Channel surfing

Channel Surfing Riding the Waves of Channels to Profitable Trading by Michael J Parsons authOrrlOUSE" 1663 £tHER7Y DRIVE, SUITE 200 BLOOMINGTON, INDIANA 47403 (800) 839-8640 wwW.AUTHORHouSE.COM © 2005 Michael J Parsons All Rights Reserved No part of this book may be reproduced, stored in a retrieval system, or transmitted by any means without the written permission of the author First published by AuthorHouse 03/16/05 ISBN: 1-4208-3312-X (sc) Printed in the United States of America Bloomington, Indiana This book is printed on acid-free paper Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifi­ cally disclaim any implied warranties of merchantability orfitness for a particular pur­ pose No warranty may be created or extended by sales representatives or wrillen sales materials The advice and strategies contained herein may not be suitable for your situ­ ation You should consult with a professional where appropriate Neither the publisher nor the author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages It should not be assumed that the methods, techniques, or indicators presented in this book will be profitable or that they will not result in losses Past results are not neces­ sarily indicative of future results Examples in this book are for educational purposes only This is not a solicitation of any order to buy or sell The National Futures Association (NFA) requires us to state that "Hypothetical or simulated performance results have certain inherent limitations Unlike an actual performance record, simulated results not represent actual trading Also, since the trades have not actually been executed, the results may have under or over compensat­ ed for the impact, if any, of certain market factors, such as lack of liquidity Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight No representation is being made that any account will or is likely to achieve proi f ts or losses similar to these shown." To my mother Peggy whose legacy still impacts this world for good more than a quarter of a century after she left it and my wife Ruth who stood by me through all the good, the bad and the ugly this world had to offer v Table of Contents Channel Surfing - The Basic Concept Break ing Waves Kiss of the Channel Line Major Price Levels Determining Balance Of Power Doing the Math - Setting Stops and Calculating the Waves Multiple Time Frames II Putting It All Together 59 True Support and Resistance ]0 Trading Options The Repeating Channel and Trend Angle VlI 31 43 ] 75 85 05 121 131 55 181 Introduction Trading is a blessing and a curse It is a blessing in that no other occupation can be more exciting and rewarding than trading You literally can become a mill ionaire overnight or at least in a very short period of time On the other hand, trading is a curse because it is more likely that you will make someone else rich long before you have any real success It is without a doubt the most expensive education you can obtain In the process of educating yourself it can destroy your marriage, your retirement, your home ownership and many other things that take a lifetime to acquire Poor money management, inability to control one's emotions and a clueless approach to trading leads many down the road to the poor house paved in fool's gold It may look great to walk on, but who really wants to go there? My own introduction to this blessing and curse came from a man in a cowboy hat that made trading sound like child's play Very quickly I realized that I was in over my head and that this man probably would have sold me the Brooklyn Bridge if given half a chance Since then I have hit rock bottom twice while trading (A nice way of saying I lost it all) After my last fiasco, I decided since I couldn't find any method that worked to my satisfaction, that is a method that actually made money, I would discover one for myself This lead to a number of observations and discoveries of how the market works, why it behaves the way it does and more importantly, several methods that actually work that are based on the geometry of the market Channel Surfing is one of those methods, providing an in-depth understanding of the markets that you will rarely find elsewhere As you read this book you can expect to learn the following: The basic concepts of Channel Surfing, presented i n a way that is easy to understand and easy to apply Why channels are a natural phenomenon and how to take full advantage of this How to take the basic concepts of Channel Surfing and catapult it into an even more powerful method of trading using advanced techniques Additional tricks to reading the geometry of the market that add to your success IX While there exists an endless array of indicators available to use in this day and age, most have one common fail ing; they fail to adapt to changing market conditions Channel Surfing succeeds in adapting to market conditions because channels are actually weaved by the market itself Price rarely moves in a straight line, therefore channels provide the ultimate momentum indicator Despite its adaptability, Channel Surfing continues to outperform many of the most popular indicators in use today, time and time again The beauty of it is that it doesn't require you to suffer through large drawdowns in order to realize a profit I n fact, it is so effective that it is probably the very best approach for beginning traders and those with very little capital So just imagine what an experienced and well-funded trader can with it! Although a parallel is made with actual surfing, this is a methodology that is about something very serious, trading profitably But obviously the more success you have and the greater your confidence in your ability to extract a profit, the more pleasurable it becomes Success and confidence are directly influenced by your ability to understand the market that you are trading To that end each chapter of this book will take you step by step through the process of reading the language of the markets Put