iOS app downloads in 2011, 462,000 on Android, 200,000 webOS downloads and 51,000 on PlayBook. (Yes, PlayBook!) These numbers include both consumer and enterprise growth combined, however.

But when Box tracks its enterprise sales, it tracks the reason for buying, and this past year, the company found there was a 30x increase in the number of enterprise deployments that were mobile-driven. So while mobile user growth may be up 9x, the sheer need for mobile connectivity is what’s driving its business. The mobile needs of the enterprise is affecting the company’s bottom line with Box seeing 3x revenue growth over the past year, as large organizations, like Procter & Gamble, McAfeee and AAA for example, signed up for the service. The enterprise customer base, meanwhile, grew by 2x and now includes 82% of the Fortune 500.

In the enterprise, iOS (iPhone, iPad) saw the most adoption, with 5 times year-over-year growth from 2010. Interestingly, Android is growing at a faster rate: 7 times year-over-year growth, even though it isn’t the largest mobile platform Box supports (iOS is, and more so the iPad).

Specific industry verticals are adopting Box at a faster rate than others, too, with the biggest jump coming from the Food and Beverage industry (up 7x), where Box counts Red Bull, Dole, PBR and others as customers. Because of the workflow-based nature of many of the industry’s tasks – like tracking product from the field to processing – this group was also big on the building custom applications on top of Box’s platform. Box now has over 130 apps integrated with its service and 5,000 developers.

Meanwhile, more traditional use cases involving knowledge worker and document sharing led to greater adoption in Financial Services (up 3.5x) and Health Care (up 3x) in 2011.

What’s interesting about these mobile adoption trends is the impact they’re having on cloud adoption. Says Box’s VP of Mobile, Matthew Self, “one of the big drivers we see for mobile adoption – and one of the big reasons why mobile deployment growth was actually higher than the user growth – has to do with the fact that enterprises are adopting cloud services because of mobile.”

“Mobile adoption is actually driving cloud adoption,” he says, “which isn’t totally obvious. But when you get to mobile, it isn’t about Microsoft anymore. Less than half of the computing endpoints in the world are Microsoft now…They’ve forced CIO’s to defect from Microsoft’s own entrenched postion, which is sort of bizarre. But it’s not like a CIO can say, ‘oh, I’ll just wait a year or two on mobile.’”

Ouch! (But totally right).

This exit from the Microsoft era is all the more evident in smaller to medium-sized businesses, which by their very nature, have had to be scrappy, turning to low-cost, easy-to-manage cloud services as an alternative to a traditional I.T. infrastructure. But the tide is turning. More enterprises are arriving at Box, which often represents their first or second toe dipped into the water of cloud computing. Maybe they use Salesforce, or some small cloud service on the side, but many are still Microsoft-based organizations running Exchange and Office.

Box then slides into place as a supplement to traditional systems like SharePoint then becomes the system of choice, leaving businesses to wonder why they still need the old system at all. In 2012, Box plans to help those folks cut the cord even more by implementing a new feature that will allow mobile users the ability to not only access, but also edit and comment on documents via the Box mobile app without needing another app supporting that file type installed on their mobile device. (For example, edit a spreadsheet on iOS with Apple’s Numbers app).

Self says Box’s move here is reflective of the move to more “cloud-augmented” apps, which he points out is already a big trend in consumer’s mobile computing behavior.

“These are apps where the bulk of the interesting work is happening in the cloud, not the mobile device at all,” he explains. For example, Apple’s Siri, where the voice recognition and processing work is happening in the cloud, and the iPhone is just recording what you say then playing back the results. Or Amazon’s Silk browser, which runs in the cloud, where only the UI (the presentation) is taking place on the mobile device. This too, mirrors Box’s plan for mobile: use HTML5 and web services for the business logic, while the UI/presentation layer renders through native code.

Combined with an increasing acceptance of using secure mobile apps (versus securing the whole mobile platform, e.g. RIM/BlackBerry Server solutions), it’s going to be easier than ever for enterprise customers to cut legacy connections altogether.

Getting featured in the Android Market is starting to have a meaningful impact for mobile app developers. According to the recent news from fitness app maker RunKeeper, the company saw a 637% increase in downloads since November after just a few days of being a featured app in the Android Market “Health & Fitness” section.

But is RunKeeper seeing the boost because of the New Year’s resolution-making crowd? Or is being featured in the Android Market really bumping up download numbers in the extreme for anyone who makes it there?

RunKeeper’s success story is a great one. On January 1st, the app became featured in the Android Market, which led it to become the #3 “Health & Fitness” app, up from a previous ranking in the 20′s, and #288 in the entire Android Market, which, as we now know, is at 400,000 apps.

It’s certainly a hopeful tale, but one that left us with questions – how much is being featured really worth? Was being a “Health & Fitness” app the real story here?

Apparently not. Another popular Android application, Lightbox, a photo-sharing app that’s sort of like a mashup of Instagram and Tumblr, was also featured in the Android Market over the holidays, starting on Christmas Eve. Says CEO Thai Tran, in the week following its new highly visible status, Lightbox saw over 500,000 downloads to bring its total number of downloads to over 1.5 million.

For comparison purposes, it took Lightbox three months to reach its first 500,000 downloads. More importantly, getting “featured” didn’t always amount to this level of traction. In summer 2011, for example, as Lightbox was working on its first 500K, it was featured in the Android Market for nearly an entire month. And yet, it still took three months to reach 500K.

Lightbox’s growth also mirrors Android’s international growth, Tran notes.  Previously, the U.S. accounted for 55% of Lightbox’s usage, and the U.K. was its #2 country.  But now the U.S. is down to 33% of its usage, and India and Brazil have leapfrogged the U.K. to become its #2 and #3 countries respectively. Lightbox is also seeing traction in Mexico, Malaysia, and Indonesia, says Tran.

But Lightbox’s jump was during the holidays – a time when many people are getting brand-new mobile devices and downloading apps. In fact, Flurry said that 1.2 billion apps were downloaded during the 2011 holiday season.

What about the Android Market’s impact on growth outside of the Christmas/New Year’s rush? For a third example, let’s look at the intelligent, social to-do list Any.DO, which announced in mid-December that it had seen 500,000 downloads over the past thirty days. The increase, says CEO Omer Perchik, was in part due to the app’s featured status in the Android Market. Although he declined to share hard numbers, he did say that during the app’s featured period, Any.DO was seeing “tens of thousands” of downloads per day – something that’s “an order of magnitude” above its normal download numbers.

Other successes include Evernote’s Skitch, which reached 1 million downloads in November, also while it was being featured on the Market. It later hit 3 million by December. Going further back, in July, Point Inside Maps was featured in the Market for an increase of a more moderate 50,000 downloads per week.

So how does an app get featured in the Android Market, developers want to know? That’s easy: build a great app. Any.DO’s Perchik says that he’s never seen unstable, unusable apps getting featured – Google looks for quality. Android Market PM Fernando Delgado previously explained the process, saying that Google has a team of editors and category managers who proactively look at new apps being released on the Market.

“If an app is determined to have high potential, it is thoroughly reviewed to make sure it meets the high bar for being featured,” he says. In other words, it’s Google’s own curation process – not just raw download numbers that help an app make the cut.

Below the trend reversal figure called “diamond” is depicted.

(For view the picture see notes in end of article)

E. Neiman states that the “diamond” figure is used just as a signal of the “bull” trend reversal after receiving the confirmation on the level of the “A”-line. Consequently, it is a good position for the downwards-directed opening.

The translation of the inscriptions in the Chart given below:

The framed inscription: This chart has been already submitted before – when an example of the “head and shoulders” figures is examined. However, in the course of time it is found out that this figure is more similar to a “diamond”. One should sell after the breaking through the 2nd line of support.

(For view the picture see notes in end of article)

There arises a series of questions, addressed to Neiman, and not answered by this author.

One should with attention reread the inscription, given by Neiman in this Chart: “it is an example of the “head and shoulders” figure. However, in the course of time (?!) it is found out (!!!) that this figure is more similar (?!) to a “diamond”. One should sell after the breaking through the 2nd line of support”.

In his analysis, Neiman sticks to the analyst’s typical position. That is, according to such specialists, the auction at Forex is necessary for detecting a figure of the reversal or trend continuation post factum.

The trader’s needs are cardinally different – i.e., figures of the trend reversal/continuation are necessary for detecting the point (figure) of the trend end:

· The closing of bargains in the old trend;

· The opening of bargains in the new trend.

Elder’s position concerning the “diamond” figure of reversal principally differs. Elder describes this figure in the following way. Starting as an expanding (divergent) triangle, finally this figure takes the form of a symmetrical triangle. To recognize this figure, one must be very concentrated. The “diamond” originates directly from Rorschach chart. Looking at this figure with attention during a long period of time, one can notice the “diamond”. However, its value for a gambler is minimal. This author was looking for “diamonds” himself but the majority of them were “zirconium fakes”.

Further in his “Trader’s small encyclopedia” Neiman has agreed with Elder. Neiman confirms that the signal is weak not only for the expanding triangle but even for the taper-type (converging) one – if the breaking occurs towards the backward direction (along the old trend). The “diamond” figure construction is based exactly on this very principle: a new trend starts developing in the direction, opposite to the old one.

One can see the confirmation on the “A”-line level and an additional signal. There is a weak position for opening upwards/downwards.

(For view the picture see notes in end of article)

So, who is right – Elder or Neiman?

What must a trader do when this figure appears during the auction? Along what trend must one work – along the old or a new one?

In what point one can see

· The new trend confirmation.

· The new trend cancellation and a flat.

· The new trend cancellation and prolongation of the old one.
Will the trader stay out of the market?

· Will the trader open a long/short position?

Every trader must find clear answers to these questions. That is, one must come to know the particularities of the situation. Otherwise, a trader will inevitably leave Forex for good, which happens to 19 individuals of 20. Seemingly, Elder, Neiman and other classicists of the technical analysis don’t grasp the essence of these problems.

A problem posed by Masterforex-V Trading Academy is to determine a clear distinction between a “true (genuine) diamond” and a “zirconium fake” – the latter notion implies the false figure of reversal. A. Elder has not dwelled on this difference. What must be added to the world-known standard chart of “Diamond” in order to clearly see when Elder is right and when Neiman’s approach is correct.

Let us examine the above-given chart that depicts Neiman’s approach. Briefly to say, Neiman defines the signal as “weak” when it is leaving the triangle. According to this analyst, in the model of “diamond” the signal is “heavy”. What is the difference between the two cases? In fact, there exist no clear distinctions. Just the movements will result in different ways, and the consequences will become apparent only afterwards. At the same time, a trader needs to see such distinctions at the very beginning of the movement.

Rounded models of the “top” and “bottom”

In “Technical analysis of future markets: theory and practice”, J. Murphy describes this figure as a “saucer”, “rounded top/bottom”, “bowl (cup)”. This pattern depicts a very slow, gradual change in the tendency under the condition of changes in the trade volume, presented in the lower part of the chart. Both in the cases of the patterns of “top” and “bottom”, the trade volume diminishes in magnitude when the market performs a gradual transition. Further the trade volume starts heightening as the new tendency is gaining in strength (the corresponding graphs resemble a “saucer”).

