This page will give some background and describe the box components. The next page presents tutorials on drawing the box and adding studies.
Alan's method is first and foremost price action. The box serves as a structure to create
- Trading Opportunities
- Targets and
The most important guidelines to always keep before you are
- Take only the best quality setups
- Focus on identifying follow through bars
- Never fade a zone (ie, never sell a support zone, never buy a resistance zone); and
- Use PVAC guidelines
The $1M manual, which is being provided completely free of charge to anyone who will avail themselves of it and invest themselves in the learning of it, consists of Alan's price action strategies. The strategies cover three basic steps:
- Setups (Trading opportunities)
- Stops (Protection), and
- Pattern Completions (Targets).
Alan developed his methods trading the ten-minute all-sessions Dow Jones Index futures (YM contract) and this document and the trading strategies described reflects his work using that instrument. He has also used the method to trade the Australian SPI futures as well as the Nikkei and Russell futures.
The settings suggested for instruments other than the YM are just that, suggestions.
Traders have applied the box to the S&P futures, DAX, Crude Oil, Euro, Bund, Bond, Russell and even stocks. And while the method was developed on the 10-minute YM, traders have also successfully applied basic box concepts to 30-minute, 60-minute, Daily, and Weekly charts. You are encouraged to experiment and find what works for you.
Alan does not use indicators (eg, MACD, Stochastic, etc), however, many traders do and have added them to their charts.
Ensign is ideally suited for the Box as it has a built in drawing tool. However, thanks to the contributions of other traders, there are codes for Tradestation, Neoticker, and Sierra Charts.
Of all the components, the angulars are the most important. Quartiles (horizontals) serve mainly to create zones and targets. The zones arise from the intersection of the angulars and horizontals and are used to create opportunities through the support and resistance nature of the angulars. The apexes provide an element of time, particularly of the Dead Zone.
Price as it moves through the box offers trading opportunities primarily through use of the angulars and zones, and at times the quartiles, as described later in the strategies section. Examples are follow-through (FT) bars, violations and obligations, 2Z, VBT, and apex splitters.
One important aspect of the box is that it also tells the trader where price did not, and cannot, go.
The major components of the box are (click to open in separate window)
- Major - Up and Down angulars from the H, L, and Midpoint
- Minor - Up and Down angulars parallel to the Major, drawn from the 25% and 75% quartiles
Note: Only Major angulars create opportunities. Minor angulars are primarily used for protection.
2) Quartiles (Horizontals)
- Yesterdays Low - 0% (See below for how to determine H and L)
- Yesterday’s High - 100%
- Midpoint - 50% of yesterday’s H and L
- Quartiles 25% and 75% of yesterday’s H-L range
- Extensions (125% to 200% or more of HL range)
- First apex at 10:20ET
- Second apex at 14.10ET
Note: Angulars do cross at 12:20ET, but as it is the center of the Dead Zone, these apexes are second in their importance for their timing value.
- Support Zone (SZ)
- Resistance Zone (RZ)
- Neutral Zone
- Dead Zone (DZ)
The standard “Chart1” box spans the pre-open through regular trading hours (RTH) session. It starts at 08:20 Eastern Time (ET), ie, NYC time, and ends at 16:20 ET. It takes the highest High and lowest Low from 08:00 ET of the prior day to 08:00 ET of the present day.
There is also a “Chart2” box that spans the entire Globex and RTH sessions. For the YM, this starts at 19:10ET and ends at 17.00ET.
As of Nov 2005, there is also a "Midnight Chart", which spans midnight to midnight. This box particularly complements the PVAC cycle.
Alan uses a four-day rotation method that he calls PVAC, an acronym generally standing for the nature of the price action likely to be encountered on those days. PVAC is described in more detail in the PVAC section.