into practice an individual can look at a market and recognize how it is likely to behave and react to the various situations that arise, a skill that often takes decades for a person to develop Chapter one begins by covering the basic concepts of Channel Surfing, with nineteen illustrations that make it easy to comprehend Five different entry methods are covered, along with two exits These basic concepts alone can dramatically improve a person's trading success, but this is only the begi oning Chapter two describes several specific entry methods that enhance the basics and provides more opportunities to enter a market with low risk Chapter three delves into an important price phenomenon that can be exploited for profit It also takes a closer look at the psychological aspects of trading and how they impact success Chapter four examines major price levels, which include much more than just support and resistance M ajor Price levels impact how trading decisions are made and can even contradict normal guidelines, so they are discussed in detail x In chapter five the balance of power is discussed What is the secret to knowing the bias of a market? The answer is detailed here from the most subtle indications on up to the larger and stronger signals The math of Channel Surfing is covered in chapter six Calculations are a requirement if you want to provide specific entry and exit numbers to a broker, but they also provide several other advantages as welL Chapter sevcn elevates Channel Surfing to another level by using multiple time frames as a basis for trading decisions This one technique will dramatically increase the odds of success in any trade you consider Chapter eight brings a series of additional techniques to the table that enhances trading even further Simple and effective, they provide additional tools to your trading arsenal that will cut down to size any market that is stubborn ly refusing to be analyzed Chapter ninc is a real eyc opener and after reading it you will never look at a chart the same way again True support and resistance flies in the face of traditional technical analysis, but it has proven itself time after time Practically every consolidation pattern, reversal and acceleration can be understood and even predicted by using this invaluable method of reading a market In chapter ten options are discussed Options offer a great opportunity for profit if you can accurately identify where a market will go and when it will be therc How to determine these key factors are outl ined Chapter eleven brings everything together providing several trading examples that show how to effectively use these methods A sobering look at the reality of trading is discussed, as well as some additional factors that will impact trading success The techniques and methods discussed in this book provide a complete trading plan that improves as the skill of the user improves More than what is needed is discussed so that an individual can adopt what fits their particular style of trading But initial ly the most conservative techniques should be utilized For example, some entries described in this book can be very aggressive and have been identified as such While such high-risk entries are at times discussed, several that are low-risk are emphasized throughout this entire book that will provide plenty of profitable trades without the need of such aggressive tactics So initially focusing on the conservative techniques is strongly encouraged Xl Channel Surfing A new channel establishes itself, although it is not as accelerated as it was previously A short entry is signaled in two ways; a rebound entry and a trend entry A nice gap follows, resulting in a quick profit - Being aware of subtle detai Is is essential when it comes to trading and th is is demonstrated in figure 1 -4 Since each aspect of a market is interrelated, a missed relationship can result in a missed trade Particularly when you are deal ing with true support and resistance l ines you want to take special note But remember that channel lines are also true support and resistance lines as well Silver continued t o climb for six months, until i t reached $8.00 IS Silver An inside channel line forms a clearly established line, even though price eventually does move to higher ground - - The outside channel line also clearly develops Later on after dropping off of its high the downward trend is halted when it enters the channel that established itself much earlier This prior channel sets up predetermined limits, allowing for a quick trade set up - A rebound entry is set up with the additional benefit of a channel already in place - Because a channel is so wel l defined and at such a low incline that it could even be considered a trading range, a short can be taken as soon as - 89 Michael J Parsons the upper line is reached Of course, a short can also be taken with the break of the smaller channel line as well, or this can simply be used as confirmation Similarly, a long can be taken as the lower channel line is reached Again, another development that can be used for confirmation is the descending channel line that forms off of the major high and the more recent lower high Whichever way price breaks here should result in a strong price move - You can count on some of these subtle details impacting price at some point and time, usually when you have a trade in place However, even if you miss any of them as long as you think through your trades and keep focused you will just fi ne There will be the occasional out of character move and it does help to be able to identify them as just that, out of place events Doing so will prevent you from exiting sooner than you should or entering when you should not So as much as you possibly can, learn to find and identify any subtle details in the market you are trading Some markets are prone to these events and may be a challenge to trade, but all markets can successfully be defined and traded The T-bond is an example of a market that many