Education & Tools for Traders

Attempting to make sense of unmarked movement can lead to futile analysis, such as counting 'waves'. We might only count 2-4 waves here but if we could see every countable event...

...such as we can here, we might realize that we're missing most of the information markets are trying to convey. An 'event' is any point where a candle tip extends above or below its immediate neighbors. Events are not 'fractals' since the calculation used to determine them is different. Inferred or 'smooth' events (yellow marks) are also countable since they support 'cadence' and appear between 'rough' events.

'Cadence' refers to the up-down-up or down-up-down pattern that markets follow when counting. Understanding cadence can help us 'see' the count path surrounding difficult areas such as DMC's (red tipped candle) and detect 'smooth' events. Markets not only favor even values, they completely ignore odd numbers. So endpoints, whether the trend is up, down, or curved, will always be even values.

Fractured Counter Trends are counter-trend movements that consist of at least 4 events (including terminals). Terminals contain the inner events and the last terminal is called the 'base' terminal. Base terminals are important because they can act as signals. FCT's are instrumental to the development of trends and recognizing and locating them is a basic analytical skill.

The ability to identify the various ways markets communicate values is also an essential analytical skill. Known signals are: Base Terminal Hits, DMC's, Cross-Counts, Volatility, Grouping, Double Hits, Gaps, and Adapters. The graphic above shows two DMC's (red tipped candles) and one cross-count (green line) appearing in close proximity. Signals that appear in the 'definition' area of a sequence can be 'pointing' to the initial step value of a new series/trend.

Thinking and speaking of market movement in terms of pushes, pulls, and "pushpulls" allows for more efficient, more descriptive, and more detailed reference to movement. With "pushpulls" we can reference both trending sections and FCT's with one word, and since FCT's are really the building blocks of trends, basing our terminology on them makes sense. For example, 'pushpull 1' is based on where the initial FCT terminates. Using this we can  create alpha location markers that always reference the same points regardless of how the trend develops.

Drawing trend lines may seem like a basic TA task, but Magenta trend lines have a very limited group of valid anchor points. FCT terminals (primarily base terminals) are the most common anchor point. Also, either tip of a DMC is valid and can be effective as show in the graphic. Correctly drawn Magenta trend lines should be used with every analysis since they tend to be a very accurate means of informing the count. Behavior indicating an active line includes oscillation in addition to hits from above and below.

The traditional way of identifying a 'trend change' is based solely on what a trader views as a sizable (or profitable) move in the opposite direction. A Magenta 'sequence' however is a technical term that uses patterned counts to determine where processes end and begin. Some sequences may not hold to what a trader intuitively (or perhaps mistakenly) understands to be a "trend," but again, we're seeking to know the 'market mind' here, not the trader's mind. A 'segment' refers to a divided sequence, usually into dual segments of A/B where B has some relationship to A or where A is a 'type' or model for B.

SandTiger counts each event, and with an initial user-defined tag, is able to locate many endpoints as they appear. It uses the 'process diagram' shown at the top of this page to auto fill and generate tags (but cannot tag half steps or repeats). However, it is up to the user to make informed decisions about were counts begin, where adapters might be present, and what events, if any, need to be skipped or added. Typically, 'definitions' based on signals include the count path, while the actual count follows the ST numbering (which may skip an event pair near a DMC). SandTiger comes in both Red and Blue versions to allow side-by-side analysis of multiple series in a single sequence.

The Process Diagram (shown at the top of this page) is core to Magenta. It provides a model for market movement and at each step lets us know what the possibilities and limitations for the next count are. As trends progress the span between step values will increase, making it easier to nail a coming endpoint. If a series repeats a value it will repeat it until the end of the series, but this can be multiple times. If a series halves a value, the half will usually be the final value in the series. (In the graphic above a cross-count gave us the initial step value, leading to a 4/6/8 series that turned on the sum of 18. The double hit at 1.04704 marked the '10 events left' point in the series. A common device, but usually marked with a DMC. Structures like this one require minimal analysis, of course, longer ones and those that incorporate adapters will be more complex and difficult to decipher.)

Adapters are the monkey wrench in Magenta, but they are a fact of movement and therefore need to be understood and handled correctly. They can probably best be described as highly flexible, alternate forms of movement. They come in flavors of 2, 6, or 10 counts. That doesn't mean that all counts of 2, 6, or 10 are adapters. Except where an adapter starts off a series or caps a sequence, they typically follow an intermediate endpoint, and are themselves followed by an IV (Initial Value) re-define. So these are typically the tell-tale signs to look for. In the graphic above, a 10-count adapter kicks off a sequence and sets the initial step value.

Ghost counts (shown in gray above) are counts that initiate at some point within a larger series. They run parallel to the host series and finally line up with the host series endpoint, either at a segment or sequence ending. Mysteriously, they almost always originate at a point where SandTiger fails to count an event pair near a DMC, and the initial step value is always 4. 'G counts' are advantageous because they are easy to locate, sometimes act as types, and help to accurately locate endpoints in larger series counts. They are able to sync with endpoints in the host series due to the limited degrees of freedom at step intervals.