Sniper Trading: Essential Short-Term Money-Making Secrets for Trading Stocks, Options and Futures by George Angell

Sniper Trading: Essential Short-Term Money-Making Secrets for Trading Stocks, Options and Futures by George Angell

1
Taylor's Contribution to Technical Analysis: The Book Method

George Douglas Taylor's contribution to technical analysis cannot
be underestimated. He believed in measuring both market rallies
and declines, and then averaging the numbers to arrive at some
approximation of what should occur on the next trading day. He
called this the "Book Method." I later incorporated these numbers
into my LSS 3-Day Cycle Method, adding an additional formula
that I called the Trend Reaction Numbers. These same numbers
were later called the LSS Pivot Buy and Sell Numbers. Leaving
aside this additional formula, let's first look at Taylor's original four
key numbers-the rally, the decline, the buying high, and the buy-

ing under.

SNIPER TRADING WORKBOOK

Questions
1 What is the rally number and what does it measure?
2. What is the decline number and what does it measure?
3. What is the buying high number and what does it measure?
4. What is the buying under number and what does it measure?

Answers
1 The rally number measures how far the market rallies from one
day to another. It is the difference between today's high (the
last completed day's high) and the previous day's low. Accord-

ingly, if today's high is 1274.00 and the previous day's low is
1231.00, the difference of 43.00 points is the rally number. If
one is trading U.S. Treasury bonds and today's high (after the
close) is 105-18 and the prior day's low is 104-30, the rally
would be the difference, or 2°h2. This number tells us that on this
particular two-day period, the market rallied 2°h2 in price. We
might use this information to determine how far above today's
low price the bond market might rally tomorrow. Hence,
assuming we are going to use the 2%2 number, with a low today
of, let's say, 104-19, we can estimate a rally of approximately
2°h2, or a high of 105-07 (10419/32 +2°h2 = 1057h2).
2 The decline number measures how far on average the market
tends to decline from a prior day's high to today's low. If yes-

terday's high was 1294.00 and today's low is 1286.00, the
decline is 8.00 points. Let's say today's high is 1323.00. Given
an 8.00-point average decline, what can we expect for tomor-

row's low? The answer is 1315.00, or 8 points lower, based on

Sniper Trading: Essential Short-Term Money-Making Secrets for Trading Stocks, Options and Futures by George Angell