find difficult to trade, particularly on a short term basis Figure 1 -5 demonstrates that despite its reputation it stil l responds well to Channel Surfing - A rebound entry sets up and a long position is signaled 90 Channel Surfing - A well defined cbannel develops that lasts for nearly a month Price spikes out of the outside channel and an exit is signaled - An entry back into the market is signaled by the break of a small downward channel line and occurs near the well defined upward inside channel line - The following day the market gaps above the outside channel l ine An exit would occur here if a limit order were already placed with a broker, but a position could be held since the market fails to drop back below the inside channel line I f an exit were taken then a trend entry could be made a day or so later when it became clear that the prior outside channel line was providing support - A break of the outside channel line signals an exit and profits are locked in - A channel develops that is not as steep as previously, but a couple of price bars clearly establish it as valid A long is signaled at the break of a smaller bearish channel line, but because it had al ready broken a prior larger inside channel l ine tbe trade would be risky and most conservative traders would not trade it - If this trade were taken and outlasts the slight break of the inner channel line occurring three days earlier, then an exit would be taken here at the break of the outside channel line - At this point it is clear that the trend has changed direction and a short is set up by a rebound entry, wh ich is signaled by the break of tbe smaller bul lish channel line - JO The outside channel line is broken and an exit is called for H owever, price initial ly holds beyond the channel line and a short could be maintained - 1 If an exit had been taken previously then at this point it would now be evident tbat the trend is ongoing A breakout entry would be the cboice here and once price drops a new channel line will automatical ly form that will be used for setting a stop - The prior fanned inside cbannel line now serves as an outside channel line An exit is signaled here when it is broken - 191 Michael Parsons Another prior inside channel l ine comes back into play and stops the pullback A short would be taken at the break of the smaller inside channel line However, the break actually occurs when the market gaps and this places an entry deep within the channel If this trade were to be manually entered it should be weighed against the increased risk Even so, it is a valid short - 14 Price's action here leaves a lot of uncertainly as to what it will next In one case you have broken an inside channel line On the other hand it has gapped lower making it appear to be a strong short and even set a new low Now price approaches a prior inside channel line and the move is in question - Price returns to finally break the prior major inside channel line and it becomes clear that the trend has changed An exit would also be signaled, which creates the first loss even if it is a very small one Following this, a trading range develops and provides the set up for the next trade - The trading range can be traded in both directions if it is wide enough This specific range would normally be out of the question for a short term trader because it is far too narrow So an entry would be signaled by means of a breakout This trading range also sets up a secondary low that establishes a new inside channel line that will be critical for any future trading decisions - 17 A secondary high is established and the outside channel line can be accurately defined This l ine is almost a perfect match for the inside channel line, which is not surprising but does confirm that the trend parameters are accurate I f for some reason a long entry wasn't made when price broke out of the trading range, then a long can now be made whenever price returns back to the inside channel line - 18 - Price spikes through the outside channel line and an exit is signaled 19 The inside channel line is broken and price starts to close beyond it, signaling an exit The trend has again changed - A lthough a market can be a challenge to trade, Channel Surfing will stil l cut that challenge down to size These series of trades can b e repeated over and over in any market you wish to trade simply by applying common sense and the methods that you have learned in this book Yes my friend, trading success is indeed possible ! What I have done here you can just as wel l yoursel f 92 Channel Surfing A few closing thoughts Now that we have comc full circle, you may be wondering what kind of success you can expect while trading these methods This is always a difficult question to answer because everyone is so different Obviously, those in the right place at the right time will fair much better than those in the wrong place at the wrong time But who can predict these events? Nevertheless, there are a few things that you can to change the type of "luck" you have If you trade markets that have very little movement then obviously you will not as well as someone that happens to pick the next 979 gold market But then again, a slow mover is better than getting stuck in a market that is exploding against you, particularly if you are unable to get out I magine owning Enron stock and watching it plummet while you desperately try to find a buyer No one is buying when everyone knows that the company is doomed These things happen and are part ofthe opportunity and risk oftrading Even so, both of these examples had plenty of signs along the way so perception and common sense will go a long way in impacting your success Realistically, trading success has as much to with money management and controlling one's emotions as it does with a method A method alone can not guarantee your success Fortunately, many of these aspects are already built into the rules of Channel Surfing Stil l , there are others that are not addressed and you