(binned per thread starter's request) Tillman Method Revisited

Thank you for visiting, this forum / thread chronicles the development / journey in developing a trading method based on the works of JM Hurst, Tillman, TradingFive and David F. I do not know these persons nor am I advertising their services but acknowledging their prior art and it's contribution to this work.

This forum will read as a journal of the development and use of the strategy which I trade on live forex accounts. The core method is not to be changed as it has been proved to be a theory, by others, not a hypothesis. A scientific approach has been taken to trading due to the issue discussed below.

Constructive criticism is always welcomed but must be accompanied by scientific reasoning with evidence; otherwise, it cannot be considered as reproducible fact and the author will be banned. I only give humans a single chance; harsh but has served me well. You have been warned.

This this forum / thread is not for newbies / get rich quick types etc... but for humans who ponder, consider, philosophize, experiment, experienced and most of all can do maths and code!

After trading for numerous years, I realised that apart from money management, my biggest issue was confidence in the belief that price would move in a certain direction for a certain period of time / pips / points. Tended to cut good trades short and let bad trades run; Dooh! By chance, I came across the works of Samuel Benner, JM Hurst, David Hickson, Jim Curry and David F. The mostly weekly YouTube videos by David Hickson gave a believable story behind the cyclic motion of the market. Unbelievably, when he said there would be a trough in the market it tended to occur even though when I looked at the news and economic forecast, I didn't believe it! However, every single time over a three-year period it came true. To the point, for the last predicted trough I listened and then the war and recession started! Thanks David H for the foresight.

Benner's Prophecy: https://www.cosmoeconomics.com/EZ/ice/ice/ice-forecasts-samuel-benner.php?PHPSESSID=3e9n8dr36gou90l8cct363da52
JM Hurst: https://cyclesresearchinstitute.org/cycles-research/economy/markets/hurst/
Sentient Trader: https://www.youtube.com/channel/UCvcnaKQb0FSe8FOkm25vgBw
David F take on JM Hurst: https://www.sigma-l.net/ (Amazing!)
Jim Curry who forecasts gold movements based on cycles: https://www.gold-eagle.com/article/forecast-gold-prices-bracing-for-first-correction-2023

The problem: Market are synchronised at the troughs and these can only be confirmed after the event. This can be too late and the market has already peaked. The vice versa also occurs. Tillman and TradingFive present a potential means of trading half the Sigmoidal Wave on the up and the down from the mid point to the trough / peak.

Tillman: https://www.forbes.com/2003/02/18/cz_jd_0218watch.html?sh=4ddfccb73eae
Tillman: https://cycletrend.tv/
Tradingfive: http://www.tradingfives.com/store/hurstbook.html
Tradingfive: https://www.tradingfives.com/store/jm-hurst-charts.htm

There have been a number of issues to overcome in developing this strategy, some are explained below: (To understand, you will need advance knowledge of Hurst and Tillmans methods).

1) By plotting moving averages (MAs) correctly current data is not available. If we extrapolate the current data (the missing data), this leads to refreshing of current data on each bar. Is this a true issue or can it be resolved be other means?

2) How to predict the take profits (tp) from the MAs cross over point given the refresh issue and needing to know the high / low of the last cycle?

3) How to ensure there is enough room in pips / points to overcome the inherent error of the system to make a profit or will it make a profit?

4) Given 1-3, this strategy probably can not be automated and will need some human intuition when trading.

I do not live in / on the internet and so will add information / strategy / indicators / data / trades when I have time.

This stratgey is not a panacea, but a trend following trading method if followed correctly with experience (hindsight).

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Interesting but nothing to do with trading and not Jim Tillman who trades markets! See the links in first post

The first issue to address is using moving averages that are shifted back in time to find market cycles. The current data is missing and must be extrapolated to find the focal point. See below an example from tradingfive. The black lines are the forward projections of price as a linear regression.

Unable to find or code a moving average with a linear regression based on the first two data points, I turned to the infamous Triangular Moving Average (TMA). As well documented, many new traders come across TMA and think they have found the solution. Sadly, TMA recalculates (i.e. repaints) the missing data every new bar.

However, knowing the above I decided to try TMA for the moving averages as another solution was not found. The repainting can be thought of as mathematical error in this method as the high / low values of the last cycle are fixed. The focal point value will either move in your favour or not.

Testing of different TMA lengths suggested that a TMA of 26 and 8 appear suitable for a 1min to 24 hr chart. Tending to focus on a 5-15 min chart with an eye on the cycles on a 1hr and 24 hr chart. As cycles on all timeframes must be completed.

The second issue was how to define the high and/or low of the last cycle. The easiest solution was to use a zigzag indicator that projects a horizontal line for the last / current high and/or low. This means we can obtain the high and low values and calculate the distance in pips to the focal point and therefore target price.

