Sequential — is a mechanical trading system developed by Thomas R. Demark. It consists if several stages:
- forming of a setup;
- intersection;
- countdown;
- entry входа в рынок;
- закрытия позиции.
Setup
According to this trading strategy any signal starts with forming of a setup for buying or selling.
It is considered that a sell (buy) setup is formed if during at least nine consecutive bars the closing prices were lower (higher) than the closing prices four bars earlier each of the bar of this sequence.
There must be not less than 9 bars in a set up.
Intersection
«Intersection» — is the final validation process required to complete the Setup phase of Sequential.
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For a buy (sell) setup Intersection occurs as soon as the high (low) of the eighth or ninth bar is greater (less) or equal to the low (high) three, four, five, six or seven day bars.
If Intersection doesn’t occur at the eighth or ninth bar the next phase Countdown can not begin until Intersection occurs. I.e. we wail for the next bar when the intersection of the corresponding bars will occur.
A setup is cancelled in two cases:
- «cycling» (will be considered below);
- If at anytime prior to the last day of a buy Countdown, a closing price that exceeds the highest high of the most recent buy Setup or if at anytime prior to the last day of the sell Countdown, a closing price exceeds the lowest low of the most recent sell Setup, then the active Setup is cancelled.