There is an example of a “saucer” at the top of the market. The tendency towards the heightening starts gradually to weaken (subside). The rise in prices is slowing down. Further there starts the smooth movement towards a new downtrend. The reader should notice that the trade volume in the lower part of the chart forms its own “saucer”. Often this model of the top is called the “upturned (inverted) saucer”.

(For view the picture see notes in end of article)

J. Murphy denies the existence of strict rules of detecting the “saucer” bottom pattern. The reader must reflect on this statement, which will permit understanding the figure essence, missed by J. Murphy.

Thus, what a trader must do when this figure emerges in the terminal graph?

The reader should try to understand why Elder, Schwager et.al. don’t relate this figure to figures of reversal. What’s the reason?

V-type patterns or “spikes”

The local maximum in the “bull” trend (or the local minimum in the “bear” trend) is another figure of reversal. After this figure comes into existence, a sudden steep reversal occurs.

The trend reversal “spike”-type pattern according to J. Murphy.

Here Chart 5.9c from “Technical analysis of future markets: theory and practice” by J. Murphy is depicted. This chart represents an example of V-type turns, bearing resemblance to spikes. This author writes that abrupt V-type turns are inherent in the market of black oil. The absence of the transitional period substantially hampers the trader’s work. One should pay attention to the number of days, after which there occur the radical turn and insular (local) ones.

(For view the picture see notes in end of article)

Chart 5.9a from the same book presents an example of V-type pattern of the “top” (or “spike”). As a rule, patterns of this kind appear after a feverish “bull” trend – when the market “overstretches (overextends)” upwards. A radical turn (sudden change) in the tendency dynamics can occur at the key-turn day. Otherwise, an insular turn can come into existence. The market reverses “on tiptoe”. The movement direction undergoes U-turn.

(For view the picture see notes in end of article)

In the same book, Chart 5.9b serves as an example of V-type pattern of the “top” (or “spike”) for the market “bottom”. The downtrend immediately changes for the rising tendency. This happens without any preventive signal or a period of transition. It is one of the most complicated (intricate) patterns for the detection and speculations at the stock exchange. Most often the V-type turn is preceded by a rash development of the market. Intermediate modifications are almost absent in the tendency – alterations that come into existence are totally insignificant. As a rule, in dynamics of such tendency several gaps (blanks) in prices are present. It looks like the situation at the market gets out of hand (becomes uncontrollable). The market has exceeded all conceivable and unthinkable expectations. An experienced trader knows that one must be very careful under such conditions.

Drawbacks of criteria of the “spike”-type trend reversal pattern, presented by J. Murphy

According to J. Murphy, it is most difficult to identify (recognize) the “spike”-type reversal figure during its formation. At the same time, one can encounter it rather frequently (it is quite commonly encountered).

Surely, every trader is day-dreaming about the victory in this maddening competition. At a certain moment in the course of the tendency development, even an experienced trader can sense that something is going wrong. In a way, it is analogous with “riding on a tiger”. However, to catch a tiger and sit down on his back is just half the work. It will be much more difficult to safely dismount from this dangerous animal.

One should reread Murphy’s description of this reversal figure once again. The goal is the following.

1. To understand that Murphy is completely incapable of understanding the essence of the given figure of reversal and regularities inherent in it.

2. To understand why traders lose their game.

That is, a trader must see

· when this “rather common” figure arises,

· at what point it may (and must) be detected,

· what instrument of the analysis can prompt that the deal may be held upwards/downwards almost all over the course,

· at what point the trend is over – as well as many other aspects.

However, Murphy just recommends “to be very careful” and “to sense the danger in time”. What precise criteria these are!

The “spike”-type pattern of the trend reversal according to Schwager

Schwager goes to the other extreme. In “Technical analysis. Complete course”, he tries to examine the “spike” figure of the trend reversal purely from the viewpoint of mathematics.

In his book, Schwager gives an example of the upward-turned spikes (Chart 6.4; cocoa, March, 1995). This author submits the following explanations:

(For view the picture see notes in end of article)

Ht-1 denotes the maximum of the previous day;

Ht+1 denotes the maximum of the next day;

k is a numerical coefficient (arbitrary or to be determined???) (e.g., k=0.75);

ADTR implies the average daily true range during the last 10 days;

2Ht-Ct > 3(CI-LI)I;

CI is the price of closing at a given day; LI is the minimum at a given day;

Ht exceeds the highest maximum in N previous days (N is a prescribed constant (for instance, one can choose N=50).

The 1st of the mentioned conditions guarantees that the upward-turned “spike” exceeds the neighboring tops – at least by three-quarters of the average true range during the last 10 days (when k=0.75). In accordance with the second condition, the closing of the day is located in the lower quarter of the daily price range (from the maximum to the minimum). The 3rd condition stipulates that the maximum of a given day must exceed the highest maximum within the last 50 days. This guarantees that the rising movement in prices preceds the given day. Generally speaking, the higher is the value of N, the more intensive must be the previous growth.

This description of the “spike” demonstrates the possibility of constructing a mathematically-precise graphical pattern. Other definitions are possible as well.

Drawbacks of Schwager’s trading system in detecting the “spike”-type trend reversal pattern

Issuing from Schwager’s description of the “spike”-type trend reversal pattern, a trader will rather lose than gain profit. To understand the reason, we will “translate” Schwager’s explanations into the language, more eligible for traders.

1. A “spike” becomes formed under the condition of the previous trend prolongation, accompanied by the breaking through the resistance (a local maximum during the ascending movement) or support (a local minimum during the descending movement). Thus, it is the trend prolongation pattern. After this, the currency pair unexpectedly and steeply reverses.

Neither Murphy nor Schwager mention points of reversal, which could become a border between

· the recoil, after which occurs the trend continuation;

· the trend reversal towards the backward direction.

2. Instead of giving points of reversal, Schwager tries to determine “the maximum within the last 50 days (why exactly 50 but not 51 or 100?).

3. Can you imagine the intensity of a trend that is moving in the same direction during 50 days, maximums being formed one after another? Precisely at the 51st day one must “catch” a peak and open a bargain against the actual trend! And what if the trend will last out a year longer (or even several years more) – see Chart that depicts USD/CAD movement, 2002-2006. Besides, the closing of the day can be located in the lower quarter of the price daily range. In this case, it is common recoil, after which the trend will go on again, and no reversal will happen.

In other words, one may try to find a local maximum (minimum) at the 51st day and, starting from it, to open a deal against a heavy tend. The reader can easily guess what will be the results of such experiments.

Below one can see Chart w1 – USD/CAD, 2002-2006.

(For view the picture see notes in end of article)

In smaller-scale timeframes (H1-4), one can find a great number of “spikes”. In a timeframe of a larger scale (w1), such “spikes” don’t change the “bear” trend of USD/CAD pair during 4 (!) years.

It is USD/CAD movement in the timeframe H1 during 23.08-12.09, 2006.

Below USD/CAD movement in the timeframe (H4) is depicted.

Can the reader imagine how many traders lose their money due to Schwager’s technique – those who expect the “spike” pattern (the trend reversal) to develop in a heavy trend at the 51st day?

(For view the picture see notes in end of article)

Apropos, Schwager himself agrees with this estimation (characteristic) of such “scientifically-mathematical” techniques. He writes that in the given examples at least one “day of reversal” is reported in vicinity to a real maximum. However, often several upper reversals occur during the ascending tendency (buoyancy) but only false signals are generated. The day of the upper reversal in vicinity to the actual top doesn’t come into existence. One can state that in the days of the upper reversal 100 signals are generated per every 10 maximums. In other words, sometimes days of reversal produce perfect signals. However, more often such signals are false.

Below one can see Chart “Days of reversal: a signal that indicates the “coming of bears” – cotton; June, 1994.

Here R denotes the day of reversal

Spikes and days of reversal, plotted simultaneously – coffee; September, 1994

(For view the picture see notes in end of article)

In order to understand the “spike”-type reversal pattern, one must come to know the particularities that have remained unclear to D. Schwager.

1. What is the difference between the “spike” of correction (the lower one in Chart from Schwager’s book) and the “spike” of the trend true reversal?

2. What is the mechanism for realization of this reversal in small-scale timeframes?

3. When the reversal in small-scale timeframes

· is transformed into a reversal in timeframes of larger scales;

· turns into correction, after which a new wave of the old trend arises.

Reversal patterns according Masterforex-V Trading System

1. At Forex, all patterns of the trend reversal serve for the only purpose – i.e., they must indicate when to close a deal in the old trend and to open a deal towards the opposite direction.

2. In their essence, all figures of the trend reversal are the same – classicists of the technical analysis did not pay attention to this fact.

3. Perusing charts of the recoil in books by Murphy, Schwager, Neiman and other classicists of Forex, one can come to a depressing conclusion. That is, the analysts either don’t understand the essence of the tendency reversal or their charts are on purpose plotted in such a way that the reader cannot get the core of the tendency (trend) reversal.

4. The reversal patterns can be conditionally divided into the following groups

· There are very intensive (heavy) signals – the figures “head and shoulders”, “spike”, “diamond”.

· Just intensive signals – the “triple/double top/bottom”.

· The reversal figure features in common – it’s the reversal inner nature.

· The difference between reversal figures consists in the form of reversal.

5. Each reversal starts in small-scale timeframes. According to Masterforex-V Trading System, there exists a certain binary regularity, characterized by very clear criteria. The movement in small-scale timeframes can turn into a reversal in a timeframe of a larger scale. Otherwise, just a correction can happen, after which a new wave of the same trend starts.

Masterforex-V Trading System doesn’t recommend opening a real account before one can clearly understand all these aspects.

Note: Full text of this article and pictures of examples you can see on http://masterforex-v.su/002_009.htm

If you wish to be trained on Trading System Masterforex-V – one of new and most effective techniques of trade on Forex in the world visit http://www.masterforex-v.su/

Vyacheslav Vasilevich (Masterforex-V)
Professional Trader from 2000 year.
President of Masterforex-V Trading Academy.
Author of Books:
1. Trade secrets by a professional trader or what B. Williams, A. Elder and J. Schwager not told about Forex to traders.
2. Technical analyses in Trading System MasterForex-V.
3. Entry and Exit Points at Forex Market
Free Books Website:
http://www.masterforex-v.su
http://www.masterforex-v.org

A trader can come across the following figures.

· A figure of the trend prolongation (continuation) indicates that there takes place the trend common correction (recoil). After the end of it, a deal must be opened along the trend. For instance, under the condition of the “bull” trend and the downwards-turned recoil, one must open a deal on “buy”, trying to “surf” with the trend new wave.

· The trend reversal figure indicates that a currency pair has reached its peak, after which the reversal happens. Starting from the peak, one must open a deal against the previous trend direction. For instance, at the top of the “bull” trend, one must open a deal on “sell”, trying to detect (“catch”) the new trend first wave.

Can the reader grasp the idea?

For instance, opening a chart H4, one can see the following.

