Price Oscillations and Time Frames

Posted November 24, 2015 By Phil Elrod

Traders make their money (or lose it) on price oscillations. Price oscillations vary with time frame. Generally speaking, the shorter the time frame the shorter the oscillation amplitude will be – and vice versa.

This is true whether you use minute bars – or as I do, tick bars – to look at different time frames. In my trading method, time frames are variable – I use tick bars and the time it takes for a specific number of ticks can vary significantly. For example, if something causes the market to suddenly accelerate trading activity by a factor of ten – and I have seen it happen in most any market – my tick bar charts will have ten bars in the same time span that minute bars only display a single bar. To me using tick bars is a no brainer – all technical indicators used in making trading decisions are calculated and graphed on a bar of bar basis. More bars mean more information – more information used properly leads to better trading decisions.

And am often asked why I routine display and monitor three different intra-day time frames (tick bar counts). In paragraph one I answered that – oscillations are different for different time frames. I use a primary intra-day chart that is set to display about 12-18 bars per day (twenty-four hour day). For most markets my other time frames will be one tenth of the previous time frame. For example if I use 5000 ticks per bar for my primary intra-day bar, my other two charts would be 500 ticks per bar and 50 ticks per bar respectively.

Depending on price oscillations, my trade will be constructed on the primary intra-day chart or the secondary chart. The third – and fastest chart – is rarely tradable, but is used to pick a entry point when trading and/or deciding when to exit.

Trading a time frame with price oscillations that have small amplitudes is an invitation to losing money. A tradable oscillation should be sufficient that capturing 80% will give you a profit of at least two times your risk plus the cost of making the trade (spread and commissions).

Routinely watching three charts of considerable difference in time span (trading activity) gives me a much better feel for the music of the market.

You can learn much more about this trading method by reading my eBook, See the Music of the Market. We have priced it so anyone can afford it.

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What’s so great about those TBL lines?

Posted November 17, 2015 By Phil Elrod

I had a trader ask me the above question. It is a very good question. So I am going to answer it as precisely as possible – and as simply as possible.

Those TBL lines represent probable future points of support or resistance.

Price oscillates over time as traders buy and sell a market.

Those oscillations vary in magnitude with the time frame in which you choose to trade.

Price often oscillates between points of support and resistance.

Having an idea where those future support or resistance points are is a powerful tool for constructing and monitoring a trade.

Entering a trade in which the oscillations are likely to be of small magnitude make it very difficult to make a profitable trade.

Trades can be constructed on an assessment of probability – or on hope.

A profitable trade requires an oscillation magnitude sufficiently large enough that 80% of it equals at least twice your risk, PLUS the spread PLUS any commission. Trading lesser magnitude oscillations is an invitation to ultimately losing. Good trades are the result of good assessment of the probability of success.

TBL lines are a critical tool in that assessment.

Of course, you do not need TBL to trade on hope. For that you need luck.

However, if you want to assess probability for future oscillation magnitudes, those TBL lines are very valuable.

Along with my other indicators for monitoring trend and market momentum, TBL lines give me the edge to consistently make money in the markets. I have never seen a market that the TBL lines do not apply to over time.

I have been using them for almost twenty years – and they still perform magnificently. You have to learn to use them – so they are not idiot proof – but the market chews up and spits out idiots on a regular basis.

TBL is available to any trader in any market at a very low price. It is an incredible value -if you take the time to learn to use it.

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The Hidden Cost of FOREX Trading

Posted November 13, 2015 By Phil Elrod

One of the things that all FOREX trading companies always brag about is that FOREX trading is “commission free.” That is true, FOREX trading companies do not charge a commission – BUT for the trader, there is a charge for each FOREX trade – it’s called the spread. When you enter a trade – let’s say a long trade. You have to pay the ask price. If you were to exit immediately you would have to pay the bid price. The difference between the two is the spread and it can be significant – depending on the pair being traded and the time of the day. Other factors also matter a bit on the short term, but the pair and the time of day are probably the two most significant factors affecting the spread.

Things are the same for a short trade – you get the asking price when you sell short but you have to buy back at the ask – that means you pay the same difference as a long trade.

The significance of this is quite simple – you have to consider the spread when constructing your trade. If the spread is 15 pips, you have to make 15 pips just to break even. Even worse, it price starts to move against your position immediately, you have to add that 15 pips into your stop loss considerations.

So a trader should look at the spread for any pair that he is trading, and be aware that the spread can change significantly when various markets open or close during the 24 hour trading day.

This information is ultra basic to trading – BUT it is one of the reasons so many traders ultimately lose in trading FOREX. Those spreads can really add up over time.

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Politics and Trading

Posted October 29, 2015 By Phil Elrod

I prefer to talk about trading and leave the politics to the pols. But in the good ole US of A, politics can have a big effect on the markets. The reason is very simple – markets move on the emotion of the traders participating. I have said it before and I will say it again – the hardest thing for me to do is to ignore my rational thinking and try to analyze the markets from the standpoint of emotion – especially when the emotion is so chaotic.

Virtually everyone in the USA knows that we need to do something different in Washington. But the specifics of what should be done seems to be a bit cloudy – even the most outspoken candidates, such as Trump and Carson, are now all that clear – at least to me – about what they would specifically do to shrink the size of the federal government. And I will state without equivocation, if we do not shrink the size of the federal government – and pretty darn soon – our ship of state will have a very hard time staying afloat.

In my life time I have seen our nation go from a place where people sought something for effort – to a nation where too many seek something for nothing.

So our politics are in chaos – and that chaos will not end after the next election. Personally I think that the chaos will get worse no matter who is elected. If a conservative wins they will have one helluva rough time trying to change things. If a liberal wins they will have a rough time trying to keep the gravy train rolling. Either way, it looks like things are going to be chaotic in our politics – and that will transfer into the markets.

If you don’t feel comfortable trading in a market controlled by chaos, you are going to be in for a bumpy ride. My trading is very short term and therefore helps me avoid much of the danger of market volatility caused by chaos. It even offers me opportunities to profit when the market goes to extremes – almost always overdoing it in one direction or the other – often both.

Today I have been watching the AUSUSD pair. It is getting over sold. But my system has kept me from going long just yet – it tells me that the market is most probably going to take the Aussie dollar even lower.

A good trading method has two purposes – put you into the market when a good trade is probable – and keep you out of the market when a good trade is not probable.

If you don’t have a good system for short term trading, check TBL. It really works – if you are willing to work. There are no free lunches in the markets. The only way to make money in the markets is to take money it from those that make their living taking money from others.

It is possible, but, no matter what you may have heard, it ain’t easy!

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You’re never too old to start something new….

Posted October 25, 2015 By Phil Elrod

For those of you who follow my blog, for most of my adult life I have written training manuals and helped to educate others on trading methods, computer technology and so forth. But there was always this little voice in my head that urged me to write a novel of fiction. Well at the ripe old age of, well let’s just say ripe and leave it at that LOL, I have not only written that novel finally, but followed it up with a sequel and am currently in the middle of writing the third installment of what is becoming known as the Mylean Universe Chronicles.

For you science fiction fans out there, if you’re interested in reading a tale so truly unique, one that has NEVER been told before, consider checking out my newest writings and please feel free to leave me some feedback. I may be an old dog but I can still learn a new trick now & then.

For more information, check out my Author website at

myleabookpage krakow_bookpage
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