ABC Point Details

Last modified 13:57, 5 Nov 2012

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ABC Point Details

The ABC Point Details dialog displays the values for each major ABC price point calculated for the individual ABC price formation, as well as important ABC trading levels, ranges and prices that are essential for analyzing and managing an ABC trade.

For more detailed information on these calculations, and ABC trading theory in general, please refer directly your Smarter Starter Pack manual.


ABC Formation

Points A, B and C

The validity of the these points are determined by the settings specified by the user in the ABC Parameters dialog.

For a detailed explanation of how ABC points are calculated, refer to page 98 of the Smarter Starter Pack manual (3rd Edition).

Entry Stop

The Entry Stop is set at the point C day's High plus one point, and it's commencement date is the next market day after point C.

Point size can be specified in the Settings tabbed page of the ABC Parameters dialog, but it usually is set to automatic, i.e. whatever the system data point size is.

For information on the Entry Stop calculation and use, refer to page 102 of the Smarter Starter Pack manual (3rd Edition).

Exit Stop

Also referred to as the Stop-loss point, this level is set at one point below point C. It will be used to trigger a stop-loss order if a trade is entered, but the price subsequently changes in the opposite direction. It is used to limit trading losses from unexpected price movements.

A detailed discussion of the reason for using this stop, and how it is calculated and applied, is found at page 109 of the Smarter Starter Pack manual (3rd Edition).

Note - This stop level can later be changed to track movements in price as the market moves in your favor. For more information on this trading technique, read Trailing Stop-loss Order, pages 117-118 in the Smarter Starter Pack manual (3rd Edition).

Ref Range

This is the exact range between point A and point B. It will be referenced to calculate Estimated Point C and the Pressure Points.

For more information on the reference range, refer to page 101 of the Smarter Starter Pack manual (3rd Edition).

Estimated Point C

Estimated Point C is one-half the reference range (see above), added to point A.

The calculation of Estimated Point C, and its use in assessing the strength of the proposed trade, can be found at pages 104-106 of the Smarter Starter Pack manual (3rd Edition).

Pressure Points

Pressure points are calculated using the reference range, and are useful in identifying crucial milestones in the course of an ABC trade.

Enter By

Also known as the Entry Limit, the Enter By level is calculated by multiplying the reference range by either 25% or 33% (or another user defined amount) and adding it to the point C value.

The resulting level must not be exceeded when entering the trade as it indicates an overbought market in long trades.

Users specify 25%, 33% or another amount, in the Settings tabbed page of the ABC Parameters dialog.

The exact level suitable for individual trades and traders, as well as a discussion of risk and reward, can be found on pages 107-108 of the Smarter Starter Pack manual (3rd Edition).

Confirmation, Danger Zone, Take out old tops/Bottoms, Safe Exit, Liquidate, etc.

Once a trade has been entered, the next seven pressure point levels govern the ABC trade.

These levels and their interpretation, as well as rules and strategies for profitably exiting trades, are discussed in great detail on pages 110-123 of the  Smarter Starter Pack manual (3rd Edition).

Convert to Trading Plan

To convert the currently selected ABC formation into a trading plan, click Convert to Trading Plan button.

A Trading Plan Wizard will open with the ABC points data for the selected formation populating its data fields. Users then enter the trade's details (number of securities, exact purchase price, brokerage, etc.).

Go to the Trading Plan Wizard topic for more information.

The ABC Points Trading Tools pop-up menu, also has a Convert Formation to Trading Plan command.

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