Don Chi an Method or Four-week rule
Richard Don
Chi an
developed a simple, but effective trading method
called the four-week rule:
1. Buy when the market
makes new highs over the past four weeks.
2. Sell
when the market makes new lows over the past four
weeks.
This
system is a trend following method and works very
well in trending markets. However, the results, like
any other trend following method, can be less than
comforting in choppy and random markets. The time
frame can be varied to a smaller or greater amount
such as two weeks or six weeks.
COMMITMENT OF TRADERS REPORT
The
Commitment of Traders report, issued by the Commodity Futures Trading Commission (CFTC), is a good source to
determine the types of traders holding positions in the
market. The report Indicates whether hedgers or
speculators are long or short the market. Some studies
have noted that certain groups, such as hedgers and
large speculators, may trade more successfully than
other groups, such as the small speculator.
Don Chi an Method or Four-week
rule