Using these calculated values, we can then take into account the repainting of the TMAs current values. For example, if the distance between the low and focal point is 5 pips, we know from the focal point to the high (target price) is also 5 pips. Therefore, given the repainting of the TMAs the probability of reaching 5 pips is potentially low. But if we use a 50% target price of 2.5 pips there is a higher probability the target would be reached. Considering spread I would not trade this example but demonstrates the hypothesis that the greater the number of pips between the high or low and focal point the more likely the 50% target price would be reached. The 50% target price was arbitrarily decide apon and can be change as supported by data.

Also worth noting is that there is a percentage error in calculating the target price even if the TMA did not repaint, so the greater the pips to the focal point the more likely the 50% target will be reached. Also the large the chart time frame the more pips between the hi / lo and focal point.

I will post a live example in due course, to better explain.

This is an example today (19 Jan 2023), on EURUSD 15min chart of a focal point and that the pips below to the low more or less equal the pips from the focal point to the high. Approx 0.26% below and above, not an exact science. Unlike Tillman, I only use two moving averages; just my preference.

This is the next chart from above, still EURUSD 15min today (19 Jan 2023), showing focal point recently formed, entered trade and just finished with 50% profit. What you may observe is that the last focal point tends to be taken out by the current price movement if momentum is not too strong.

My trade is not marked on the chart as I use both tradingview, mt4 and cross code between the two. So charts provided maybe from either platform; as appropriate and required to demonstrate the method.

The other lines on the chart are future line of demarcation. refer to JM Hurst for further information.

The above are basic examples of the method without the indicators calculating the pips etc. I will continue to post how the method works with logically reasoning and then provide the indicators etc... This will allow for a more informed technical discussion.

This is the next chart from above, still EURUSD 15min today (19 Jan 2023), showing that the 100% target price was reached. Note the focal point has moved as the cycle developed due to the repainting of the TMAs. In this instance the focal point moved in our favour.

This is how it looks in MT4 for reference. The horizontal lines dotted 50% target, solid line 100% target. These change as more data becomes available. Yellow and white arrows are work in process, ignore for now.

Zigzag, bollinger bands and Tillman.

I was taught years ago that when price is outside a bollinger band it is overbought/oversold; yet trying to trade this event was never consistent or profitable even when tested / traded by expert advisor. Reading John Bollingers’ book he conversely states when a candle close is outstand a Bollinger band there is a high probability it will continue in that direction.

As an experiment I applied Bollinger Bands (standard settings), to cycles and found that often (not always), when the price goes outside the band it happens to co-inside with the formation of a focal point; confirming Bollinger’s finding that price will continue in the given direction. See attached chart from EURUSD 15min on 18/01/2023

The other interesting observation was that when zigzag (12,5,3), changes direction from hi to lo and vice versa this often (not always), co-insides with the formation of a focal point. See attached chart from EURUSD 15min on 18/01/2023

These observations can be used as potential confirmation to enter a trade.

Today's (20 Jan 2023) trade, EURUSD 15min chart, how not to trade this method and still have confidence it will work out fine!

Entered put trade on arrow pointing to right of screen as price crossed below both TMAs believing the focal point will form. Too inpatient today. Then price went against trade but could see that the distance between the hi and where the focal point might form meant there was enough room from the trade entry price and the focal point to the potential low to end trade in profit. Worked out but would have been stressful if not for being able to calculate where price would go to. This is why I like this method as even when I get it wrong I can determine using maths whether I can recover the trade or will have to take a loss.

Why price went back up was to fulfill the up and down cycles of the lower timeframes first. Further information read the eight Principles of Hurst’s Cyclic Theory: https://www.timepriceanalysis.com/Home/Education/Hurst

Please find attached the TMA indicators used. These are set to 8 and 26 respectively. As stated in previous posts and everywhere TMA is mentioned, the indicator extrapolated data is recalculated every new bar. i.e repaints and so can not be relied on by itself! You have been warned.

If you intend to follow this forum / thread, please don't rename the indicators, as these are used in other indicators / templates etc which I will post in due course. Thanks for reading and maybe following.

Please find attached the Zigzag indicators used. ZigZag Ace is used to define the values of the high and low to the focal point. ZigzagExtras v1.5 BT is used to see the change to a new low / high looking at the breakouts. The ZigZag indicators use standard setting to depths, bars back etc.....

If you intend to follow this forum / thread, please don't rename the indicators, as these are used in other indicators, templates etc which I will post in due course. Thanks for reading and maybe following.

Attached is template for above indicators. Change chart color, bar type etc as you feel.

This is the basic template to start with; more advanced templates will be added as the method is explained further and the advanced indicators are added. This method does not use lots of indicators but advanced versions continue to be developed and tested to refine the method; so thinking is automated as much as possible. I prefer the minimalist approach to indicators and trading; like Joan Miro's approach to art.

The next indicator is the calculator which provides the calculations for the method from the focal point to the Hi and Lo in pips and monetary value. Adjust the input values for lot size being used for puts and calls and the target lot / pip size wanted i.e. target amount per trade.

