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SCHAFF TCTC1 TRIGGER

Doug Schaff

FX-Strategy

http://www.fx-strategy.com

The Schaff TCTC1 Trigger marks price bars associated with key turns in both the Schaff Trend Cycle and TC1 indicators (STC and TC1). This occurs in a three-step process.

TCTC1B:

1. Either of the yellow STC or blue TC1 indicators drops below a dotted line at 30, called the "buy line".
2. Either or both turn up with the other one rising. The price bar above it is colored blue and is called a TCTC1B setup bar.
3. A close above the high of the setup bar "triggers" the TCTC1B.

³Traders 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.

TCTC1S:

1. Either of the yellow STC or blue TC1 indicators rises above a dotted line at 70, called the "sell line".
2. Either or both indicators turn down with the other one falling. The price bar below it is colored black and is called a TCTC1S setup bar.
3. A close below the low of the setup bar "triggers" the TCTC1S.

A TCTC1 setup bar only occurs if both the STC and TC1 indicators are moving in harmony, a stricter requirement than for either the TC or TC1 Triggers, alone. Waiting for both indicators helps to avoid early trade entry and exit.

An orange square is drawn around a sell and buy setup bar that occurred next to each other. This normally indicates a short-term consolidating market that will break in one direction before long, as shown by whichever setup bar triggers.

In his case the buy setup bar triggered and the market rallied to a new peak where a black setup bar appeared, providing a better sell entry.

 Usage

Schaff TCTC1 Triggers help to pinpoint trend cycle tops and bottoms based on movement in the Schaff Trend Cycle and TC1 indicators. The triggers can also be used to create buy and sell signals.

TCTC1 Triggers and FXS Trailing Stop (Trail) are drawn across 6-hour USDCHF prices, above. The yellow and blue lines in the lower chart panel are the STC and TC1 indicators, respectively.

Trail is used to indicate trend direction. The TCTC1 Triggers show changes in trend momentum. Sell conditions are fulfilled when prices close below Trail and below a black TCTC1 sell setup bar. Buy conditions are complete when prices close above Trail and above a blue TCTC1 buy setup bar. These rules attempt to implement a strategy of trading in harmony with Trend Direction and Momentum.