will need to find a way to control them So I encourage you to educate yourself in these areas before trading Trading brings with it an incredible opportunity, but also an ever-present risk A year of hard work can literally make you a m i l lionaire many times over But then again, a week of bad trading can take it al l back Successful traders strive to be consistent and therefore are alert to when they need to take a break from trading Burn out is common in this industry and it is often necessary to take time to benefit from the fruits of your labor and to regroup Bad trading usual ly begets bad trading Sometimes it is better to walk away than to fight The income derived from trading can exceed your wildest dreams, but there is a self-limiting effect in trading As long as you are consistently winning, you can give yoursel f a raise at any time by simply trading more stocks, contracts or options But as trading quantity increases so does the delay in any buying and sel ling One contract of the S&P 500 will move in a heartbeat, but one thousand will take quite a bit longer So while you 93 Alichael J Parsons have the opportunity to become very wealthy by trading you will never rule the world by means of it Another limiting factor has to with the method itself If you incorporate all the trading principles that we have covered in this book then you will fi nd that most markets can only be traded less than half the time But on the positive side the results can and will be rather robust So don't let this concern you There are always plenty of markets to choose from Beware of becoming greedy or chasing after markets when you have already missed the set up It is not uncommon for someone to make a steady profit and build up a substantial account only to blow it all on a couple of sloppy trades where they just had to get in on a runaway market or they decided to try something new Stick with what you know works and keep greed in check Additionally, the type of market you trade can be limiting as well Trading stocks by buying and selling them outright will offer much less of a return than trading futures that are traded on margin The more power your money has then the greater you can profit from it If you trade stocks, keep an eye out for the big gainers and losers and then keep track of them The best markets are the ones that will have the greatest movement associated with them Many charting programs and web sites will provide scans of stocks that meet this criterion Simply find a larger channel that the stock is fol lowing and set an alert for whenever price draws near to its inside channel line A smaller channel would then be used to set up the trade Right now all ofthis is new to you so keep your expectations low at first It is unreasonable for a beginner to expect the same results as an experienced trader Even though you may follow the same rules nothing teaches like experience There are many subtleties of trading that no book or class will ever teach you, only experience can The positive note here is that you will improve as you gain more experience, so trading will only get better with time With this point in mind I would recommend paper trading until you thoroughly understand the process and how to deal with situations that develop before devoting any real money to this method Paper trading is defined as recording your entries and exits as if you were really trading, but doing so without the transaction of real monies At the same time, paper trading will never replace actual trading When your money is on the line then your emotions will step out of line No amount of paper trading will make you a real trader Emotions can be the biggest obstacle 94 Channel Surfing to trading success So the next step would be to trade with a control led and limited account in order to get a handle on your emotions While a larger account does allow more room to trade under pressure and should be the norm for anyone seriously trading the markets, caution needs to be applied here particularly when you first start out A runner doesn't throw everything to the wind at the starting gate Start with an easy steady pace until your understanding and confidence has grown to a comfortable level I f you start with too large of an account you could allow the false security of a large bank rol l to allow you to get too comfortable with a lackluster performance A larger account can also place a larger emotional strain on your trading as wel l An even worse emotional strain occurs when you use money that you should never touch I f you are depositing your life's savings or your children's college fund in a margin account then you are setting yourself up for fai lure Trading with money that you can't afford to lose is a sure guarantee that you will lose it Emotions are that devious when it comes to trading If you are fol lowing the rules of Channel Surfing properly then you should see a consistent profit I f losses start to dramatical ly shrink your account then something is wrong and the culprit is probably your emotions Of course, there will be times when you will stil l have losses, such as when a market gaps unexpectedly against you But this should be the exception and not the rule The problem with emotions is that they will cause you to chase after markets, rush entries, stay in a losing trade, choose dead markets, take bigger risks than you need to, take smaller profits than you could have, and see things that are not really there There is a long list of other fatal faults that can sabotage your best efforts as well Learning to detach ourselves from our money and trade based on logic is one of the hardest aspects of learning to trade Don't underestimate the power of emotion That is why it is essential to only use money that you can afford to lose Otherwise, your fear of losing it w i l l be devastating to your trading success The same principle applies in regard to any reliance on trading for your livelihood If you wake up one morning and decide that you are going to become a day trader and th is will be your only source of income and yet, you haven't mastered trading, then I guarantee you that you are setting yourself up for failure In order to succeed you cannot have the emotional baggage that comes from a do-or-die situation Take trading one step at 95 Michael J Parsons a time and your success will come as your experience grows Because learning to trade is the most expensive education you can obtain it is best to let your trading fund it and not your bank account If day trading is your goal then let the transition occur because trading success demands it, not because you There is a great deal of subtle aspects to learn about trading that cannot be accomplished overnight Learning them will require practice, practice, and practice Did I mention that you need to practice? Of course, this goes against the grain of what everyone wants trading to be Why we all get into trading in the first place? We are attracted by the thought of easy money that requires very little work and offers a great deal of excitement One could say that all losing traders are greedy lazy thrill seekers But oddly enough just replace the word lazy with hardworking and you have a fitting description of a successful trader Success comes to the trader who puts in the necessary work to ensure that the odds are in his or her favor So never forget to take lazy out of your description and replace it with good old fashion hard work Despite what you have been told hard work comes with the territory We are creatures that habitually choose the easy route whenever we can After all, many of today's inventions were thought up as a way to reduce labor and make life more convenient To become a doctor a person has to attend an educational institution for nearly a decade This is followed up by a couple of additional years of internship where they practice their skills under the supervision of another doctor Then finally a doctor can be allowed to "practice" on his own Even after this a doctor must add to his education every year or he will not be allowed to continue to practice I n comparison, trading offers an income that is even greater than that of a doctor Is it reasonable then to conclude that you wiII succeed with little or no work? The reality is that you must work hard in order to become more skillful than your opponent and then continually work hard to remain one step ahead of your competition What you have embarked on is a never­ ending battle of supremacy To l ive like a king means that you have to conquer like a king The day that you take the easy route is the day that you are conquered, even if just for that day Shortcuts translate into losses Unless it is your intent to be a loser, not take shortcuts Throughout this chapter, you have no doubt noticed that I have focused highly on emotions and the development of your skiII, even to the point of repeating myself a number of times From experience I recognize how important these issues are to trading success and know that you need 96 Channel Surfing to understand what you are truly up against We can more damage to ourselves than aU the surprises that a market can throw against us combined While the focus throughout this book as a whole has been on a trading method, no method can keep you from beating yoursel f if that is your determination Your emotions are determined to beat you and the market is geared to exploit this tendency to the ful l I cannot overemphasize this point; you must learn to control your emotions Remember these three goals before taking any trade and your odds of success will be multiplied ] Trade in the direction the market is biased toward Enter when you risk the least Trade when the profit potential is high, preferably with a minimum to ratio Trading that follows the direction of market bias is a simple matter of knowing which direction the trend is in Channels will tel l you this, particularly when you use multiple time frames When two channels line up in the same direction then you have a market biased toward one direction, the direction of your trade Entering with the least amount of risk means that you are waiting for the market to come to you, not chasing after it However, don't get unreasonable about this You are not going to buy the bottom or sel l the top You just want to negotiate a better price and plaee your entry as close to your stop as reasonable The market itself will dictate where your stop will be plaeed and an exit would be taken at the first sign of trouble I f the trade goes wrong then your loss will be small It is mueh easier to recoup a small loss then it is a large one Trade when the profit potential is high This requires some type of price projection and a larger channel wil l usual ly suffice in giving you some indication of the potential move Even if you have two channels line up in the same direction, ifprice is already close to the larger channel's limit then the profit potential is relatively small It is much better to enter when you are further away A four to one ratio means you are risking one point for a potential four-point or greater profit While this may be an unreasonable ratio at times and need to be adjusted, the key point will always be to only take trades that have a higher profit potential than risk 97 Michael J Parsons Experience will allow you to adjust your risk level, enabling you to take more frequent trades One benefit from success is an increasing account size that will automatically open up more trading opportunities for you as well An example of a higher risk trade would be trading in the opposite direction of a larger channel, a contradiction to one of the basic rules But sometimes the right situation develops and this can be a very profitable trade However, this should only be done when there is a clear indication of a substantial move such as you would see with a center Iine swing It should also only be attempted by an individual who has a considerable amount of trading experience H igher