[How to Trade Cryptocurrencies Profitably Using TD Sequential]-Steemit Crypto Academy | S4W8 | Homework Post for @reddileep

Hello there how are you doing today? Welcome to week 8 of the steemit Cryptoacademy it has been very insightful these past weeks, and I want to appreciate the professors for their time invested in creating these lectures. This week professor @reddilep did teaching On trading Cryptocurrencies profitably using TD sequential of which Homework questions were assigned to the students and here in this post, I will be providing solutions to the questions to the best of my ability.

QUESTION 1

Define TD sequential indicator in your own words

The TD Sequential indicator is a system developed by Tom DeMark which is pegged on three main Concepts to provide a quantitative measure of a budding trend reversal. The concept which forms the bedrock of the TD Sequential is the Buy/Sell setup, which signals the partial termination of a trend. The second concept which makes up the TD Sequential is the Buy/Sell setup perfection, it indicates a high likelihood of a trend at least stagnating. Buy/Sell countdown signals the depreciation in the momentum of an observed trend hence showing an opposition in the trend direction.

The TD Sequential technique works intending to detect potential trend reversals. This was the basis behind its production while being developed by Tom DeMark. Take, for example, the countdown mark 13 is said to coincide with the top or bottom of a specified trend. Another method of applying the TD Sequential is to place a Buy/Sell following a perfected setup which is found close to a support/resistance with none of the candles closing below or above the Support/Resistance.
It is always fundamental that during the process of trading, traders tend to seek the direction of a given market hence the application of these indicators. Take for example an asset that moves for a stipulated amount of time in a specified direction, it is quite ideal that the asset tends to undergo a reversal and move in the opposite direction this enables it to attain balance in the market. Traders tend to take advantage of this concept and apply it while making trades in the market to enable them to make correct entries and maximize profit while trading. This concept was inculcated by Tom DeMarks to develop an indicator that we see today as the TD Sequential.

QUESTION 2

Explain the Psychology behind TD Sequential. (Screenshots required)

The TD sequential indicator as highlighted previously is used to identify trend exhaustion and momentum depreciation hence the initiation of Trend Reversal. The term sequence means a particular item following a specified order. The TD sequential indicator is designed with special counts, from 1 to 9 which is placed above or below each candle.

The indicator consists of special counts which align along the candlesticks the Japanese candlestick or bar chart is usually used following this indicator because each count is assigned to each candle present. The Indicator possesses two distinct phases, which are the setup phase and the countdown phase.

TD Setup

The TD Setup helps traders determine asset direction whether it will continue in the direction of the trend, or reverse its movement it usually provides the prerequisite for the TD countdown reversal signal. The TD Setup is of two types namely the Bearish and Bullish TD of which the Bearish TD gives off a buy signal and the bullish TD gives off a sell signal indicating the onset of a sell trade. The BEarish TD consists of the numbers 1 to 9 attached to 9 candles and this usually signifies the start of an uptrend.

TD Buy Setup

The TD Buy setup pattern signifies the change in momentum of a given asset flowing from a Downtrend to an Uptrend. The pattern consists of 9 Candles labeled 1 to 9 as seen in the image below.

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TD Bearish
This is the opposite of the TD Bullish Setup, were numbers 1 to 9 lie above the candles and it signifies the change in price trend from an Uptrend to a Downtrend.

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TD countdown
When the 9 candle count is complete, it signifies a price retracement or a trend reversal also. At this phase, the TD sequential starts the second phase with a countdown and it ends with a countdown of 13. When the number 13 is recorded, the price stops and a price rollback is encountered and a price rollback or reversal is likely to occur.

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QUESTION 3)

Explain the TD Setup during a bullish and a bearish market. (Screenshots required)

Still, on the TD Sequential indicator, there are two types of setup in the TD sequential indicator. These setups are the Buy Setup and the Sell Setup. We will be elaborating on these setups shortly.

TD Sell Setup

Generally in the market, when an asset has observed a given trend for a certain amount of time it tends to undergo a reversal and change its direction, this concept is also applied in the TD sequential Sell Setup. When a market has observed the bullish trend for quite a long time it soon observes a reversal and starts the bearish movement and this is capitalized on by market traders using the TD sequential, I will be illustrating this shortly.
To detect a bearish we need to observe the last 6 Candles of the previous 9 candles that have been formed. This process is not only limited to the 9 candles but it can also be from a series of failures in the previous signal hence the necessity to pay attention to the 6 candles.

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Certain pre-requisites aid the assumption of a candle entering the bearish phase and the requirements are

The Close of the next candle is less than the close of the candle that formed the previous four periods. The close of the next candle is less than the Close of the candle that formed the previous four periods.

The Close of the current candlestick has a greater value than the close of the candle that was formed 4 periods before.

TD Bullish

The bullish trend is the opposite of the Bearish trend hence the Bullish TD pattern also consists of six candles of which The Bullish TD pattern also consists of six candles and is the opposite of the bearish TD, if on the bearish TD the close price of C is higher than A. So here the close of candle C is lower than candle A, and the close price of D is higher than B.

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The completion of the trend is seen to be completed by the next 9 candles. This movement is opposite to that of the Bearish TD, it is usually advised that once one can identify this signal at the beginning of the candle, then it is
proper to open long positions.

QUESTION 4

Graphically explain how to identify a trend reversal using TD Sequential Indicator in a chart. (Screenshots required)

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In this question, I will be graphically representing how to identify trend reversal. Here we make use of the second phase of the countdown. It has been previously elaborated but I shall be laying more emphasis on this as we proceed.

The Countdown contains 13 bars total of which to begin the countdown, the previous 9 bars must meet the requirements stated in the Bullish and Bearish TD. We also have to count candles that close higher or equal to the high of TD Bullish countdown closes the previous 2 bars. The picture below elaborates the concept being explained above.

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The start of a new count is regarded as a countdown. Candle 7 in the picture above is the initial identification of the last cycle element. The next candle meets the requirement that the close must be lower than the previous two candles, so I label it candle A. On the third candle, it can also be observed that the close price falls below the previous two candles which is the 9th candle. Based on this analysis, it is safe to say that a new trend has begun, in the case of an uptrend, the price will break the previous high.

It should also be noted that several conditions must be met for a reversal to occur these requirements are

The lower wick of the 13th candle must be higher or equivalent to the close of Bar 8 for a Bullish Countdown. And the closing price must be lower than the low of the previous two candles for a bullish countdown. Likewise the high of Candle 13 must be lower or equal to the closing price of candle 8 for a bearish countdown. And the closing price must be higher than the high of the previous two candles for a bearish countdown.
It should also be noted that the candles must not be sequential, hence if the 13th candle does not meet the requirements, then one can look at the next candle as the 13th candle.

Conclusion

In conclusion, this has been very insightful homework. I deeply apologize for not being able to attempt question 5 my account is currently going through some reviews hence it hindered me from attempting the 5th question due to the real trade attached. I want to thank professor @reddilep for this lecture I hope to see more from you as time progresses thank you very much sir.