Trading with TD9 Indicator (Tom Demark Sequential)

The idea of magic 9 turn index comes from the TD sequence of Tom Demark, a famous master in the field of technical analysis. Its core function is to find the inflection point of the current stock price trend and improve the success rate of seizing the opportunities of the bottom and the top. Through the back test of big data, it shows that the success rate of magic 9 turn index is 68.6% based on individual stocks and 75.6% based on index.

Indicator Logic

When the stock price reaches the trigger condition for 9 consecutive days in the process of rising or falling, the series 1, 2, 3… 7, 8, 9 will be generated, and the series will be marked above (below) the candlestick chart of the day. Only when the stock price reaches the trigger condition for the sixth consecutive day, the series will start to display, showing 1, 2, 3, 4, 5, 6 in turn. When the stock price still reaches the trigger condition on the seventh day, it will display 7. If the trigger condition is not met on the seventh day, the serial number of the previous six days will disappear. The display logic of the eighth day is the same as that of the seventh day. When the trigger condition is still reached on the ninth day, a nine turn structure (sequence) is formed. When the trigger condition is not reached on the ninth day, the serial number of the first eight days disappears and the nine turn structure does not hold. The nine turn structure formed in the process of stock price rising is called up 9 structure, while the nine turn structure formed in the process of stock price falling is called down 9 structure.

Trading Tactics

The core use of the magic 9 turn index is to help us effectively escape the top area of the stock and accurately grasp the bottom opportunity of the stock. When the stock price rises 9 structure in the process of operation, the stock price is often located in the top reversal area, and individual stocks are likely to face the risk of reversal and decline. At this time, we should reduce the position to avoid the risk. When the stock price falls 9 structure, the stock price tends to be in the bottom reversal area, and individual stocks are likely to start the trend of stopping falling and rebounding. At this time, we can consider building positions or increasing positions to obtain the excess profits brought by the rise of stock prices.

Example:

If you use TD9 signal and bought Facebook Stock ($FB) on March 27th (Stock price ~$149.82), and then sell it on June 5th (Stock price ~$229.89), you would achieve 53% return. That means if you invested 100 shares in Facebook Stock with $14,982, now your assets turned $22,989, and you made $8,007 in 2 months! That’s like the income of a full-time 9 to 5 job!

Scope of Application

As a rare timing technical index in the market (different from MACD, KDJ, W & R, chip index, etc.), magic nine turns can capture the turning point of individual stocks in low or high positions. However, it should be noted that the magic nine turn index is only applicable to the shock market, weak bull market and weak bear market of the index and individual stocks. When the stock price or index is in a bear market or a bull market, the direction of the magic nine turn is not very clear. At this time, we should combine market sentiment, fundamentals and other indicators to study and judge the current trend.

Keep in Mind:

1. As a technical index, magic 9 can not be regarded as the judgment basis of buying and selling stocks arbitrarily, but should be combined with the fundamental and other technical indicators for comprehensive analysis.

2. In the process of strong rise (fall) of stock price, 9-up (down) structure may be formed continuously. At this time, the use strategy of magic nine turn should be changed, and the first up (down) 9 structure should be regarded as a signal to strengthen the market start (down).

3. The magic nine turn technical indicators superimpose the bottom deviation (top deviation) and other signals for secondary confirmation, which is more able to determine the reversal of the trend.

So who doesn’t like to make some extra money when you are quarantined at home and have nowhere to go? Good luck with your trading!

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