1. A figure of the trend prolongation (continuation) indicates that a trader must wait till the correction end and then open a deal along the trend (the figure itself is called the trend prolongation (continuation)). Dealing with this trend in this way, one can earn several hundreds of points.

2. Further, finding the figure of the trend reversal, one can earn several hundreds of points more – working in the backward direction.

3. There again occurs the recoil (the figure of the new trend prolongation (continuation)). Opening a deal at the peak of recoil, a trader opens a deal along the trend. A trader can work endlessly according to this technique.

At the same time, is not the reader embarrassed by “some- things”?

For instance, 19 of 20 traders, who lost their deposits, also had religiously examined figures of the tend continuation/reversal.

The author wants to attract the reader’s attention to the three principal problems. The proper solution forms the basis of Masterforex-V Trading System approach in its part, dedicated to figures of the trend continuation and reversal.

1. Classicists of technical analysis of Forex describe all figures of the trend continuation and reversal in such a fuzzy (vague) manner! As the result, these figures become “visible” only after the end of the movement. However, a working trader needs detecting such figures at the very beginning of the movement.

For instance, E. Neiman, finishing the description of dozens of such figures, has made the following conclusion. He recommends not looking for trend figures in the situations, where they are absent. According to this author, it would mean just to practice one’s fantasy to no purpose.

By the way, Neiman’s endnote strikes me as very cynical. I wonder how E. Neiman has managed to present his theory of detecting trend figures in a “specific” manner. As the result, a trader (an interested party!) cannot distinct whether such figures are real or just imaginative – i.e., the trader either cannot detect them or he starts devising trend figures when they are absent. Can you imagine that, in geometry, a triangle and square are described in such a manner that they look like indistinguishable? In science it’s impossible. However, at Forex in its present state, it is commonplace.

2. All classicists of the technical analysis examine all figures of the trend prolongation and reversal at the same chart and within the same dimension (A. Elder makes the only exception). However, there exist an infinitely large number of timeframes (time profiles) – M1, M5, M10, M15, M30, H1, H4, H8, D1, etc. Each of these timeframes is a component of a time profile in a larger scale. In each graph, there are different figures of the trend continuation or reversal. Often such figures are in contradiction with one another.

That is, opening a deal (short or long) with one and the same currency pair, a trader can see:

· a figure of reversal at M15;

· a figure of the trend continuation at H1;

· a triangle at D1.

Hence, what must a trader do? The reader should note the time, necessary for taking the right decision. That is, a trader must have time to determine points of confirmation and cancellation of deals, planned according to the trader’s own calculations. Besides, a trader must be quick enough to install a stop (lock).

The reader should keep in mind that a trader deals with such situations in the majority of trading sessions.

3. Nobody of “classicists” of Forex has tried to attach these figures to other instruments of the analysis

· Elliot waves (the figure of trend reversal makes the end of the 5th wave; the figure of trend continuation is one of correctional waves, etc.);

· the trend slanted channels;

· the levels of resistance and support;

· synchronism in the alley currency pair movement;

· the fundamental analysis;

· Fibonacci levels, etc.

At Forex, the movement is unified. Hence, it must be possible to present correct techniques of giving analysis to this market as a single whole. When developing Masterforex-V TS, I proceeded from this idea.

Examining the 3 above-enumerated problems as a single whole, the reader can understand the reason why 95% of traders lose their deposits.

All classical figures of the trend prolongation and reversal had had being examined by J. Murphy, A. Elder, E. Swagger, E. Neiman and other authors. Later on the corresponding developments were copied into all manuals of the analysis of Forex.

The trend reversal classical figures are the following

· Head and shoulders;

· triple tops and bottoms;

· double tops and bottoms;

· V-like top and bottom (sometimes they call it “spike”);

· rounding pattern or saucer;

· diamond.

The trend prolongation classical figures are the following:

· the triangle;

· the flag;

· pennant (pennon, pendant);

· wedge (chock, gusset, gore);

· rectangle.

We now try to look at the well-known figures of the trend reversal from a cardinally new standpoint. Our goal is to deconstruct all inner contradictions, which result in traders’ mistakes. By resolving such contradictions, the reader can learn how to detect

· the end of the movement along the old trend;

· the beginning of a new trend.

The pattern of the “head and shoulders” reversal

Charts from “Technical analysis of future markets: theory and practice” by J. Murphy can serve as the corresponding examples.

(For view the picture see notes in end of article)

J. Murphy describes the “head and shoulders” figure in the following way. In Fig. 5a from his book, one can see an example of the “head and shoulders” pattern in the case of the market top. The left and right shoulders (A and E) are located approximately at the same level. The “head (top)” (C) is located higher than each shoulder. One can see that every successive peak is accompanied by diminution in the trade volume. The pattern is considered accomplished when the price of closing becomes fixed below the line of “neck” (the line # 2). The minimum price guidepost is equal to the vertical distance from the “head” to the line of “neck” – to start from the point of breaking through the “neck” line and downwards. In the course of the successive ascent, the return to the “neck” level is possible. However, prices cannot cross this line.

“Head and shoulders” reversed pattern (the mirror image that appears during the “bear” trend changing into the “bull” one)

(For view the picture see notes in end of article)

The rules of work according to A. Elder (“How to speculate and gain on stock exchange”) are the following.

1. There can occur a decrease in the trade volume, intersection of the trend line and divergence between technical indicators and prices. Seeing the “head” or the right “shoulder” under these conditions, one must sell.

2. After the “head”, the recession forms the line of “orifice (mouth)”. If a trader still holds the position, he must install precautionary (safety) measures below the “orifice (mouth)” line.

3. As a rule, a lift of the right “shoulder” is characterized by small trade volumes and technical indices that indicate the market poor activities. This rise of the right “shoulder” gives the last real chance to go out of the ascending trend with profit. In the right “shoulder” technical indices often reach values greater than in the “head”. However, such values never reach maximum values, obtainable in the left “shoulder”. Selling in the right “shoulder”, the trader must place the “stop” on the level of the “head” peak. The “Stop-and-Reverse” order must be made. If the order is realized, the position becomes closed. Then it is opened in the opposite direction (see “Baskervilles’ Dog” signal).

4. When the “orifice (mouth)” line is crossed over, the recoil with a small volume gives a perfect opportunity for the “sell”. Precautionary (safety) measures must be placed slightly above the “orifice (mouth)” line.

E. Neiman reveals drawbacks of submitting the “head and shoulders” reversal figure (see his “Trader’s small encyclopedia”). This author notes the following.

1. For pity, before a trader will be convinced of the “head and shoulders” classical figure formation, the substantial movement of this price will be already finished.

The reversal and the trend 1st wave towards the backward direction can be missed because of fuzzy criteria, submitted in E. Neiman’s book. This author comforts such traders in a rather original manner. He says that one gets a valuable experience concerning the new trend movement direction. Surely, now the price dynamics is much less intensive. However, already knowing the trend direction, one can be more or less convinced in one’s own position.

2. There is a danger to see the given figure much more often than it really comes into existence. To avoid this, it is obligatory to check the conclusion concerning the figure via the volume indices.

Thus, traders’ losses during the work with the “head and shoulders” reversal figure are caused by the corresponding recommendations submitted by classicists of the technical analysis.

1. Within the framework of this model, one can open a deal only when a substantial part of the movement along the trend new (backward) direction is already over.

2. “The index of volumes” is absent at the handbook-market Forex. Consequently, the principal filter does not exist as well. According to J. Murphy, E. Elder, Swagger and E. Neiman, this filter divides the true reversal (the “head and shoulders”) and the false (unconfirmed) one.

3. E. Neiman states that, after missing a heavy movement towards the backward direction, a trader finally will see the new trend. This thesis is disputable and often erroneous.

a). On the one hand, the “head and shoulders” reversal can indicate the trend 5th wave end – in this case, E. Neiman is right.

b). On the other hand, the “head and shoulders” reversal can indicate the end of the trend 1st and 3rd waves. After their finish, the stop-loss comes into action. Otherwise, the deposit can be lost for good. As it is evident, E. Neiman does not understand these specificities. He just tries to soothe losers (or his own conscience) with above-mentioned phases (about imagining figures and fantasy).

4. A. Elder has introduced a new figure – that of the trend continuation (prolongation). It is the so-called “Baskervilles’ dog” pattern. Being a lame (abortive) version of the “head and shoulders”, it is intended for the following case. Notwithstanding all signs of the “head and shoulders” formation, often a currency can break through the “head” top. Thus,

· the “head and shoulders” pattern formation is canceled;

· the former trend is going on.

“Baskervilles’ dog” pattern: cancellation of the “head and shoulders” figure In “Fundamentals of stock exchange trade”, A. Elder has explained the origin of the pattern title. In the famous detective story, Sherlock Holmes noticed that at the time of crime the dog didn’t bark – i.e., the dog new the murderer. Hence, it was purely family affair. Thus, the enigma was solved.

Analogously, the absence of any action serves as the signal (the absence of the “bark” to be expected!). When the market refuses to “bark” in response to a quite clear signal, one gets “Baskervilles’ dog” pattern: the market, refusing to reverse, keeps on rushing upwards.

(For view the picture see notes in end of article)

The “head and shoulders” pattern in Masterforex-V trading system

The “head and shoulders” reversal figure (the upturned “head and shoulders”) is in detail described in Masterforex-V Trading Academy.

The author suggests tips for the independent search for the answer to the problem, unsolved by classicists of the technical analysis. These prompts are intended for those who cannot take the course in Masterforex-V Trading Academy via internet.

1. The “head and shoulders” reversal figure is a combination (system) of horizontal and slanted channels, in detail described in the previous parts of this Book.

2. One can understand the essence of the given figure by adding 2 lines to the charts by Murphy and Neiman. This permits opening a deal at the beginning of the reversal tendency but not at the end of it.

3. Other instruments of giving analysis to Forex (but not trade volumes) confirm correctness of the reader’s solution:s

· Elliott’s wave theory;

· levels of the resistance and support;

· Fibonacci levels;

· levels of slanted channels;

· alley currency pairs;

· achievement of the goals of the previous movement at the peak (the “head”);

· the time necessary for the formation of the “head and shoulders” figure;

· correlation between various timeframes (4 kinds of the trend), etc.

The problem (test) #1 posed in Masterforex-V Trading Academy. There is a chart from Neiman’s book. The reader should try to understand what’s correct and wrong in this picture.

Chart. The problem (test) #1 (For view the picture see notes in end of article)

It is a perfect test. It permits you to know the degree of your understanding Forex. One must find out the mistakes made by E. Neiman in his picture of the “head and shoulders” reversal figure. Otherwise, the reader will also confuse the true reversal with the trend common correction. Respectively, the reader’s deposit will be inevitably lost.

The analogous mistake is present in J. Murphy’s charts (The “head and shoulders” reversal and the “head and shoulders” upturned figures). Not without reason the author has submitted both figures in the graphical form, the charts of real trades not being depicted.

The problem (test) #2 posed in Masterforex-V Trading Academy.

