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SCHAFF TC1 TRIGGER

Doug Schaff

FX-Strategy

http://www.fx-strategy.com

The Schaff TC1 Trigger marks price bars associated with key turns in the Schaff TC1 indicator (TC1). This occurs in a three-step process.

4. The blue Schaff TC1 indicator drops below a dotted line at 30, called the "buy line".
5. The TC1 turns up. The price bar above it is colored green and is called a TC1B setup bar.
6. A close above the high of the setup bar "triggers" the TC1B.

²Traders can employ different trigger rules. For intraday timeframes traders can require that a market close above a buy setup bar in order to consider it "triggered". For a sell setup bar, traders can require that a market close below it to consider it "triggered". For 5-minute charts, two closes beyond the setup bar might be required. Another variation is to require that the market trade a certain number of points above a buy setup (or below a sell setup bar) in order to consider the setup bar triggered.

The same process, in reverse, is used to create a sell setup bar.

TC1S:

4. The Schaff TC1 indicator rises above a dotted line at 70, called the "sell line".
5. The TC1 turns down. The price bar below it is colored magenta and is called a TC1S setup bar.
6. A close below the low of the setup bar "triggers" the TC1S.

Schaff TC1 Triggers can help pinpoint trend cycle tops and bottoms based on movement in the Schaff TC1 Indicator. They can also be used to create buy and sell signals.

Below is a 30-minute USDCHF line chart of closing prices. FXS-Pivot Cloud (input = 10) and Schaff TC1 Trigger "angle bars" (inputs = 10,100,115,10) are drawn across prices. A blue TC1 indicator with the same inputs is drawn in the lower chart panel.

TC1 Triggers can be used in combination with FXS-Pivot Cloud to produce trading signals, such as with the following Trade Entry Conditions:

Sell Entry: The 30-minute Close must be below BOTH Cloud and the low of the TC1S Sell Setup Bar.
Buy Entry (not shown on chart): The 30-minute Close must be above BOTH Cloud and the high of the TC1B Buy Setup Bar.

Trade Exit Conditions are as follows:
Sell Exit: Exit short positions if 30-minute Close is above Cloud OR above a TC1B Buy Setup Bar
Buy Exit (not shown on chart): Exit long positions if 30-minute Close is below Cloud OR below a TC1S Sell Setup Bar.

Note how price never closed above the green buy setup bars at 1, 2 and 3. The "setup and trigger" method of trade entry has two steps. The indicator conditions that produce the setup bar did occur, but the price movement required to trigger it did not. This allowed traders to maintain short positions (and/or refrain from buying at 2 and 3), thus turning the trade into a 100+ point winner.

Traders should be prepared to act if their trigger conditions occur. Thus traders can use setup bars (as at 2 and 3) as trailing stops, to control risk and lock in profits.