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The Trend Change Index System

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"The TCI System"

The TCI System is a trend following trading system developed to keep you in a trending market. This system uses a Stop and Reverse (SAR) once a trade has started. In the example above the first set of yellow dots at point [1] will become your entry point for a long trade. To enter this trade call your broker before the market opens and place a buy stop at the price of the yellow dot.

To find out the price of the yellow dot place your mouse on the dot and left click. The other way to find the price is to look in your price box on the top left of your screen. The SAR is the entry point on this long trade. Once the market goes through that point it becomes the Entry = in your price box. In the example above 7054 was the initial SAR at point [1]. Because we were not in the market the dot is our entry point, but once in the trade the SAR is a Stop And Reverse. Therefore to stop and reverse you would call your broker and sell two contracts, one contract to take you out of your long position and one contract to put you short. For more information on SAR please read New Concepts in Technical Trading by Welles Wilder.

 

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The TCI System uses the theory that you do not need a stop if the market is trending in your favor. At point [1] the TC Index is green and penetrates the yellow dot giving you a long trade.

As long as the TC Index stays green you do not need a stop, therefore no stop or dot is on your screen. At [2] the TC Index turns yellow causing the system to give you a stop below the market. Call your broker and place a stop at the SAR = indicated in the price box. Notice the dots turned from yellow to green. If the dots are green and below the market you are long, why because the dot is a stop trying to keep you long the trend.

At point [3] the TC Index is green and the system takes away your stop. You would call your broker and cancel your stop placed at point [2]. Notice the TC Index stays green as the market moves sideways to Intermediate 8 low. The trend is strong and moves up to Intermediate 2. The TCI System cancels your stops until a yellow bar occurs. At point [4] the TC Index turns yellow producing a stop below the market. Your price box will tell you the price of the new stop at SAR =. Call your broker to place the protective stop for the long trade. The stop a SAR will not change for this set of yellow bars.

The Intermediate 3 low comes in and the market starts trending up to Intermediate 4. No stops are used here until the next yellow bar. The TC Index turns yellow down to Intermediate 5 where new stops are placed under the market. The placement of the stop is calculated by the length of the bars. If the bars are long the stop will move farther away from the price action, if the bars are short the stop will move closer to protect profit in the trade. The TCI System is trying to keep you long the trend as long as the market trends.

The TCI System will keep you long this trade until the bar penetrates the SAR. When that happens the system will put you short. On 12/11/03 the Equity in this trade was $7262.98

The previous trade produced equity of $242.98. Do we know when a strong trend will continue?

No, that is why we use a SAR which keeps us long or short the market. Can we use Delta timing as a filter? Yes, we can trade markets in the direction of Long term and Medium term.

The TCI System trades 17 markets listed below. Research was done to determine which markets traded best using the TCI System. They are ranked in your price box. If the market you are trading is not one of the TCI System markets then no number will appear in the price box next to TCI System.

POINTS TO REMEMBER

The TCI System makes money in trending markets. If the dot is yellow you are either short and it is a SAR or you will use it as a entry point to go long. If the TC Index is in your favor no stop is used. When the TC Index is against you a stop will appear. The stop will not move away once it is set on a color bar change. If the dot is green you are long the market and the dot should be below the bar. A yellow dot is above the bar when you are short. The TCI System trades 17 markets well but can be used on all futures markets.

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