Because of such mistakes, the real chart that depicts the course of trades takes the following form (see Chart 2.14 from “Trader’s small encyclopedia” by E. Neiman).

Chart. The problem (test) #2 (For view the picture see notes in end of article)

*** The circle designates the area of intersection of the two signals. The “head and shoulders” figure indicates the trend reversal. The “false breaking” through the line of the channel support maintains the channel actual direction. Thus, one can see the “bull” trend victory. A lot of trading traders – who misestimated the situation at that moment – have lost their money. Under those conditions the best way out would be either to wait till the situation would clear up or to look for other confirming signals.

The reader should try to independently detect the mistake made by E. Neiman in the determination of the “head and shoulders” reversal figure. E. Neiman himself has not solved this problem.

The triple and double “top-bottom” figure of the trend reversal

The charts from the following books can serve as examples of such patterns.

· J. Murphy. “Technical analysis of future markets: theory and practice”.

· E. Neiman. “Trader’s small encyclopedia”.

(For view the picture see notes in end of article)

Detecting the triple and double “top-bottom” figure

According to J. Murphy, the “triple top” figure very much resembles the “head and shoulders” pattern (see Chart 5.4a in his book). The only difference is that all the three maximums are located on the same level. Each of the subsequent peaks must be accompanied by a decrease in the trade volume. The pattern is completed when prices break through the level of both declines (recessions), which is accompanied by an increase in the trade volume. The procedure of getting the price guideposts is the following. First, one measures the pattern height. Further the obtained value is mapped on downwards to start from the point of the breaking-through. As a rule, after the breaking-through there occurs the price backward-directed motion towards the lower line.

In Chart 5.4b from J. Murphy’s book, the “triple bottom” pattern is depicted. It is analogous with the “head and shoulders” reversed pattern. The only difference is that all the three minimums are located on the same level. It is a mirror copy of the “triple top” pattern. However, in the case of the upward-directed breaking, the trade volume is more important in the role of the confirmatory factor.

A. Elder states that the “double top” figure becomes formed when prices increase anew up to the previous maximum. Analogously, the “Double Bottom” figure becomes formed when prices decrease anew down to the previous minimum. The 2nd maximum (or minimum) can be slightly lower or higher than the previous one. This fact often embarrasses analysts-beginners.

Double “top” and bottom” are often determined with the help of technical indicators. The latter are often accompanied by divergence of “bull” or “bear” trends. For a trader, one of the best opportunities is to buy in the double “bottom” and to sell in the double “top”.

(For view the picture see notes in end of article)

E. Neiman has pointed out the drawbacks of such reversal figures. Dealing with triple (and especially double) “top + bottom” patterns, one can receive too many false signals. They can be detached just with the help of the parallel analysis of convergence/divergence. RSI oscillator is taken as an example.

The problem (test) #3 from Masterforex-V Trading Academy

1. According to Neiman, there are intensive signals – figures “head and shoulders and “triple top” (“bottom”). Besides, there are signals of moderate intensity – the “double top”.

The task is to determine the difference between the “double and triple tops” in the cases of using different instruments of the analysis of Forex (slanted channels, moving averages, etc.).

2. Can one single out false signals of change in the trend with the help of

· the volume index, not used in the handbook market of Forex;

· RSI oscillator (it’s the index of flat but not that of trend)?

3. What is the difference between the “head and shoulders” figure and “the double or triple top (bottom)”? Here the reader must take into account that, according to Elder, the 2nd maximum (or minimum) can be slightly (?!) lower or higher than the previous one – the fact that often embarrasses analysts-beginners.

However, the reader must think it over what does the term “slightly” imply. Let us suppose that the top is broken through. In this case, should a trader stay out of the market or open a deal? Should one regard this breaking through the top as true or false? Respectively, must a deal be opened along the trend or against it?

The reader must try independently to answer these questions and to find out a mistake in Elder’s argumentations. This error produces a series of trader’s own mistakes. Without the correct answers, it is impossible to gain profit regularly at Forex.

Promptings from Masterforex-V TS for the individual training

· Such figures as “head and shoulders”, “spike” and “diamond” are extreemly intensive signals.

· Such figures as “triple top (bottom)” and “double top (bottom)” are intensive signals.

One must try to understand the difference between figures of these two categories and their features in common.

· The common is the essence of reversal, inherent in all figures.

· The difference between the figures is the reversal form.

By understanding the reversal in its essence, one can see the end of the movement in the given direction.

Seeing the reversal form permits the trader to faultlessly detect the new trend waves or the strong correction towards the backward direction (1-2-3/a-b-c).

Such notion as “slightly”, used by Elder, is unacceptable in Masterforex-V Trading System.

A currency either does not break through the technical level of support/resistance, or the currency does break it – by a strictly determined distance. The corresponding goals (1, 2, 3, etc.) are embedded into Host Computer of Organizer of the universal game of Forex.

See continuation of this article under name “Forex Secret. Trend Reversal Classical Figures in Technical Analysis at Forex Market (Part II).”

Note: Full text of this article and pictures of examples you can see on http://masterforex-v.su/002_008.htm

If you wish to be trained on Trading System Masterforex-V – one of new and most effective techniques of trade on Forex in the world visit http://www.masterforex-v.su/

Vyacheslav Vasilevich (Masterforex-V)
Professional Trader from 2000 year.
President of Masterforex-V Trading Academy.
Author of Books:
1. Trade secrets by a professional trader or what B. Williams, A. Elder and J. Schwager not told about Forex to traders.
2. Technical analyses in Trading System MasterForex-V.
3. Entry and Exit Points at Forex Market
Free Books Website:
http://www.masterforex-v.su
http://www.masterforex-v.org

You try to set up hypotheses of your own. If the market confirms them, you can use such hypotheses as the foundation of your practical work – otherwise, you are not obliged to apply the incorrect theory.

General conclusion

The traditional approach is of no use to traders. It is suitable only for analysts, who try to “scientifically” explain the reasons of traders’ losses at Forex post factum .

I hope that now it is evident why Dow’s classification of trends is still acknowledged and approved almost by all analysts at Forex . In practice, they do not want to change anything in this classification. In addition, each of such analysts has his own vision of these sorts of trends, which introduces an additional confusion (mishmash).

Trend Classification according MASTERFOREX-V

Let us begin with a platitude. The theory is viable only if it depicts the reality correctly, helps to understand it better and predicts its further development.

Often practice leaves a theory behind. In this case, turning into dogma, the theory hampers the development of practice. As the result of this in the case of Forex , traders will inevitably make mistakes – consequently, they will lose real money.

At Masterforex-V, the trend classification is the following:

1. the intra-session trend;

2. the weekly trend;

3. the trend that lasts several weeks/months

That is, I try to classify trend from the viewpoint of a working trader. I use this very classification by myself, and it does help me in the practical work at Forex . The correlation between the three kinds of trends is clear. One can trace it out at the very beginning of the intra-session movement of ally currency pairs – in contrast to the majority of systems developed by “analysts”, where this correlation becomes understandable only post factum .

For instance, two kinds of trends (the intra-session and the weekly ones) coincide at the beginning of the trading session. In this case, it is a wave of the general trend. This wave can be detected even by a beginner at Forex – to say nothing about more experienced traders. If the trends do not coincide, there occurs retracement (correction) of one kind of trends with respect to the others.

A trader can see the area of this movement, clearly distinguishing tactic from strategy of “his” currency pair movement. This is the only way to detect a trend of the duration of several weeks/months. Respectively, from the very beginning the trader can see towards what direction it will be worthwhile to open a deal – but not post factum when the movement is already dieing out. For instance, in for GBP/USD and EUR/USD pairs (see below) the segments of this trend are clearly observable.

a). April 18 – July 20, 2005;

b). July 20 – September 5, 2005;

c). September 5 – November 28, 2005;

d). November 28, 2005

The corresponding charts clearly indicate what a trader had had to do on any of those days. At the same time, one is interested in gaining profit but not just in acquiring materials for the analysis. The work with the intra-session trend permits us to understand the situation at Forex at a given moment (the intra-session trend, the retracement , reversal or the weekly/monthly trend continuance). Naturally, it serves for gaining profit.

The trend of the 1st type is an integral part of a longer trend, its continuance or retracement.

Thus, the principal difference of this classification from other ones consists in the following. The 1st and 2nd positions are introduced as new. The long-term trend lasts several weeks/months. The next (4th) position can be examined as well. However, being a trader but not an investor, I’m not interested in taking it into account in my practical work at Forex .

The intra-session trend at Forex : proofs of its existence and practical application .

The proof #1 . At present the trend classification is of a somewhat dogmatic character. Therefore, let us dwell on practical problems – i.e., the methods of up-to-date traders’ work and time intervals during which deals are being kept open. Understanding of these practical aspects will facilitate us the understanding the theoretical problem of the trend classification.

The question is formulated in the following way: “On average, for how long do you keep the position open at Forex ?

a). the intra-session trading during 1 day;

b). several days (up to a weeks);

c). from a week till a month;

d). from a month and longer.

As it turned out, the overwhelming majority of traders work exactly during the intra-day trading session (more than 80%). Just a few traders keep their orders open from a week till a month. The results could shock all those theorists who still consider the intra-day trading to be just “a trading noise”.

The proof #2 . Let us compare the charts of GBP/USD and EUR/USD movement with the currency pair spread extent.

Chart 11.1. GBP/USD movement (For view picture see notes in end of article)

Chart 11. 2. EUR/USD movement (For view picture see notes in end of article)

Working with these currency pairs, I always suppose that per session the stock reserves (the stability factors) of GBP/USD and EUR/USD pairs make ~70 and ≥40 points, respectively.

There arises the question: why should not a trader work within the intra-day trading session? Really, the spread makes 2-4 points, while the currency pair stock reserve (the stability factor) more than 15 times exceeds the spread?

I’m wondering do such up-to-date authors-analysts at least sometimes open the point-of-sale terminal when they talk about “the market noise”. Why do they vigorously talk traders out of working within the intra-day trading session? – Naturally, here the up-to-date authors are implied but not those who lived decades ago.

The proof #3. Let us examine intra-session tends from the viewpoint of the criteria of the trend itself.

a). According to Ch. Dow, the trend is defined as the price directed movement when each of the next maximums is higher/lower than the previous one. Analogously, each of the next minimums is higher/lower than the previous one. From this very viewpoint, let us examine the charts M15 of GBP/USD movement in the Asian, European and American trading sessions on December 12, 2005. We can clearly see that each of upward fractals is higher than the previous one. Respectively, each of downward fractals is lower than the previous one. Thus, there are precise criteria of the trend type in each of trading sessions.

Chart 11.3. GBP/USD movement (For view picture see notes in end of article)

Chart 11.4. GBP/USD movement . (For view picture see notes in end of article)

Chart 11.5.GBP/USD movement

b). When the trend is over, there starts the natural retracement (correction) towards the direction opposite to the trend movement. The correction is equal to various Fibonacci levels. It is clearly depicted in the given intra-session trend charts.

