Anty Setup

THE ANTY The basic principle is that a short-term trend will tend to resolve itself in the direction of the
longer-term trend. Two different time frames or cycles moving in the same direction create a condition called "positive feedback." This in turn creates some powerful, explosive moves. For this setup, trend will be defined by the slope of the slow %D stochastic. (The parameters are listed again below.) The first thing you might notice is that often the %D slope is positive while the slope of a moving average is negative (or vice versa). This is because we are really measuring the trend of the momentum. Momentum often precedes price, so it is useful to know when this line is leading or rolling over. Here are the rules for the setup: 1. Use a seven-period %K stochastic (the "fast" line). If your program allows for an adjustment of the smoothing of this parameter, default to four. 2. Use a 10-period %D stochastic (the "slow" line). BUY SETUP (SELLS ARE REVERSED) 1. The slow line MD, the dotted line in the examples has established a definite upward trend (downward trend for sells). 2. The fast line (%K, the solid line) has begun to rise along with the slow line. A consolidation or retracement in price causes the fast line to pull towards the slow line. 3. Enter when the price action causes the fast line to turn up once again in the direction of the slow line (forming a hook). TRIGGER If you are anticipating this setup, there are two easy ways to enter that give you quite a bit of extra edge. 1. When the %K and %D have formed opposing slopes for at least three days, creating a tension between them, place a buy stop one tick above the previous day's bar. (This will be to go long when %D has returned to a positive slope.) If the buy stop is not hit, keep on trailing it down to the high of each previous day's bar. 2. A trend line can also be drawn across the tops of the congestion or retracement pattern. Sometimes this setup captures moves out of small "flags" or "drift" patterns. Other times it captures beautiful moves out of setups that the eye would not normally pick out on a price chart. I have also entered many times after the "hook" in the fast line has occurred. This is usually a strong enough pattem that it is OK to enter a bit late. The only word of caution is that the average holding time is three to four days. If you get in after the hook has already formed, be prepared to exit within two days. INITIAL STOP As with all swing patterns, once the market has turned, it should not look back. The initial stop should be placed just below the bar of entry. It is better to get stopped out and reenter later than to risk too much on the initial trade. By studying the examples and examining this pattern on your own charts, you will quickly see that there is little risk of the good trades getting stopped out. Once you are in a winning trade, look to exit on a buying or selling climax within three to four bars. This is not a long-term trade, just a quick "Thank-you very much!"
1. The %D has a negative slope. The %K hooks down. We enter a short position on the open the next morning. Our initial stop is entered at the small swing high. The market should not come back to this point. Confirmation of the short sale is given by the break of the trend line containing the consolidation area. The market falls a quick 60 cents in our favor. If you do not take profits on this dramatic drop, a trailing stop should lock in at least half of the gains. 2. A buy setup three weeks later. The %D has a positive slope. The hooks up. We enter the trade on the opening the next morning, or if we have been anticipating this set up, we enter the trade on the penetration of the trend line. Our initial stop is placed at the most recent swing low. The market should not come back to this point. We look to exit within two to four bars as that is the average holding time for the "Anti".
The sharp slope of the %D indicates a good upward trend. The %K pulls back for five days, signalling a correction. Aggressive traders have an opportunity to enter early on the break of the trend line at point 1. Conservative traders can enter on the next day's opening at point 2 after the %K hooks up. Our initial stop is placed beneath the low of the retracement; we should look to exit within two to four days. The market gave us a good range expansion bar at point 3. This would have been the ideal place to take profits.
A small drift pattern is highlighted by the retracement in the %K A point 1, a small trend line is broken and the %K hooks down. We enter: the market on the opening the next day. The market was accommodating and provided us with a selling climax on the fourth day at point 3. You will notice a small one day setup at point A. These occur all the time and are tradable as long as you place an initial stop. However, this pattern is best used to capture breakouts from congestion areas that last two to four days.
The hook up in the %K signals the breakout from congestion. The momentum (%D) is already trending up. We enter this trade at-the-market and place our stop beneath the swing low at point one. After four bars up, we move our stop up to point 2, the next higher low. The market has met its time objective of two to four bars and there is no guaranty- of continuation. At point 3, the market gives us a range expansion bar, the ideal spot to exit this trade.
There are three examples on this chart. Each setup occurred after an established trend in the %D, and each had an initial stop point. Learning to place an initial resting stop-loss in the market is always the most important step to trading success. Notice that the majority of time we are in this trade for no more than 10 to 20 minutes (two to four bars.) The less time that we are in the market, the less risk we have. The people who trade this pattern off five-minute S&P charts spend lots of time reviewing their charts at night. This process helps develop a feel for what the "choicest set-ups look like. As with any true principle of price behavior, this pattern will work equally well on all time frames, across all equities and futures markets.
LARRY: What I especially like about the "Anti" is that it does a great job of identifying breakouts from consolidation patterns. It seems to me that many people only use oscillators to identify overbought or oversold situations. LINDA: Right! That is also one of the easiest ways to get in trouble if you ignore a strongly trending market. With this setup, the slope of the %D will identify the trend of the momentum. The best trades occur when the %K corrects back at least two to three bars. These are the types of setups which I like to trade because they tend to be the most explosive.

Anty Setup

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What is the 'Anti' trading pattern and how does it work?

What are the rules for entering a trade based on the 'Anti' pattern?

THE ANTY The basic principle is that a short-term trend will tend to resolve itself in the direction of the

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