We come back with a theoretical article about the Trident Trading System #TTS, to enrich our knowledge of technical analysis.
The TTS is a tool used to identify a theoretical objective of where the price will go. It is therefore particularly useful, after having identified the direction of the trend, to understand where a take profit could potentially be expected.
It is based on tracing four points, the theoretical P4 objective to be identified and the knowledge of further three points P1, P2, P3.
An example figure is shown below:
Image 1 : representation of the four points of the TTS
Basically the three known points are that of the previous wave (see Elliott’s article on the waves) and the goal is where the next wave will be positioned.
The TTS formula suggests, in the event of an uptrend, that P4 is calculated as follows:
P4 = P2 + P3-P1
With a view to reaching P4 as a relative maximum, it is suggested to open long positions at:
ENTRY PRICE = P3 + (P2-P1) / 4
So you have to wait before figuring out if from P3 it actually takes place to a bullish movement.
To be kept as “control level” the following:
CRITICAL PRICE = (P3 + P4) / 2
Where we check that the trend is really going in the desired direction.
Specular considerations should be made for bearish trends.
- Achille Fornasini, “Mercati finanziari: scelta e gestione di operazioni speculative – I metodi e i sistemi della moderna Analisi Tecnica a supporto delle decisioni operative”, 1th edizione del 1996, ETAS