The proof #4. If during the intra-day trading session the currency pair movement is heavy, then in the end of this trend the natural retracement occurs. It makes at least 23-38% in accordance with Fibonacci levels. That is, the retracement is inevitable and it substantially exceeds the spread in magnitude. Consequently, why should a trader keep on holding the position open further?

Is it because some analysts somewhere and some time denied the intra-session trend existence? Evidently, only unqualified theorists, talking about the “market noise”, can recommend issuing from charts D4 to traders in their work.

The proof #5 . You should carefully study where traders of one of the first-rate informational agencies (Dow-Jones agency) place their orders for the buy and sell of currencies.

EURO: orders for buying are at 1.1950/60 (options), 1.1935 and 1.1890; orders for selling are at 1.2000.

YEN: orders for buying are at 116.30/40; orders for selling are at 116.75 (options) and 117.00 (options).

STERLING : orders for buying are at 1.7660; orders for selling are at 1.7700.

The difference in 40-60 points testifies that these orders are intended for the intra-day trading session.

The proof #6 . Let us examine the levels of support and resistance, edited by world-leading banks market-makers. One can see the analogous recommendations – i.e., to work within the trading session (or a day).

As one can see, both Deutsche Bank and Saxo Bank place their orders within the intra-day trading.

There arises the logical question. In the cases of the breakout of the levels of resistance or support, why should not a trader open his order and enter the market? The only reason is that some theorists, pretending to be “classics”, refer to this movement as to the “market noise”. Probably, such “analysts” must come down to earth and revise their views on Forex after examining the work of real traders.

The proof #7. Let us dwell on the results of real traders’ work; the profit gained within an intra-day trading session.

In http://forum.masterforex-v.su, one can find examples how traders from Masterforex-V Trading Academy work at Forex . There is no doubt that the commercial account balance is the principal criterion of the trader’s success at Forex . If the positive balance (up to several hundreds of percents per month) is the result of the intra-trading session, it serves as absolute proof that the stable movement of currency pairs does exist within the intra-day session. Skillful traders who have mastered the technique of intra-day trading gain profits by this method.

Conclusion. There is a manifest discrepancy between the theory and practice. As it is evident, the overwhelming majority of traders work in intra-day sessions. The “Maintenance Staff” (banks, Forex Brokers, leading informational agencies) works in the same regime. In fact, the up-to-date market of Forex is formed by such organizations and individuals (the chain “trader – Forex Brokers – informational agency”).

At the same time, there are analysts who, not dealing with any link of Forex , claim that intra-session/day trends do not exist. Such theoretical conclusions have turned into dogmatic statements long time ago!

The proof #8. However, it must be mentioned that a series of theorists have already acknowledged the intra-day work existence (so to speak, they “validate” it).

The proof #9. Practice is the criterion of correctness of any theory and technique. Analysts of the “old” traditional school of Forex ignore the intra-session/week trend (or even deny its existence). Confusing real traders, this viewpoint causes irreparable damage to the real trade at Forex .

As an example, let us examine the situation on December 12, 2005 (the charts D1).

The chart 11.6. Movement of GBP/USD pair. (For view picture see notes in end of article)

The chart11.7. Movement of EUR/USD pair. (For view picture see notes in end of article)

The graph clearly indicates that on December 12, 2005 B. Williams’s Alligator had not reversed upwards yet (the reversal appeared after the heavy movement on that date). However, on December 12, 2005 there had been the lateral trend (flat) of USD with respect to EURO and GBP. The flat had started on November 28, 2005 and lasted several weeks. About two weeks earlier (December 5-9, 2005) there had been USD “bear” lateral trend (flat) of a week’s duration.

The day after December 12, 2005 I received a letter from a skillful trader. He informed me about his enormous losses induced by the currency pair reversal (stop losses worked). Besides, about a dozen of his colleagues were taken in the same trap (captured by the same trick) – notwithstanding the fact that their experience of work at Forex varied from 2 to 8 years. At the end of his letter my colleague wrote that the losses were inevitable because of the absence of any signs of the reversal at all. In its essence, such viewpoint is typical of traders who belong to the old traditional school. This approach logically results in the loss of their deposits by more than 90% of traders. When this happens, the theorists-dogmatists just can say that the market is unpredictable.

However, Forex is perfectly predictable and logical. To confirm this, I want to quote extracts from the closed forum of Masterforex Trading Academy on December 12, 2005 during the on-line trade.

- Vert : “Let’s wait and see. In the case of the upward breakout, we’ll buy. In the case of the downward breakout, we’ll sell. Otherwise, we’ll do nothing”.

- F. and M.:”The movement is started, the levels are broken. I have been right to buy. Now it is important to get out correctly. Good lack to everybody!”

- I:”I have gained some profit…I want more but I’m afraid of opening in the middle of the channel. As regards EURO and GBP, likely, it would be possible to open at the breakout of Fibonacci 61.8% from D1. Maybe, professionals have done this way. It must be taken into account”.

- b: “Not bad! I pocketed 45 points! If I were not afraid of entering as I had written, I would got at least 75 points. That’s all right – we are still learning. Long live Profit!”

- I: “First time I have successfully closed the deal according to MasterForex technique. In reserve I have 90 points in GBP and 50 points in EURO. Now I go out, it’s enough”.

- S: “The trading is successful. Now the retracement is ò=15.24 ( Kiev time). So, Americans, you come!

Masterforex estimated the movement in the European session as classical. Nobody lost! However, issuing from the traders’ questions, it would be worthwhile to attract your attention to certain details.

In that session the levels function perfectly. The reason is that all conditions for “playing the trick” on the majority of traders have been prepared. First of all, in England has happened the technogeneous catastrophe – the greatest one to start from the World War II. You guess towards what direction the majority of traders’ orders would be opened in accordance with the fundamental analysis canons.

That is, when I keep on writing that you must try to open your deals against the “flock”, it means against the canons. However, one can combine different techniques of the analysis in the presence of the necessary prerequisites. More in detail this subject is elucidated in the paid enclosures. Ibidem one can find specificities of trading at the American session, analyzed by the corresponding examples.

Dwelling on problems of logic and intuition .

A series of examples of opening and closing various deals and the corresponding reasoning are in detail examined in the paid enclosures.

To the beginners I recommend to work according to the standards. It is better to take less but for certain.

Those who are confident in themselves can try the technique of getting into the lock. It is just impossible to lose working by this technique (in detail see the paid encloses).

That is, an individual of a certain experience can break rules, clearly being aware of the risk taken deliberately. Respectively, one must realize when (to start from what point) it is necessary to acknowledge the made mistake and to get into lock. After this one must add positions in the opposite direction.

I hope the idea of breaking the reader’s own rules is not too perplexing – in case of the possibility of gaining profit more than 70 points, whereas the lock is half the value.

Traders write to me, tell about their experience and ask for advises. Of course, here I cannot go into details of the analysis given to the trend intra-session motion because it is the authors’ techniques. However, the principal point is evident. Every participant in Masterforex Trading Academy is horrified when the price is starting to approach his stop-loss against all rules of the “traditional’ Forex .

To prove that the above-described situation was not accidental, I cite on-line posts on December 13, 2005 (it was the day that followed the issue of news about the rise in the interest rate; at first this information caused the fall in USD rate; further USD started to slowly rise again).

- A: “Today the scheduled meeting of FOMC of USA Federal redundant system (FRS) took place. The level of basic interest rates was discussed. As the majority of economists had expected, Federal fund rate increased by 0.25% – up to the level 4.25% (December 13, 2005; 19:14 GMT). So many traders were entrapped!”

- Ser and Br: “It is nonsense! USD rate must increase together with Federal fund rate rise!”

- B: “What a trick FRS played by removing the word “soft” from the announcement (statement)!”

- And: “The scheduled meeting of FOMC has heightened the rate. Again the consortium has demonstrated that traders must not believe “the base”. What is about the flat? Personally I had time to take 34 pips upward with GBP”.

- Several other traders: «The best thing is to close the deal. It is just the beginning!”

A and B: “The direct the rise in the interest rate is already taken into account in the price. However, not the rise itself is important (it was expected for sure by everybody) but the comments about the rate policy in future.

In what way are the interest rates taken into account in the price? If it was done yesterday, it was a kind of fun – i.e., USD in advance had fallen down by ≥200 pips with respect to EURO and GBP. If it was starting to be done last week, then up today USD has fallen down by ~500 pips with respect to GBP. Consequently, “the base” must be considered to be a heavy movement. However, its direction is not prognosticated.

I hope that changes in the traders’ approach are evident. Instead of intricate dogmatic theories, traders clearly see what is going on at the market. They can take into account many factors simultaneously. They understand the notion of “trend” anew – as a stable movement, in the course of which one must gain profit.

What is important, many participants of the closed forum at Masterforex Trading Academy are the beginners. Their experience at Forex is just about several months. One should compare their posts with those of “competent analysts” in the same situation!

We now dwell on another specificity of the trend characteristics.

The intra-session trend is the means of gaining profits but not the method of classifying traders according to intra-day or not-intra-day trading. I wonder, at so many forums they try to artificially divide traders into two groups – those who work during a day (intra-day) and all others.

As far as I’m concerned, not traders must be classified but their techniques of gaining profits. Each of such techniques is just one of facilities for gaining profit. The more of such facilities (techniques) a trader possesses, the higher are his chances of gaining profit.

Really, nobody classifies carpenters in accordance with the tools they use (a plane, fret-saw, ax, hammer, hack-saw, etc.). Analogously, in any area a professional must to perfection master all facilities. A professional chooses those ones that are most suitable for given circumstances.

On the contrary, “analysts” of Forex do not notice evident things. They keep on inventing “new” classifications (indicators, techniques, etc.), thus confusing traders and themselves as well.

The site http://forum.masterforex-v.su contains an illustrative example of the traders’ attitude to this classification (the intra-day or not-intra-day traders). Traders vote for the intra-day trading as the basic means of gaining profit at Forex. They fairly mention that it does not matter for how long the position is opened – either a week or several seconds. Everything depends on the situation at the market. As the market is chaotic, we cannot change it. It is unnecessary to see everything in absolute terms. This is the comprehension of the currency pair motion in its essence. Nobody knows in advance what level a currency pair can reach during its motion in the trend or in the corresponding retracement. It becomes evident only when the currency pair in its movement reaches certain levels at certain moments. The trader must know at least several points (goals), where a currency pair can stop and turn to correction. However, only a “Guru” can exactly predict at which points this will happen (see B. Williams).

Note:
Full text of this article and pictures of examples on http://www.masterforex-v.su/001_011.htm

If you wish to be trained on Trading System Masterforex-V – one of new and most effective techniques of trade on Forex in the world visit http://www.masterforex-v.su/

Vyacheslav Vasilevich (Masterforex-V)
Professional Trader from 2000 year. President of Masterforex-V Trading Academy. Author of Books: 1. Trade secrets by a professional trader or what B. Williams, A. Elder and J. Schwager not told about Forex to traders. 2. Technical analyses in Trading System MasterForex-V. 3. Entry and Exit Points at Forex Market Free Books Website: http://www.masterforex-v.su

In order to draw a trend line one needs at least 2 points to connect. This is usually done by connecting the first and the last closing price over a period of time say, 1 month, 3 months, 6 months etc. It’s entirely up to you. If you trade short-term you would take a shorter period and with long-term trades the period that the trend line will cover would obviously be longer.

