I originally wrote the kernel of this longer article in September 2003 as two entries in my actio-et-reactio blog. I've since adapted it to incorporate additional material and images along with updates on new resources.
The number one question I have been asked about forks is: Where do I find out more about Andrews pitchforks?
|Best Trendline Methods of Alan Andrews
One fast track overview of "forks" is Patrick Mikula's simple and concise book titled The Best Trendline Methods of Alan Andrews, which I recommend to those who like a working desk reference.
It is available through his website as well as through amazon.com. $55 now seems modest for a trading book and is worth the price. You won't find the material in such an easy to use form elsewhere. Even Alan Andrews own course material on the basic aspects of median lines isn't as clearly presented, and no disrespect towards Mr. Andrews is intended. If Andrews pitchforks "speak" to you, this is my first recommendation.
Online Training: Pitch Fork Primer
I have not personally used pitchforkprimer.com, but it is a low key site with a chart sample posted now and then. What feedback I've read has been positive. The approach is hands on, ie, you turn in your examples as you learn and Gordon sends you feedback. From Gordon's site:
I was privileged to become acquainted with Dr. Andrews through his course and at his advanced seminars. Pitchfork Primer Goal: To offer a low-cost, self-paced, e-mail study program centered on course materials furnished by the founder of "The Median Line Technique," the late Dr. Alan H. Andrews.
ed, April 2006: Since first posting this, Tim Morge has published a book on median lines. There are copious examples of his work on his various sites, medianline.com being the primary site. I have not bought his book and thus cannot recommend it from personal experience. It is not available through amazon.com and, curiously, a search for his name turns up Patrick Mikula's book. However, it is available through his website.
Tim Morge has made available Alan Andrews' original
Action-Reaction Course as an online set of slides and images. The
student of pitchforks will enjoy seeing how Mr. Andrews presented his work.
From the Introduction:
Welcome to the FFES
(Foundation for Economic Stabilisation) Case Study Course applying
principles of mathematical probability to the production of profits
The old Romans were wise enough to know that things change and fluctuate. They therefore recognised that the best way to know what would probably happen in the future was to study how changes took place in the past. To symbolise this, their two headed Janus was their chief deity with one head confidently looking to the future as the other head had studied the past."
Alan Andrews freely attributed his work to Roger Babson, who like Andrews, was also an engineer, among many, many other pursuits. Roger Babson, founder of Babson College, says in his autobiography, appropriately titled Actions and Reactions,
Let me say that the ideas that underlie my work were selected from the Bible and the writings of Sir Isaac Newton.
Not as well known as Mr. Babson is his wife Grace, who was a close partner not only in marriage but also as his business partner. It was Grace Babson that applied her love of Newton with great determination to steadily acquire a collection of "Newtonia" rivaled only by those at Cambridge and the British Library, both of which were amassed well after her own collection was firmly established.
Mrs. Grace Babson so loved the works of Isaac Newton that she purchased the fore-parlor of Newton's last London residence -- literally the entire room -- and had it dismantled and shipped to Massachusetts. It was reassembled, according to Mr. Babson's journal notes, "exactly as occupied by Sir Isaac Newton, with the same walls, doors and even the identical shutters containing the hole through which he carried on his first experiments in connection with the diffusion of light." The Newton Parlor is now part of the Horn Library at Babson College, their name-legacy.
It was she and her husband Roger that developed the Babson Chart, the "as above, so below" approach that was to serve them and their investor clients well. In 1904, with an initial investment of $1,200, Roger and Grace founded Babson's Statistical Organization (BSO), later called Business Statistics Organization and then Babson's Reports. The BSO would eventually evolve to become Babson College.
The Babsons applied their affinity for actio-et-reactio to economic and market forecasting methods. Roger Babson is credited with being the first financier to predict the Market Crash of 1929. Lauded today for that prescient prediction, in his day he was dubbed "The Prophet of Loss" and being the messenger, roundly 'shot down'.
Here is more about Babsoncharts, including a few samples, but, alas, not the famous 1929 crash chart.
Apart from his financial work, Babson was a prolific writer on a wide variety of subjects. Babson brought his spiritual stance into everything in his life, an approach not uncommon in his day. An example of this is found in Foundations of Prosperity, reproduced at this site. While Babson's language is often quaint in comparison to modern prose, the simplicity self-reliance and a humanistic, value-based approach to endeavor is one I believe is needed in these undisciplined times.
In closing, I'd like to share on more quote from his Actions and Reactions autobiography:
Perhaps the foremost lesson which I have learned is that emotions rule the world, rather than statistics, information, or anything else. Emotions are a very important factor in causing the economic cycle. When recognizing the great power of emotions, in our own lives and in the lives of others, we should also learn to master these emotions and not let them master us.
A century after forming BSO, Mr. Babson might not be surprised to see the idea that the markets reflects emotions is no longer such an odd idea, but rather, one eagerly embraced by candlestick readers, Elliott Wave practitioners, and trading coaches. He might even say, "Well, it's about time!".
It is no coincidence that my love of Newton's third principle, "for every
action there is a reaction"-- actio et reactio
as I learned it in my first undergrad Physics class-- has been at the core
of my website since I started it in 1998. It is also central to the appeal
of the median line as it reflects my way of thinking and seeing things.
My work with what I learned as "bisects" started in 1998, after looking at the work of a bond trader friend. I'd watch him stare at his hand-drawn charts for long, absorbed moments, and was pulled in to know more about what he called bisects. Curiously, his work was more focused on the timing uses of the median line: his charts did not even have the parallels.
This grounding was to serve me well as I was not long after given a copy of Andrews course, which filled in the price movement aspects of the complete "median line set" as some call the three lines that look like a pitchfork. I, however, continue to think of these three-point lines as bisects and apart from parallels that can be drawn in and used as Action-Reaction lines, put more attention on the central "bisect" line.
Once I started using bisects, they "spoke" to me in much the same way RSI did: I was compelled to use them. I shared my work daily with readers of stockcharts.com "Public Charts List" for over three years, when I decided to trade privately, but still continued posting to my actio-et-reactio pages. After two years using the Quote.com charting package, I discovered Ensign and in late 2004 started sharing my bisect work with traders at Ensign's Echat.
While there are specific rules or methods available, I have always stressed personal exploration, and lots and lots of it. Use what you already know about market structure to determine 'correct' pivots. Don't be afraid to use momentum and divergence indicators to aid your selection. Don't worry so much about 'pretty' or 'clean' in the beginning, rather, ask yourself if the lines you drew provided trading opportunities that are repeatable, that give you confidence. Look for similar patterns to emerge at other times and time frames.
Study how price trends, as well as individual price bars, behave as they approach and cross the bisect in particular, but also the outer parallels. There is a wealth of information to discover in just this technique alone, along with the various other methods such as trigger lines, sliding parallels, action-reaction lines, and multi-pivot lines. In time I'll add specific examples of each, but the online course at medianline.com describes how Alan Andrews approached each of those, which is a good start.
To summarize, Mr. Andrews pioneered the work, but the concept itself is timeless and it is our job to not only honor the pioneer, but honor him also by doing our own pioneering. I hope I have done just that over the years.
Alan Andrews had many rules and guidelines, but in his course, given under the auspices of his company named FFES (Foundation for Economic Stabilisation), the following five were stated right at the beginning.
Median lines (ML) can tell where the prices are headed, and the place they will reach, about 80% of the time, and when approximately that place will be reached. Slopes of alternate MLs of comparable length indicate the trend. There is a high probability that: