TCBR System

TCBR System

The Trending Candle / Body Reversal (TCBR) investment technique is a system that was developed by a professional investor named Geert Strubbe. Mr. Strubbe is a personal friend of mine and volunteered this system for inclusion within the CSF and PFP software applications. The TCBR system is an investment technique that embodies many of the same principles of the Japanese Candlestick technique. More information on the TCBR trading system can be found within the PFP programs help file.

The most obvious benefit of the TCBR system is that it works very well in trending markets (such as the S&P, the Currency markets and others). If an investor is attempting to trade a market that exhibits a good capability to trend, the investor should review the signals generated by the TCBR system for effectiveness. When a PFP user first loads a chart, the chart is scanned using the TCBR system and users can enable the Vision Flags to see where and when the TCBR system generated investment signals. The TCBR system generates multiple investment signals allowing investors to scale into a market position. If investors do not choose to scale into a market, then they should simply buy or sell into a market position and watch as the trend continues. Remember to trail your protective stop levels accordingly as new TCBR signals form.

The TCBR system tracks the markets ability to trend up or down by identifying a pattern formation called a Trending Candle (TC). A TC can be a black candle or a white candle. If it is a black candle, the trend is presumed bearish. If it is a white candle, the trend is presumed bullish. Each subsequent TC of the same color will generate an additional buy or sell signal and move a protective stop level up or down. The only drawback to this technique is when the market enters a congestion area. The TCBR system will likely generate signals too later to be profitable when the using it on a congesting market.

The Trending Candle/Body Reversal (TCBR)principle is on of the most unique and effective investment techniques to be developed on the basis of Japanese Candlesticks. Mr. Geert Strubbe is a market technician and trader in Belgium. He has been using our software products for over 4 years (as of 11/1997) and has been an active speaker in Europe regarding his findings and investment techniques. Mr. Strubbe has allowed us the rights to include his techniques into our software applications.

The TCBR trading system is a market trend tracking system that incorporates a trailing stop, or breakout, level. The breakout level is used to assist in insuring consistently profitable trading results as well as to attempt to limit the initial risk within the trade.

The basic rules of the TCBR system:

1. A trending candle = a candle whereas the open~close range is greater than half the high~low range.

2. The body reversal level is always the open price of the current trending candle.

Although, if a trending candle is found after a gap in price activity, the body reversal level is moved to the lowest point of a bullish gap, or the highest point of a bearish gap.

3. The trending candle is used to establish the existing current trend. For example, if a white trending candle is found initially, the trend is considered bullish. If a black trending candle is found initially, the trend is considered bearish.

Once the initial trending candle is found and the direction of trend and body reversal level is established, the following rules apply:

1. Any trending candle of the same color with a higher close (in the case of a bullish trend), or a lower close (in the case of a bearish trend), following the initial trending candle is considered a takeover candle. With this candle, the body reversal level changes to the new level of the current trending candle and one should watch for the next trending candle of the same color.

2. Any trading session that closes below or above the body reversal level (depending of the existing trend identified by the initial trending candle) creates a Neutral body reversal. The Neutral body reversal indicated that the existing trend is Neutral and the existing body reversal level is ignored. At this point, traders need to back to the beginning of the rules for this investment technique and wait for a new trending candle to establish the trend and body reversal level again.

3. Any existing trend and body reversal level established by a previous trending candle can be reversed by an opposite colored trending candle that closes below the body reversal level (in the case of a bullish trend), or closes above the body reversal level (in the case of a bearish trend). This type of formation is called a Trending Candle/Body Reversal.

Trading with the Trending Candle/Body Reversal System:

1. The first instance of the Trending Candle is the traders first instance to enter a trade. Use the Body Reversal level as a trailing stop level.

2. Any additional instance of a Trending Candle of the same color as the first instance is the traders chance to add to their existing position in the market. Use the Body Reversal level as a new trailing stop level.

3. Any Trending Candle/Body Reversal is an instance where traders should liquidate their initial positions in the market and reverse positions. Use the new Body Reversal position as a new trailing stop level.

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