However, at this point it is only a tentative trend line. The trend line will become more and more valid after the prices have tested the tentative trend line several times maintaining the overall trend. Once a valid trend line is in place, it becomes useful in many ways.

One of the basic concepts of a trend is that a trend in motion is more likely to continue than reverse. In addition, a trend also takes on a certain slope as identified by the trend line, and will usually maintain that same slope. Therefore a trend line not only helps determine buying and selling points, but is also useful in signaling a changing trend.

An uptrend line provides an area of support where investors can buy equity whereas a downtrend line provides an area of resistance where investors would sell equity.

Support, also known as support level, is simply a trend line where prices tend to drop to but don’t pass through. Once touched, prices then rebound back up again. Vice-versa, resistance is a trend line where prices tent to move up to but don’t pass through. Once touched, prices will then drop again.

Now this obviously doesn’t happen all the time. A trend line can also be broken where prices will then move in the opposite direction creating a new opposite trend.

So as long as a trend line remains intact, it can be used to determine buying and selling areas. Once a trend is broken, it is a signal of a change in the trend and all positions in the direction of the previous trend should be closed.

If you choose to use a trend line to trade with a prevailing trend, then you should trade in the direction of that trend. There’s an adage that says: “the trend is your friend”. And that’s how you should treat a trend especially if you trade short-term. It is not so important with long-term investments. But on short-term it definitely is! In other words, during an uptrend you would buy stocks or call options and during a downtrend you would sell stocks or buy put options.

When using trend lines, it is important to be aware of how long a trend has already been in place and when the trend is about to end. At major turning points, the crowd is often wrong about the direction meaning that at these point the masses usually get heavily involved with a trend just as it is about to reverse.

Knowing how to identify these trend changes will present one of the most profitable trading opportunities, because when a trend line is broken the stock will usually assert itself strongly in the direction of the break.

What Constitutes A Valid Break Of A Trend?

As a general rule, it can be said that a stock needs to close below an uptrend line or above a downtrend line to constitute a valid break. But even then, the break should be followed by at least one or two other subsequent closes below the trend line before it can be considered a valid break.

Just too often, a break of an uptrend is just due to profit taking. Then, the next day, investors often pick up on this stock that has now become cheaper and buy into it again continuing the uptrend the stock was in just before it droped.

In addition it can be said that the longer the trend has been in place, the stronger the trend is. And more often than not, a penetretion of a significant trend will lead to a large move in the direction of the break.

Yours in Successful Trading

Ricky Schmidt
http://www.stockbreakthroughs.com
http://www.stockbreakthroughs.com/articles/trend-lines.htm

Hence, trend detection is the trader’s PRIMARY target. If “The Trend Is Your Friend”, entries should be executed trendwise and the profit should be allowed to flow, etc., there emerge questions to touch every live Forex trader:

- what are the trend’s criteria (bullish or bearish) – once known, it is a trader’s conventional job to enter trendwise and let the profit flow?

- if the Forex major rule quintessence is as simple as that, why 90-99% of traders suffer losses with enviable permanence?

Book I Chapter XI “Where trends are to be chased at Forex or the trader’s faultless profit segments”, http://www.masterforex-v.su/001_011.htm analyses the Forex scholars’ and modern forum-speaker traders’ overwhelming chaos in the field, ranging:

- from the Charles Dow classical definition that “a trend constitutes a vectored price travel, where each consecutive high is higher/lower than the foregoing one with each consecutive low being higher/lower than the foregoing one” (my opinion: the definition is obsolete and does not fit new Forex realities)

- to some traders’ purely absurd opinions on no trends at modern markets along with Eric Nayman’s thinking of his trend varieties built upon no distinct criteria (“There are none of any strict rules, once forever established”, – E. Nayman stipulates).

One of the factors responsible for traders’ en-mass deposit losses is fairly understandable from the above. If there’s no distinct definition of trend – then the question is: should entries be effected bullish or bearish trendwise and where should the profit be allowed to flow?

Masterforex-V TREND DEFINITION

From Masterforex-V standpoint a trend is a vectored price travel between two opposite reversal patterns. In-trend movement is of zigzag nature, i.e. there is a recovery wave following each pulse wave. The pulse/recovery ratio is indicative of the trend direction. Thus:

- under a bullish trend, the uprising pulse length exceeds the corrective bearish wave one;

- under a bearish trend, the bearish pulse length exceeds the corrective uprising wave one;

- under a sideways flat, the pulse and recovery durations are equal.

Figure 1. Trend and recovery (For view picture see notes in end of article)

Figure 2. (For view picture see notes in end of article)

Head’n'shoulders is a USDCAD reversal pattern with a bearish trend startup, where a downward pulse is longer than an upward corrective action. Respectively, a USDCAD W1 bearish trend is alive till there is a reversal pattern.

Figure 3. (For view picture see notes in end of article)

As obvious from USDCAD W1 chart, there was no upward reversal pattern in 2003-2006. Hence the W1 bearish trend continues.

Figure 4. (For view picture see notes in end of article)

Later on in Book II “Technical Analysis in Masterforex-V trading concept” I will stage a detailed description of each component, attributable to the trend change, but for the time being only the critical ones will be referred to.

1. A trend continues till there’s a swivel, thus increasing the importance of reversal patterns, discussed hereinafter.

Reversal patterns are found at any trend’s origination and termination. Thereby a trend constitutes the distance from one reversal pattern to another, being opposite:

- the start of a bullish trend is a reversal pattern of the preceding bearish or sideways trend;

- the bullish trend continuation is a trend continuation pattern (see Book II “Trend continuation patterns http://www.masterforex-v.su/book2.htm)being a retracement variety calling for a trendwise entry.

- the bullish trend termination being a bullish trend reversal pattern.

Here are the examples:

2. There is an arbitrary fall of classical bullish and bearish trend reversal patterns into:

a). reversal patterns resulting from a non-breakthrough of a next in turn resistance or support on a bullish or a bearish trend respectively:

- double top;

- triple top;

- double bottom;

- triple bottom.

with reference to drawings of classical trend reversal patterns from the following books by Forex scholars:

John J. Murphy “Futures markets Technical Analysis: theory and practice”

D. Schwagger “Technical Analysis, comprehensive course”

A. Elder “How to gamble and win at the exchange”

A. Elder “Basics of exchange trading”

Larry Williams “Long-term secrets of short-term trading”

K. Lukas “Using Technical Analysis at the world Forex market”

A. Nayman “Minor trader’s encyclopedia”

A. Nayman “Master trading. Secret materials”

Figure 5. (For view picture see notes in end of article)

Figure 6

Figure 7 (For view picture see notes in end of article)

b). reversal patterns resulting from a false breakthrough of a next in turn resistance or support level:

- head’n'shoulders

- inverted head’n'shoulders

- spike.

And hereinafter in details:

A head’n'shoulders:

Figure 8. An inverted head’n'shoulders. (For view picture see notes in end of article)

Figure 9. A spike. (For view picture see notes in end of article)

Figure 10

3. Classical trend continuation patterns.

The centerline is that any trend is of zigzag nature:

- there is a counter-trend pullback following a trendwise pulse;

- the pulse is always longer than the retracement being the axiom of the Elliott’s WA;

- a trend continuation pattern is but the Elliott’s corrective waves variety

Therefore, each trend continuation pattern is integrated into a corrective model, whereupon a next in turn trendwise wave follows:

- a gap

- a quadrangle

- a triangle

- a flag

- a pennant

- a wedge

Below is a sample bullish flag. It is to be noted, that the bullish pulse is much longer than the bearish pullback.

Figure 11. A bullish pennant. (For view picture see notes in end of article)

Figure 12 A bullish wedge. (For view picture see notes in end of article)

Figure 13 The gap. (For view picture see notes in end of article)

Figure 14 (For view picture see notes in end of article)

A quadrangle with the pulse and corrective waves equal to each other

Figure 15 (For view picture see notes in end of article)

Below are several sample trend continuation models within a single trend. Of interest is the bullish wave transfiguration into a pulse and the bearish wave one – into a corrective action, thus governing a bullish trend continuation.

Figure 16 (For view picture see notes in end of article)

Figure 17 (For view picture see notes in end of article)

CRITICISM OF CHARLES DOW’S CLASSICAL TREND DEFINITION

In last century thirties Charles Dow has proposed a trend definition up to now wandering from manual to manual and injuring traders in an irremediable manner. Please, once again go through Charles Dow’s definition: “a trend constitutes a vectored price travel, where each consecutive high is higher/lower than the foregoing one with each consecutive low being higher/lower than the foregoing one”.

Is it clear why his definition fails to properly account for modern trend realities?

According to Charles Dow, the trend core criterion is restricted to the fact that “each consecutive high is higher/lower than the foregoing one with each consecutive low being higher/lower than the foregoing one”.

It leads to erroneous logics of stops allocation (“safety cushions” per Bill Williams) offered in practically all Forex manuals: one to several points lower the previous low at uptrend or the previous high at downtrend.

Various timeframe figures below are illustrative of how this classical trick is used by the Forex Game Organizer to blow off traders’ stops, positioned in strict accordance with Dow’s trend rules, included into the world’s Forex manuals.

What type of trend is here, proceeding from Charles Dow’s provisions? Please, take pain to calculate how many highs are higher than the previous ones and how many lows are lower than the previous ones. And above all! How many traders’ stops have been shot down here?

Figure 18 (For view picture see notes in end of article)

Figure 19 (For view picture see notes in end of article)

GENERAL TREND DEFINITION OUTLINE AS SEEN BY Masterforex-V TRADING CONCEPT.

1. A trend is a vectored price travel between two opposite reversal patterns.

2. In-trend movement is of zigzag nature, i.e. there is a recovery wave following each pulse wave. The pulse/recovery ratio is indicative of the trend direction.

3. Classical patterns are incorporated within a recovery (pullback) model, followed by a new trend wave.

And now, assuming these pares 1-3, we will analyze the above figure 18.

By all classical canons the previous low of 1.9647 is to be followed by:

- the preceding trend denial according to Charles Dow’s “uptrend tops and bottoms being higher than the previous ones”;

- stop-loss orders placement.

Instead of stop-loss orders I resort to hedging.

I am always putting a series of questions to staunch supporters of stops being placed in conformity with Forex canons:

- Are You sure that the trend won’t reverse at that point?

- If negative, why should You be placing a stop?

- But if You are certain, why don’t You effect a concurrent opposite entry?

- What is Your piece of mind on how many traders in the world have placed stops along with You?

- Are You sure that the Forex Game Organizer will not be tempted to knock down all the world traders’ stops by way of a single gesture and to continue urging the previous trend further on?

The above sample chart of dated 01.12.2006 furnishes strong evidence of:

- WHAT FOR the world traders are trained to place stop-loss orders at the same point;

- WHAT FOR obsolete theories of Charles Dow and other Forex scholars are published in millions of copies, being sufficient for ALL the traders throughout the world;

- WHY the 97-99% traders’ loss statistics is identical through all the countries.

