Here in this article today, we would take a look at balance lines as the fifth measurement of the market in Bill Williams trading Strategy. The balance line is the line where the price would be if there was no new incoming information affecting the market.This is the Tutorial that shows us exactly how to go about the fifth measurement of trade.
According to Newton’s First Law, the velocity of a body remains constant unless the body is acted upon by an external force. Thus according to Bill Williams, the price movement would be described by the Awesome Oscillator in the absence of new information. Let’s consider an example; the buyer’s power was weaker on the second bar as compared to the first bar. This is proven by the lower maximum of the second bar
Why were the sellers stronger on the second bar, it is because the market received ate new information that changed the power balance. If the buyers can raise the market on the third bar higher than the maximum of the first bar it would mean there have been dramatic changes in the behavior of the stock crowd which are harbinger of our deals in the fifth dimension. In this case, the second bar would be a base bar.
A base bar for a signal to buy is the current bar, the second when the third bar hasn’t yet appeared or the most recent bar whose high is lower than the preceding bar’s high bar B after C bar at the higher maximum appearing. The base bar for a signal to sell is
the current bar or the most recent bar whose low is higher than the low of the preceding bar.
We can now formulate the first 3 principles of the fifth principles. Read the chart from right to left, if you are waiting for a buy signal look at the highs only, if you are waiting for a sell signal look at the bottoms only .Establish the base bars first, let’s assume that the price is above the balance line. If you are waiting for a buy signal one new maximum is
needed, if you are going away from the balance line or two new maximums if you are approaching the balance line in other words, for a buy signal to appear we only need the price to overcome the maximum of the nearest among the previous bars with the highest maximum than the base bar. Let’s assume that we see on the chart only the first bar and all the previous bars, the second and 3rd bars etc has appeared yet.
At this moment the bar number 1 begins to form under the definition of the base bar forthe buy signal this will be the current bar which has a maximum below the previous bar.The main principal of the buy signal above the balance is that a buy stop order has to be place one pip above the high of the bar that precedes the base bar. In our case its bar number 1, bar number 2 occurs on the chart with a high that is lower than that of bar number 1 so bar 2 becomes the base bar, the pending order has to be deleted and the new buy stop has to be placed one pip above the top of bar number 1, the bar that precedes the base bar 2 the same happens on bar 3 and bar B. Once bar B appears it becomes a base bar and a pending order has to be placed one pip above the high of bar number 3.After that bar 4 occurs but Bar B is still a base bar .In other words if you read from right to left this bar is the first with the high lower than that of the preceding bar. The high of bar 4 is lower than the pending order so you aunt yet in the market but then bar 5 appears and its top is higher than that of the bar preceding the base bar so your buy stop is triggered and you enter the market following the buy signal above the balance line.
Happy Trading!
According to Newton’s First Law, the velocity of a body remains constant unless the body is acted upon by an external force. Thus according to Bill Williams, the price movement would be described by the Awesome Oscillator in the absence of new information. Let’s consider an example; the buyer’s power was weaker on the second bar as compared to the first bar. This is proven by the lower maximum of the second bar
Why were the sellers stronger on the second bar, it is because the market received ate new information that changed the power balance. If the buyers can raise the market on the third bar higher than the maximum of the first bar it would mean there have been dramatic changes in the behavior of the stock crowd which are harbinger of our deals in the fifth dimension. In this case, the second bar would be a base bar.
A base bar for a signal to buy is the current bar, the second when the third bar hasn’t yet appeared or the most recent bar whose high is lower than the preceding bar’s high bar B after C bar at the higher maximum appearing. The base bar for a signal to sell is
the current bar or the most recent bar whose low is higher than the low of the preceding bar.
We can now formulate the first 3 principles of the fifth principles. Read the chart from right to left, if you are waiting for a buy signal look at the highs only, if you are waiting for a sell signal look at the bottoms only .Establish the base bars first, let’s assume that the price is above the balance line. If you are waiting for a buy signal one new maximum is
needed, if you are going away from the balance line or two new maximums if you are approaching the balance line in other words, for a buy signal to appear we only need the price to overcome the maximum of the nearest among the previous bars with the highest maximum than the base bar. Let’s assume that we see on the chart only the first bar and all the previous bars, the second and 3rd bars etc has appeared yet.
At this moment the bar number 1 begins to form under the definition of the base bar forthe buy signal this will be the current bar which has a maximum below the previous bar.The main principal of the buy signal above the balance is that a buy stop order has to be place one pip above the high of the bar that precedes the base bar. In our case its bar number 1, bar number 2 occurs on the chart with a high that is lower than that of bar number 1 so bar 2 becomes the base bar, the pending order has to be deleted and the new buy stop has to be placed one pip above the top of bar number 1, the bar that precedes the base bar 2 the same happens on bar 3 and bar B. Once bar B appears it becomes a base bar and a pending order has to be placed one pip above the high of bar number 3.After that bar 4 occurs but Bar B is still a base bar .In other words if you read from right to left this bar is the first with the high lower than that of the preceding bar. The high of bar 4 is lower than the pending order so you aunt yet in the market but then bar 5 appears and its top is higher than that of the bar preceding the base bar so your buy stop is triggered and you enter the market following the buy signal above the balance line.
Happy Trading!
The Fifth Measurement Of Trade
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