Advanced Charting Techniques for High Probability Trading: The Most Accurate And Predictive Charting Method Ever Created

CHAPTER 1

Introduction to Advanced Charting

Advanced Charting techniques have historically not been a part of the Compound Stock Earnings (CSE) method. Rather, the focus of the CSE method has been to understand simple bias in stock price direction and to act accordingly. To understand bias, we assess the stock’s price cycle (the current movement of the stock price within a parallel range) and the position of the stock within that cycle.

When a stock is high in its current cycle, the bias is down. When a stock is low in the current cycle, the bias is up. To understand this bias, a simple straight-line, or open-high-low-close (OHLC) chart is used. This method of understanding simple bias has been applied, and proven successful, for years using the CSE covered call, LEAPS, and credit spread techniques.

The reason simple charting methods can be used successfully with the CSE covered calls, LEAPS, and credit spread techniques is that the techniques are based on probability. In a speculative stock or options trade, if the speculator picks the direction of the stock incorrectly, a loss on the position will be realized. In the CSE covered call methodology, if the assumed bias is incorrect, a loss is not generated. Rather, another management technique can be used to provide a solution. Therefore, when using the CSE covered call technique, an incorrect assumption of stock price direction does not result in the investor losing money; rather, it results in the investor needing to apply a ...