Constructing Squares with Superimposed Channels in your Chart
In Equilibrium Fractal Wave (EFW) Analytics, you have the list of choice for your trading. Constructing Square is one of the trading option. Let us revise why constructing square might be useful. Here are the two immediate advantage.
- Firstly, each square can provide useful insight for your market prediction including turning point and breakout.
- Secondly, each square can act as your sensible stop and profit targets as well as trail stop level.
If squares are constructed carefully, then you can achieve both of above advantages. The question is how to construct them nicely without too much subjectivity. In first place, EFW Analytics provides automatic superimposed channel detection. Superimposed channel, derived from superimposed pattern, serve good location to construct squares. Secondly, the channel rating provided from EFW Analytics can help you to get rid of additional subjectivity in square construction.
For your information, each channel rating indicates the predictive power of each superimposed channel. This is not a rocket science. Higher rating means the higher predictive power. Rating 1 is minimum rating and it will indicate low prediction power. For example rating 9 means much high predictive power over rating 1. To construct squares, you will need followings:
- One up slope superimposed channel with high rating.
- One down slope superimposed channel with high rating.
This is a must because you can only draw stable squares from the combination of one up sloped channel and one down sloped channel.
To draw squares with EFW analytics, you need to click over the square button in your chart. In a default color setting, blue color indicates up slope channel and red color indicates down slope channel. So you will need to click twice, first one on blue square and second one on the red square in your chart.
Another point to consider is that you should not choose too old channel to construct squares to predict future market. This is the typical wisdom used by scientist. Give priority to newer channels first. If you are not able to find newer channel with high rating, then you might look for them in the old channels. Having said that, we will not have too many choice for this task since we have fixed starting position and ratings for each channel. Typically you will be able to find the best one in very few attempts.
Constructing squares is just one option for your trading. When you are not able to construct good squares, then just use the single channel with good rating for your trading. In this case, you should also give the priority to the newer channel. This will also provide highly accurate entry and exit for your trading. If you are concerning about getting alert crossing the lines on square, then use our Auto Chart Alert. This is free tool built for this purpose.
For your information, Channel rating is only supported from Version 8.6 of EFW Analytics. Please download the latest version to use this wonderful trading option.