So, what’s to be done to avoid plopping down into losers’ swamp?

AT LEAST, You are to try to get the understanding of WHERE and WHY traders loose their deposits whereas, AT MOST, You are to attempt to elaborate Your own entry and exit algorithm.

To this end You are to give scrutiny to the chapters on reversal patterns and trend continuation, incorporating a detailed investigation of:

- shadow details of each trend retracement (recovery) – see the chapter on trend continuation patterns;

- shadow details of each trend swivel – see the chapter on trend reversal patterns;

- inaccuracies, innuendos and direct errors committed by Forex scholars on the issue.

Putting it otherwise, You will have to find problems solution, many of the scholars (John J. Murphy, D. Schwagger, B. Williams, A. Elder, K. Lucas, A. Nayman, etc.) have failed to find.

AND BY WAY OF A PROMPT FROM Masterforex-V…

A head’n'shoulders reversal pattern should take shape to ensure trend reversal.

Figure 20 (For view picture see notes in end of article)

Options A and B are indicative of the points where the head’n'shoulders reversal pattern could be feasible.

Note:

Full text of this article and pictures of examples http://www.masterforex-v.su/002_000_01.htm”> http://www.masterforex-v.su/002_000_01.htm

If you wish to be trained on Trading System Masterforex-V – one of new and most effective techniques of trade on Forex in the world visit http://www.masterforex-v.su/

Professional Trader from 2000 year. President of Masterforex-V Trading Academy. Author of Books:
1. Trade secrets by a professional trader or what B. Williams, A. Elder and J. Schwager not told about Forex to traders. 2. Technical analyses in Trading System MasterForex-V. 3. Entry and Exit Points at Forex Market Free Books Website: http://www.masterforex-v.su http://www.masterforex-v.org

In the trend absence (a flat, lateral movement), one must not take risks and stay outside the market. Otherwise, as it is written in all the manuals of Forex , one should open deals on “sell” at maximums of uptrend and on “buy” at minimums of downtrends.

It is so logical and simple, isn’t it?

However, the first thing that makes me wonder is the following. Authors of numerous books concerning Forex pass the problem of the trend detection clear criteria over in silence (respectively, they do not dwell on opening deals by a trader in this trend). Even B. Williams has omitted this principal problem (the author who has written about Elliott’s waves, fractals, changes in the momentum direction, divergence, target zone, cushion pads, etc.).

So, what is the trend by definition? What are its criteria? In what a temporal chart is it detectable? I mean that one wants to open a deal not “just for fun” but in order to gain profit faultlessly and regularly. As I can see, this problem is not elucidated in the literature.

However, the problem of the trend detection is primary with respect to the problems of a fractal, “Alligator”, “a wonderful indicator”, etc.

Thus, who does teach whom and to what? How can one gain profit? For instance, in what cases the stochastic indicator is applicable? Let us suppose that this indicator fails to function in a trend. At the same time, we do not know how to detect these trends… One can clearly see the logical consequences of this situation.

So, the stochastic indicator exists by itself, indicating something every second (as well as many other “classical” indicators at Forex do). Forex market is operating separately. Traders are on their own as well – they either work or play. It is necessary to find out the keystone of the whole system in order to link all of its elements together. That is, we need a certain indicator to detect the trend. Respectively, we can distinguish a flat, the trend replacement, etc. Various indicators are applicable at different stages in the currency pair movement.

Dozens of various indicators and techniques are developed by “Classics” and “Masters” of Forex . Such “specialists” do not see the system as a whole. All the same, they try to prove the reliability of their mathematical techniques of detecting particularities, whereas the whole pattern remains unknown.

Therefore, it is worthwhile to dwell on this problem more in detail. The scheme of the examination is the same as in all chapters of this book. That is:

a) elucidation of the problem in the classical literature;

b) the unresolved contradictions that hamper a trader to gain profits regularly;

c) my approach to this problem and, respectively, the method of gaining profits.

CONCEPT DEFINITION of TREND in MANUALS of FOREX

Here I do not want to dwell on the basic definitions again. What a trend represents by itself, its classical figures of reversal and continuation, the movement channels, etc. – all these aspects are in detail elucidated in the corresponding literature. As a matter of fact, the beginners pay $150-500 to various Forex Brokers for this information.

Any fundamental course of Forex takes for granted the following definition of a trend, formulated by Ch. Dow in the 1930s. The trend is the tendency in the price movement when each of the next maximums is higher (lower) than the previous one (the same relates to the minimums).

There are the three types of trends:

· “bull” – the price is going upwards;

· “bear” – the price is going downwards;

· “lateral” – the price is moving within the trading range (channel), unable of breaking through the levels of resistance neither from upward nor from downward.

Is it so easy? On the face of it, “The Trend is Your Friend “. That is, one must open deals only in accordance with the trend direction. In this way, one can receive a profit automatically – the gaining will “just come to you”! At the same time, why do 90% of traders keep on losing their deposits at Forex ?

There are even verses dedicated to this problem. It can be translated approximately like this: “A trend should me whisper how to enter and when to exit. In vain, I’m visiting forum with friends. To quit it! We howl and wail”. Here I’m not going to discuss this work of art (as well as the quality of the translation). However, the essence of the problem is depicted perfectly. That is, any trader-loser asks the same question: “What is the trend in its essence?”

The problem becomes obvious. Even the concept of “trend” is obscure. That is, nothing is clear and simple – notwithstanding the information submitted in every manual for the beginners.

And what is more, many traders in earnest consider that there are no long-term prospects for trends at Forex.

· Nobody understands the concept of trend;

· Some traders, rather experienced and successful, don’t mind the problems of this kind – i.e., they don’t care for the trend concept. They are not interested in detecting trends at Forex.

At Forex , the problem of the trend identification is important from the only point of view. That is, a trader wants to understand how to detect a trend and its criteria (not post factum !). An individual wants to clearly see the applicability of such criteria to any currency pair at any second. The goal is to open deals at the very beginning by making use of these criteria in order to regularly make money at Forex . As regards any trader, this problem is purely practical. To work in accordance with the trend, which is “my friend”, it is necessary to calculate the point of beginning of the trend and its direction. In this way we get a section (segment), where a trader can gain profits faultlessly.

From this practical viewpoint we will examine classifications of trends given by various classics of Forex . We want to detect various trends (i.e., the price directed movement) according to their techniques. Our goal is to regularly gain profits when we work with these trends.

TREND CLASSIFICATION by CHARLES DOW

The classification submitted by Ch. Dow can shock and muddle up a contemporary trader. Really, towards what direction a deal must be opened? Must it be done either upwards, or downwards? Or, probably, it would be better just stay out of the market because of the flat. Ch. Dow’s theory is still not disproved by anybody. According to this theory, there are the following types of trends.

1. A long-term trend lasts several years (according to Dow, it is the basic trend). Can you imagine what a currency pair it must be to make you to stay in this deal during such a period?

2. A medium-term trend lasts several months (the intermediate tendency). According to Dow, the direction of this trend is opposite to the long-term basic trend. In its essence, the intermediate trend is corrective (it depicts retracement ). Below one can see the charts of the two principal currency pairs movement. The medium-term trend of the duration of several months is depicted. However, the long-term (basic!) trend of the duration of several years is absent.

3. The short-term trend lasts not longer than three weeks. It consists of short-term oscillations in the framework of the intermediate tendency.

4. The comment . According to Dow, the intra-day trade is just “small ripples”, and not much attention should be paid to it. Nevertheless, the fact of its existence must be mentioned.

There arise the questions:

a). How many traders do work in the long-term trend of the duration of several years? Personally I do not know anybody. How is it possible to keep the deal open during such a long time interval? Above all, towards what direction this deal must be carried on? – See the charts D1 that depict the movement of EURO/USD and GBP/USD pairs.

b). How many traders do work in the medium-term trend and hold up deals opened during several months and longer? And what is more, traders must risk! Really, according to Dow’s theory, the medium-term trend, being corrective to the basic one, goes in the opposite direction. Personally I know a few of such traders.

c). How many traders do work in the short-term trend? According to Dow, such trends last not longer than three weeks, being just short-term oscillations in the framework of the intermediate tendency. A few of traders work with short-term trends as well.

d). Nowadays the majority of traders work with intra-day trends. 100 years ago such trends were regarded as absurdity and nonsense. Ch. Dow considered such trends to be just “small ripples, not worthwhile of one’s attention.

Thus, there at least three types of trends (the “bull”, “bear” and flat). This figure must be multiplied by their four varieties that differ in the duration. You can see how many variations are possible! In addition, in what direction and for what time interval must a trader open his deal?

You can imagine what an extended “front of operations” analysts of Forex have!

You can find the technical analysis given by JPMorgan Securities Ltd. London to USD/SWISSI movement on September 27. The medium-term trend is of the “bear” type; during the short-term trend the upward retracement occurs. The long-term trend is ascending (the uptrend).

Issuing from the recommendations given by JPMorgan Securities Ltd and FX EURO CLUB , who can tell me towards what direction a deal must be opened? (Is it the uptrend or downtrend?). In any case, post factum such “analysts” can explain anything. They had warned you…. Why were you guided by the medium-term trend under the condition of the short-term retracement ? Why did not you pay attention to the long-term trend? Are you an investor who disregards the short-term downtrend when the medium-term trend is directed towards the opposite direction, while the lateral trend lasts already for two years? These are the reasons for your losses. As it is evident, the number of such answers to traders is unlimited.

The FIRST CLASSIFICATION of TRENDS according to E. NAIMAN

Let us examine how another up-to-date classic of Forex presents the trend classification (see “The trader’s small encyclopedia” by E. Naiman ):

- the long-term trend, the period of which makes two years or longer;

- the prevailing (dominant) trend; its period is one year;

- the primary cycle (or medium-term trend); its period is within 9 -26 weeks;

- the trade cycle of the duration of 4 weeks;

- the semi-prime cycle; its period is in the middle of the duration of the primary and trade cycles;

- the a / b cycle of the duration of 2 weeks.

Another important aspect of the formation of the cycles and giving analysis to them must be mentioned. It is the right- and left translations.

The right translation consists in the following. In the first phase of the cycle (the uptrend) the impulsive lines are tilted to the right with respect to the time like axis. The left translation occurs in the second phase of the cycle (the downtrend) when the impulsive lines are tilted to the left with respect to the time like axis.

As regards the application of the right and left translations, the following fact is the most interesting. In the “bull” trend the rise is slower than the decrease (the retracement ). In the “bear” trend the rise (the retracement ) is quicker than the decrease. If you notice such dynamics in prices, you can classify the trend type and predict the reversal more accurately.

The classical theory of cycles marks out the following 5 phases (stages) in the cycle development:

- the preliminary phase (the introduction);

- the rise (development);

- the maturity;

- saturation;

- decrease and recoil.

Can you understand this classification? Personally I cannot.

Besides, I think that the trend up-to-date classification by E. Naiman (2003) is even more perplexed than the classification by Ch. Dow (1930s).

