Fifth Measurement Of Trade

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Welcome to currency trading with Profiforex!
This video is devoted to "Balance Lines" as the fifth dimension of the market in Bill Williams' trading strategy. 
The balance line is the line where the price would be if there were no new incoming information affecting the market. According to Newton's first law,  the velocity of a body remains constant unless the body is acted upon by an external force. Thus, according to Bill Williams the price movement will be described by the Awesome Oscillator in the absence of new information.

Let’s consider an example.

The buyers' power was weaker on the second bar as compared to the first bar.This is proven by the lower maximum of the second bar.Why were the sellers stronger on the second bar? It is because the market received the new information that changed the power balance.If the buyers can raise the market on the third bar higher than the maximum of the first bar, it will mean  there have been dramatic changes in the behavior of the stock crowd, which are a harbinger of our deals in the fifth dimension.In this case, the second bar will be a "base bar."

The base bar for a signal to buy is either the current bar (the second bar when the third bar hasn't yet appeared) or the most recent bar whose high is lower than the preceding bar's high (bar "b" after "c" bar with the higher maximum appearing). The base bar for a signal to sell is the current bar or the most recent bar whose low is higher than the low of the preceding bar.

We can now formulate the first three principles of the fifth measurement:

Read the chart from right to left.

If you're waiting for a buy signal, look at the highs only.

If you're waiting for a sell signal, look at the bottoms only.

Establish the base bar first.Let's assume that the price is above the balance kine. If you're waiting for a buy signal, one new maximum is needed if you're going away from the balance line,

or two new maximums if you're approaching the balance line.

In other words, for a buy signal to appear we only need the price to overcome the maximum of the nearest among the previous bars with a higher maximum than the base bar.

Let's assume that we see on the chart only the first bar and all the previous bars. 

The second and third bars, etcetera, haven't appeared yet. At this moment the bar number one The main principle of the buy signal above the balance line is that a Buy Stop order has to be placed one pip above the high of the bar that precedes the base bar. (In our case, it's bar number one.)

Bar number two occurs on the chart with the high that's lower than that of bar number one. So, bar two becomes the base bar.The Pending order has to be deleted, and a new Buy Stop must be placed one pip above the top of bar number one (the bar that precedes the base bar two).

The same happens on bar three and bar "B." Once bar "B" appears, it becomes the base bar,and the pending order has to be placed one pip above the high of bar number three.

After that, bar four occurs, but bar "B" is still the base bar. In other words, if you read from right to left,this bar is the first with the high lower than that of the preceding bar.The high of bar four is lower than the pending order, so you aren't yet in the market.


But then bar five appears and its top is higher than that of the bar preceding the base bar, so your Buy Stop is triggered and you enter the market following the Buy signal above the balance line.

Bill Williams offered some methods of installation of Stop Loss of warrants: If in the market there is a tendency, line items should be closed if the bar at the price of closing crosses Teeth of the Alligator (the red line). In promptly moving market as level for Stop Loss of the warrant we use Lips of the Alligator (the green line). The market admits prompt if the slope angle of the price is more than slope angle of the green line. Other method of installation Stop Lossа was studied in the tutorial of a zonal trade