I thought the same thing when I first read about it, but it seems that a lot of heavy hitters greatly value his work. Sequential is designed to pinpoint trend exhaustion, and the signals to me look somewhat similar to what you would get by applying a divergence analysis, only the rules are very specific. I wonder if you could be more specific about the type of backtesting you did, ie time frame, rules etc. As I understand it, sequential is not really a complete system but rather an indication that a trend is exhausted. Supposedly it was intended to give big hitters the all clear that is was safe to begin accumulation.
The way I see it ... if you had used his "trend exhaustion" system to try to buy the recent sell-off you would have been roasted ... and el surdo even said so in a recent post. So while it often does work in a market which is in a trading range, they still have to implement good risk management controls, otherwise your going to get into trouble. Same old, same old.
Clearly none of you have any clue how to use DeMark indicators correctly, particularly Sequential. I trade several markets and whilst I have my particular filters, I live and die Sequential. I've used it for years and it has and continues to serve me well. You need to understand how the count works to see if it makes any sense as and when the exhaustion count is completed. A different money management technique needs to be employed with this indicator. It's a trade all on its own and your usual average RR methods need to be adjusted.
Yes, you are correct. We are not familiar enough with the tool, through theory and/or real-time to understand how to use it effectively when a good signal is given, or when that signal is negated. The fact that it is used to trade multiple markets tells me that it probably takes alot of time for a good trading signal to develop, so to make it profitable you have to trade across multiple indicie/securities. If you would be so kind as to point us in the right direction to clarify these issues it would be appreciated, as there isn't a lot of information on the system available at the retail level, which is why the OP started the thread. Best Regards.
His book has mixed reviews (but of course) ... but a lot of people seem to think he's pretty good at this game. New Market Timing Techniques: Innovative Studies in Market Rhythm & Price Exhaustion Here's the review breakdown, from highest to lowest: 5 star: 59 4 star: 5 3 star: 2 2 star: 3 1 star: 9 *** I guess you either get it or your don't.
To be honest, I've forgotten the exact details, but it was something along the lines of screening all US stocks (of tradeable volume) that met the sequential criteria, looking ahead over a range of days and comparing with the broad market. Tested on daily data only.
Ok, let's get one thing straight. Tom DeMark, whilst clearly a clued up guy cannot write clear English to save his life. That book, Market Timing Techniques is a complete nightmare to read. The third book, DeMark on Day Trading Options is the one to read before looking at the Timing Techniques book. I think the options one was written by his son. This third book was written to sell more books and they decided to call it an options book to make it different to his previous two. But, a much easier more logical read. Yes, correct, due to the time it takes to get a completed Sequential count, it does enable you, well, more require you, to look at several different markets. It's easy to scan and see in a second if there are any completed counts, but if you're watching all markets all the time, then you see them brewing and you know that if you're looking at a daily, and yesterday was a 3 count, you can forget that chart for some time. I employ other trading techniques as well, but Sequential is a HUGE part of my overall trading strategy. I'll take my outlook back to the monthly charts which when form a completed count I sit up and take notice. Weekly, then daily. If I get a weekly TD sell signal, then a daily TD sell, then I'm know I've got to get involved. I go down to 240's after that. Like anything, you get alot of false signals, but this is why you have to adjust your RR. When they call a turn, it can be very quick and wholesome let's say. People use this on much lower time frames as well, down to 1 min charts. I find that it makes some incredible calls on the 15 min charts, but it's all about your timescale preference. Would I suggest anyone rush out and learn this stuff? Not sure. For me it's the basis of my trading, but I've used it for a long time and know how to use it. Are your signals just as good if not better? Probably. If it aint broke, don't fix it. Usual stuff, what works for one, doesn't for others. For me, every single chart has Sequential on it.
What it has going for it is that it is a reversal system, and traders seem to really like the concept of taking reversal trades and catching the top or bottom of the next subsequent move, so there is that. I went to his website and it seems that the indicators are only available on a limited choice of software: DeMark Indicators Contact Information... If you'd like more information regarding the DeMark Indicators, please contact: CQG - 800-525-7082 Bloomberg - 212-318-2000 Thomson - 212-964-1199 so I hope that helps and good luck to the guys who want to use them. Once again, I don't know anything about this stuff, this has merely been a fact finding mission for me. Cheers and thanks for the info Wood474. The way the system works it's almost impossible for it to be competitive. There are too many markets to follow and a lot of knowledge and experience that has to go into this trading process.
I personally use CQG and it's spot on. I had Bloomberg for a while, but the technical side of Bloomberg isn't a patch on CQG. Thompson I know nothing about. I have seen on the web somewhere, someone who had put up a screenshot of a chart from Tradestation and it had the TD Squential count on it, which surprised me. It must have been custom programmed I guess.
Yeah, I'm sure if a savy trader hits Google they can find a version of the indicators which have been adapted to tradestation. The only problem I would have with that is the quality of the indicators written (they are interpreted, not the original), and the fact that they aren't the "official version" and would not receive any updates. If I were to trade this system, I would only use the recommended software. So buyer beware.