In addition, in another part of his book E. Naiman submits one more classification of trends.

The SECOND CLASSIFICATION of TRENDS according to E. NAIMAN

The duration (life time) of the trend and its life cycle.

As regards their duration, trends can be the following:

a) the short-term trend;

b) the medium-term trend;

c) the long-term trend.

All trends differ in their life time. The analysis may be given to various intervals in the course of the trend life time.

On average, the long-term trend lasts 2-2.5 years. The medium-term trend lasts from 3-6 months and up to a year. The short-term trend can last from 1 day to 3 months. The trend life time can be determined by giving analysis to the trend life cycle (TLC). It is very important to correctly determine the cycle duration.

How to discern TLC

a). the beginning (the birth, childhood and youth);

b). the middle of the term (the maturity);

c). the end (the old age and death).

Even you may have no time to detect the trend beginning. However, it does not matter so much. More importantly is to get at least into the middle of the trend. The trend center is much more profitable than the first stage because of the speculative warming-up. You must be especially careful when the trend is dieing. You risk having no time to gain profit. Even worse, you can suffer heavy losses (take a bath) if you will be enable to react to the trend reversal.

The THIRD CLASSIFICATION of TRENDS according to E. NAIMAN

Bell curve model

This model of the price dynamics is applied by financial and technical analysts of Forex already the last 30 years. This cyclic model is based on the study of the three fundamental types of the market dynamics:

a) the long -term trend;

b) the medium-term trend;

c) the short -term trend.

According to this model, the long-term trend lasts 4-4.5 years. The cycle “bull” stage lasts 28±1 months. The “bear” stage lasts 15±1 months. To understand whether a given trend is a long-term one, it is recommended to make use of monthly charts. Long-term trends are mainly used by those investors who carry out real investments.

The medium-term trend duration (the second cyclic wave) is 20±1 weeks. The “bull” stage lasts 12±1 weeks. The “bear” stage lasts 8±1 weeks. Generally speaking, one can see the medium-term trend twice a year. Its “bull” stage coincides with the “bull” stage of the long-term trend 3-4 times during the total cycle. The “bear” stages of these trends coincide 1-3 times. The majority of traders prefer to make deals exactly in periods of the unidirectional dynamics of development of these trends. To detect medium-term trends, it is advisable to examine weekly charts. The results of giving analysis to medium-term cycles are valuable for those traders who possess substantial investment resources to hold on the positions open during rather long time intervals.

The short-term trend is the third wave of the cycle in question. The total short-term trend lasts 39±1 days (as it is considered, there are 240 trade (marketing) days in the calendar year (CY)). In one CY there can be 5-7 short-term trends. To detect them, it is advisable to examine daily charts. Both traders and short-term speculators analyze short-term trends for their work. The best positions for making the corresponding deals belong to interval where the price movement direction in the medium-term trend coincides with that of in the short-term one.

Thus, the long-term trend lasts 4 years and 1 month. The “bear” stage lasts 42 months, and the “bull” stage duration is 8 months. The long duration of the long-term trend first stage is conditioned by the protracted medium-term trend at the beginning of the complete cycle The latter makes 107 weeks, and consists of 87 “bear” weeks + 20 “bull” weeks. The medium-term trend duration varies within 7-37 weeks. In general, short-term trends rather precisely depict all principal oscillations of the price about the medium-term trends. There are 3 short-term trends, where the dynamics development direction coincides with that of the long-term trend. In the retracement (correction), one can single out two basic short-term trends, which is in the perfect agreement with the theory. It is difficult to distinguish short-term trends from medium-term ones because of the negligibility (minority) of the second stage in the complete cycle development.

So, should a trader remain in a deal during 1 day, 3 months or 3 years in order to gain the maximum profit?

The FOURTH CLASSIFICATION of TRENDS according to E. NAIMAN

The trend 4th classification by E. Naiman has confused even me. Let us try to understand what types of trends exist according to it. Below we issue from Naiman’s recommendations for opening deals.

Possible strategies of the work. The choice of one of the three techniques available depends on the period under analysis and the trader’s preferences.

The first strategy consists in keeping the positions open during a long time interval (from a few days and up to several months). This strategy is used by large-scale investors (investors-strategists) and semi-professional speculators. It is the most effective in the trend springing up. This approach is the least profitable when trends are lateral or stagnant (sluggish). A kind of security against losses (a cushion pad of a sort) and the corresponding work at the terminal market of options are necessary.

The second strategy consists in the work with medium-term trends of the duration up to several days. It is also popular mainly with semi-professional speculators. This approach combines advantages, inherent in various working strategies. On the one hand, this strategy can be long-term enough. On the other hand, it can be rather short-term. A suspension pillow of a kind (a security net) at the market of options is also desirable.

The third strategy implies opening of short-time positions (their duration varies from several minutes up to some hours). This strategy is applied by speculators-professionals, who know the market well enough and already “have developed a sense” of it. The positive aspect of this approach is the following. Unexpected messages and changes in the price that appear at the moment when you were out of the market do not affect your trading. At the same time, indirect expenses are rather heavy (the commission, spread, communication services, etc.). Besides, there are great risks of unfavorable short-term oscillations of the price. That is, a trader must be continuously concentrated. The whole day long such an individual works under the condition of self-control and stress.

CONCLUSIONS MADE by NAIMAN about HIS CLASSIFICATION of TRENDS

As it is mentioned above, Naiman writes that, as regards the trend types, there are no strict rules, established once and forever. Anybody’s opinion about an object under analysis can be too subjective. Therefore, it cannot be taken for granted and must be thoroughly checked by a trader himself.

In the theory of cycles it is important now and then to look anew at the regularities discovered by you earlier. The so-called “the rule of mirror” is one of the best means of avoiding subjectivism. That is, logic of the development of any cycle must be confirmed not only directly. The inverse pattern, as if reflected in the mirror, must also prove the correctness of your model. For this purpose, you should reverse a sheet where the cycles are plotted. The cycles must be seen all the same (this can be done with the help of a mirror). The principal problem of all cyclic theories is the following. It is easy to see a certain pattern in the past, while at present it is rather dubious. As regards the future development, in practice, it is totally uncertain and unpredictable.

See continuation of this article under name “Where to look for trends at Forex, or the faultless gaining of profit by a trader. (Part II)”

Note:
Full text of this article and pictures of examples you can see on http://www.masterforex-v.su/001_011.htm

If you wish to be trained on Trading System Masterforex-V – one of new and most effective techniques of trade on Forex in the world visit http://www.masterforex-v.su/

Vyacheslav Vasilevich (Masterforex-V)

Professional Trader from 2000 year.

President of Masterforex-V Trading Academy.

Author of Books:

1. Trade secrets by a professional trader or what B. Williams, A. Elder and J. Schwager not told about Forex to traders.

2. Technical analyses in Trading System MasterForex-V.

3. Entry and Exit Points at Forex Market

Free Books Website:

http://www.masterforex-v.su

http://www.masterforex-v.org

The first time I heard about Grid Computing I was still up at school in the late 90s which, not surprisingly, was around the same time I was engrossed in my parallel computing course. All the talk of IPC and modulo arithmetic joined in an unholy matrimony with massive amounts of Mountain Dew and 3am whiteboarding in the labs, the offspring of which was a simple understanding of why and when to use parallel computing.

Fast forward to today and Silicon Valley’s VCs have eliminated all but the most trendy of ideas to back, the recent darlings being so-called Cloud computing. So what is Cloud Computing? Supposedly The Cloud is an ultra-scalable architecture that has implicit redundancy so no one ever has to go through the painful process of upgrading hardware; is this not the panacea of Datacenter logistics – completely automated vertical scalability?

The Promise
Current providers of Cloud provisioning software, such as 3Tera, promise less cost, ease of maintenance, and simple scalability. Need a new server? Just click a few buttons and you have a new virtual server, possibly pre-configured with software and even your specific settings.

The Failure
While having a large and dynamic infrastructure is appealing, there are inherent problems with the current approaches, the most obvious of which is the lack of failure abstraction. While products like VMWare have the ability to provide fail-over automatically, the fact that offerings like Applogic and EC2 do not provide such capabilities out-of-the-box is very telling about the underlying architecture. While many can argue that Xen-based hypervisors can be instrumented to failover, the fact that the technology does not, as a matter of its DNA, provide failover is The Failure. In order to provide the promises marketing for the various grid services has suggested, not only do we need to scale easily, but we need reliability; you cannot provide one and not the other.

Commentary
We all know that technology changes rapidly, but vendors and pundits fail when they speak as if change is good just for the sake of itself. Recently we’ve seen many old architectures rehashed: mainframe dumb-terminals have become remote desktops and terminal services, talk of Ethernet’s limitations being replaced with a protocol that involves a “Token” and the new SMP craze disguised as multi-core processing. It’s time for some real progress. It may be in the same way virtualization has brought us the Cloud that the Cloud itself may be an intermediate step to something better. At the very least let’s hope that the next step on the ladder is up, not down.

When you are running a business you know there is a need to store data, be it data that your clients have access to or data that you access to service your clients.  For any business data loss will lead to a serious disaster. It is obvious that you will be storing all your data in the server at your office. Now consider a situation where your office infrastructure will not allow the server placement. In such conditions, you will be looking for a server hosting services that host your data in their servers. You will not be able to maintain the actual hardware and you have to share the critical data with other companies. These are all avoided with server co-location.

The changing business trend

Today any business needs to store information and there is a great importance on the reliability of that data.  For anything ranging from the company’s progress to future research to project-related information, data is very essential. Without appropriate data, the business cannot continue. Network redundancy is becoming more and more important. The IT infrastructure is gaining value and these days, every business is having its own servers. The cost of server systems is also reducing and you can easily get a server for your business. Catastrophes can occur at any time and if you have a single server at your office and some serious disaster happens at your office, you may not be able to recover the lost data. This will create serious damages to your company and data redundancy is commonly demanded by modern day businesses.

What is server co-location?

You may have an office with excellently built IT infrastructure but you are not able to manage your own server. Server management includes 24/7 monitoring and you have to also concentrate on the temperature and environmental conditions. The servers should be placed in an air conditioned room all the time and the changes in temperature like heat and humidity affect the data in the server. If you install the server in your own office itself, you will have to spend a lot of manpower in taking care of the server. With server co-location, you can have your server at the company offering server co-location service and remotely access the server using high speed high bandwidth connections. Your day to day activities will not be affected by the server co-location. You can the access data in the server just as if you are operating the server located in a different room within the same building.

Server co-location services

With the increasing demand of the businesses, many companies are now offering server co-location services. These companies will give you the shelf space and the man power for server management. A reliable team of engineers will be available with the server co-location company who will offer 24/7 support for your server. A dedicated premium network that has several Tier-1 carriers will be made available to you for enabling the network redundancy and for minimizing the latency. This is critical because you have to access the server from your office and latency is undesirable. The network that is provided will be highly secure with all the necessary firewall protection. You can visit the server co-location company and physically access your server and upgrade the hardware if you wish.  For more information on server colocation visit http://utropicmedia.net/colocation.php.