ABC Trade Details

Last modified 13:34, 2 Nov 2012

sitmicon34.gifThis content is provided in support of the Safety in the Market (SITM) module for Your SOFTWARE and may not be applicable to your package. For more information, go to the Modules topic of this help.

ABC Trade Details

The first work page of the of the Trading Plan Wizard, contains details of the ABC Formation on which the trade is based (in the section on the right of the page), and all of the trading Pressure Points that are calculated using the price levels of that ABC formation (in the right side of the work page):

The Date and Price for the A, B and C points are populated based on the selected ABC formation.

The remaining fields are calculated using those figures.

Generally speaking, the ABC Formation data is referred to when entering the trade, and the Pressure Points data is referred to when setting trailing stops or otherwise determining when to exit the trade.

Note - Both the ABC Trade work page of the Trading Plan Wizard, and the ABC Point Details dialog both display these two groups of information.

ABC Formation data group

Points A, B and C

These points are automatically inserted into this dialog by Your SOFTWARE. The Date and Price for each point correspond to those in the selected ABC formation.

The exact determination of the these points is affected by the settings specified by the user in the ABC Parameters dialog. It contains a number of settings which will include or exclude certain ABC formations based on user selected criteria.

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

For an explanation of which parameters can be altered by the user, go to the ABC Parameters topic.

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 and exceeds this limit. 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

Also known as the Reference Range, this is the exact range between point A and point B. It will be referenced by the software 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 method of 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 data group

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).

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