risk trades are not recommended for beginners because you have to be able to recognize when this is appropriate and when it is not The point is that although your trades may be very limited at fi rst as your experience grows so will your trading opportunities Channel Surfing has proven itselfin a wide array ofmarkets, from stocks to futures and from funds to the Forex 1t is strategically effective in defining any market's bias No, it will not always work flawlessly But aside from Enron scandals, unexpected disasters or trading channels so small that slippage alone puts you in the red, it will prove to be a very reliable and profitable method that will rival any other that you can possibly use On top of this, the technique is simple to learn, easy to apply and adapts to any market condition It is a solid foundation for success, leaving the rest up to you It is my hope that you will richly benefit from what you have learned here and find the success you desire Success means different things to different people Perhaps your desire is to simply have more free time to spend with your family, better and longer vacations, an oceanfront dream home, put your kids through college, improve your family's health, or travel to distant places Perhaps it is all of these and more It is amazing what you can when you have money Most people work their lives away just dreaming of the life they desire With Channel Surfing you can actually live the dream So ride the waves of channels to profitable trading It will be the ride of your life ! Surf's up! 98 Glossary Aggressive Entry - An cntry signal generated when an outside channel l ine is broken Average Price Differencc - The average variation of price within certain period of time Balancc of Power - Term that refers to the battIe between buyers and sellers and who has control of market direction Breakout -When price exceeds a range, high or low that it previously could not exceed Center line - The center of a trend that is identifiable by a series of subtle highs and lows that split that trend into two Changing of the guard - A term uscd to described the phenomenon of channcl lines or support and resistance lines that reverse roles Channcl Surfing - A trading methodology that uti lizes channels to control risk, signal entries and exits, and analyze markets Conservative Entry - An entry signal generated by price bars closing beyond an insidc channel line Current Price Limit - The maximum current l imit of price based on a channel calculation False Breakout - A break of support or resistance that fails to hold, often resulting in a move in the opposite direction of the breakout Inside Channel li ne - A trend line that provides either support or resistance and is to the right of price activity Inside Entry - An entry signal generated by when an inside channel line is broken Lower Channel Line - A trend line that acts as support for a trading range Major Price Levels - Refers to major support and resistance levels whether static or dynamic that el icits a strong reaction from a market when broken 99 Mini Channel - A very small channel that is hard to completely outline but can be used for a break out entry signal Multiple Time Span - Two different samplings of data ranges that form channels with one usually larger than the other and encompassing the smaller range Outside Channel Line - A trend line that provides either support or resistance and is to the left of price activity Panic Bar - An unusually extensive price bar created by crowd anxiety Predictive Reaction: Taking an action in response to an event because of the future implications of that event Price Band - A thin band surrounding a specific price level that acts as support and resistance Price Zone - Ranges that price lingers and bordered by highs and lows Pullback - A contrary move against the prevailing trend Rebound Entry - An entry signal generated by the break of a secondary channel that rebounds toward the previous inside channel l ine, as long as it does not exceed the prior high or low Repeating Channel - Channels that follow a similar angle as a previous channel Risk/Reward Ratio - A ratio of risk in relation to potential profit Safe Zone - Price levels beyond the ability of price to reach within the required time period Stops - An order that exits a trade when a predetermined pnce reached IS Total Accumulated Price Difference - Total difference in price between two different price levels Trend Angle - An angle used to gauge trends that fol low at a similar angle Trend Entry - An entry signal that occurs price is closest to the inside channel line of a prevailing trend 200 Truc Option Value - Actual current value of an option once all costs are factored in True Support and Resistance -Price levels that have established themselves within the flow of a market by multiple l imits on price action Upper Channel Line - A trend line that acts as resistance for a trading range Volatil ity - A comparison of the degree of movement within simi lar periods of time for increase or decrease Zigzag - Refers to a form of pul lback or price pattern that forms a contrary move against itself 20 About The Author Michacl Parsons started tradi ng in 987 and fol lowing a series of losses embarked on ajourney of research that has led to the development of several trading techniques based on a unique approach By utilizing aspects of wave science he first developed what would later be cal led Reversal Magic, a time based method for predicting reversals The accuracy and success of this method was astounding, but even astounding methods need some form of money management, resulting i n the birth of Channel Surfing He has continued to develop an emerging science of technical analysis with a price targeting method cal led Balance Magic Today he continues to write about and research new methods of trading and maintains a web site at www.tradingcafc.com Additional information on the various publications he has written can be seen at www.reversalmagic.com