Trading with Median lines is a system and a leading indicator suitable for Swing trading.I am following this strategy for Nifty and Bank Nifty with good results.Those interested to trade with Charts and Price action to analyse target price, support and resistance levels will find this strategy very interesting.

Feedback welcome!Happy trading...

Wednesday, September 21, 2011

Median Lines as a Price Magnet

History of the Median Line Method
( excerpted from book by Greg Fisher on "Using Median Lines as a Trading tool")
The Median Line method was developed by Alan H.Andrews to assess the market direction by drawing a single line on the chart of any stock.His study of the method determined price action returned to the Median line 80% of the time.
He created a course called Action- Reaction Course in the 1960's and 1970's for students and hi called his method the Median Line Method.
Andrews believed the markets exhibited an order that could be identified.
“Of the two kinds of change in the Universe, flowing change and random change, we are indebted to Newton's invention of Calculus that enables us to find out in advance the conditions that flowing change will produce in the future. His discovery of the natural law that Action and Reaction are equal and opposite in the field of physics also has been applied in the Course to the random changes of price movements in free markets. This application of the Action-Reaction law enables you to learn in advance where the probable reversals of price trends will come in the future.”
“When we speak of any scientific law, we mean a statement that a relationship has been observed among certain given conditions. We mean, "if these conditions now, then those conditions follow, and can be expressed mathematically". We have "order" through which we can know the outcome from these conditions. We can therefore take advantage of this knowledge, and thereby progress and profit.”
“So Newton was one of the great discoverers of this "orderliness" that underlies all of the Creator's work, even if we are often slow in discovering it. Newton's Laws therefore as stated above, have benefited the users in both flowing and random changes.”

Andrews original course states five observations concerning the Median Line (ML).
There is a high probability that:

1.prices will reach the latest ML

2.prices will either reverse on meeting the ML or gap through it

3.when prices pass through the ML, they will pull back to it

4.when prices reverse before reaching the ML, leaving a “space”, they will move more in the opposite direction than when prices were rising toward the ML

5.prices reverse at any ML or extension of a prior ML.

The book is available free "Using Median Lines as a Trading tool"on the net and those interested can download and read the material.
The original Alan Andrews course material is also available at and should definitely be studied for a greater understanding of the concepts.

I hope you will also be enthralled by this method as I did , though in this age of computer algo trading and mechanical trading , one will have to have patience to understand the concepts, practice and trade realtime with a system created around is method . Hope my sharing of my experiences will help.

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