The 50% and 100% target limits are based on the distance in pips / points from hi /lo to focal point. For ease of coding the TMA26 line was used as the focal point; because when the TMA8 crosses the TMA26 that is the point we are measuring from. I find this works well. Please note as TMA repaints each new bar, the target prices also changes each new bar but found this does not matter as the focal point tends to move in our favour, but not always and TMA26 value changes relatively slowly. They are a numerical and visual guides to the method. The human being still needs to make the decisions and take responsibility for them.

Unfortunately this is a manual method and requires patiently waiting in front of the screen for potential trades to come along and not be missed. Automation is difficult due to the necessary repainting of indicators meaning trade execution is delayed by a few bars and price tends to have already moved too far.

As stated in previous post(s), the distance between the hi or lo to the focal point is used to determine if there is enough room in pips to trade. Also the white horizontal lines dotted 50% target, solid line 100% target are used to determine if price has or has not moved to too far yet to enter a trade and be profitable.

I use the indicator autorefresh set to 60 secs to ensure the indicators that repaint are updated every minute.

Template attached includes the indicators attached to this post.

For the template to work and to follow the method, all the indicators posted will need to be in your indicator folder and obviously the templates in the template folder. Your chart indicators should be like the attached picture below.

Probably will need to explain the above in further detail when time allows.

The technical details of the method:

Note: This is a slow method as we are waiting for a specific event to occur first before making a decision to trade or not. The larger the timeframe the more pips between the low / high to focal point; therefore method unsuitable for timeframes below 15mins, due to available pips, spread and price already moved too far in the given direction.

1) Wait for focal point to occur or just about to occur. i.e. TMA 8 crossing above or below TMA 26.
2) Check pip distance between high or low to focal point depending if TMA8 above or below TMA26. If TMA 8 is to cross below TMA 26 we are looking for a sell. If TMA 8 to cross above TMA 26 we are looking for a buy.
3) Check pip distance, taking into account spread. i.e if the pip distance is 10 pips and spread is 2 pips, therefore available pips on the otherside of the focal point is potentially 10-2 = 8 pips.
4) The take profit (TP), in the first instance should be 50% of the potentially available pips. Therefore if 8 pips, the TP should be set a 4 pips.
5) If focal point is about to form or just formed and happy with 1-3 above enter trade in the appropriate direction only if price has NOT moved too far i.e if the TP is 4 pips and the price has already moved 2 pips in the direction, your potential profit is 4-2=2 pips. This is why the method is suited to higher timeframes as it provides a larger number of pips to play with.
6) Personal choice how to manage risk. I manage the stop loss manually and try to calculate if a bad trade maybe recovered or not before ending trade in a loss. An example is given in post 11.

Notes: Also helpful to check what is happening on the timeframe below and above i.e. 5min and 1hr; as cycles on all timeframes must be completed.

The Tillman calculator provides all the necessary numbers already calculated for you and the 50% and 100% profit lines; except the calculations do not include spread at this time. Spread in displayed separately.

Any example of the method today (23 Jan 2023), on EURUSD 15min chart:

1) TMA8 > TMA26, therefore looking for a put trade.
2) Hi to TMA26 is 20-19 pips, so ok range.
3) TMA8 about to cross below TMA26. Waited about 2-3 hrs for this to happen; price bouncing around alot (ranging).
4) Price has reached the 50% TP already (this situation does happen and you must then find a reason for more movement in that direction), by looking at the structure of the market and the previous fair price range being 1.08590 - 1.08018. There is high probability price will probably drop to the 100% TP. Trade entered. Also note the double top cycle structure. The markets move in "M" and "W" shapes. That is why harmonic patterns can work.
5) TP of 1.08819 reached at around 1 hr later. Could of used a moving SL to get more profit; but there will always be another setup to trade.

As stated in the first post there has to be a narrative / story behind why a trade should be entered and that the narrative is believable. Like my profile statement "Whenever there is any doubt, there is no doubt", stay away from the trade!

Note, post 10, that Bollinger bands and the switch from hi to lo and vice versa can be helpful in confirming trade entry is potentially valid.

To practice and hone your skills, open strategy tester in mt4, add the indicators, select a date period and run, watch what happens, practice trade entry point and if tp is reached.

The next part is the obligatory arrow indicator for the method; not as simple as it may seem.

Expert advisor has been made etc...

Today's trade (24 Jan 2023), on EURUSD 15min chart:

1) TMA8 > TMA26, therefore looking for a put trade.
2) Hi to TMA26 is ~14 pips, so ok range.
3) TMA8 about to cross below TMA26.
4) Again price reached the 50% TP before focal point appeared (this situation does happen and you must then find a reason for more movement in that direction), Trade entered looking to exit at 100% TP.
5) TP of 1.08683 reached during the same 15 min candle.

Focal point did form and price continued down to 1.08512.