Introduction to the TCI Technical Analysis System by Qexpert.com

TCI means ‘Trading Center Indicator’ and it is a technical analysis system that can be used for forecasting any price pattern of any financial market or asset. The system was introduced to the web by TradingCenter.org and it is an idea of George M. Protonotarios.

 

TCI Can Analyze Any Financial Market

TCI SystemOne of the key features of the TCI system is that it can perfectly analyze any financial market or asset in any timeframe. That includes Forex, Stocks, Indices, Bonds and Commodities. There is a common factor behind the price behavior of any financial market/asset. That factor is human psychology. Human psychology repeats itself in different markets and is characterized by exaggerations that tend to form overbought and oversold markets.

 

The Psychological Factor in Short-Terms Periods- Technical Analysis Vs Fundamental Analysis

Fundamental Analysis is the King in the Long-Run

In the long-run, the price of any market/asset is valued based on fundamental facts and figures. For example the price of a Forex exchange rate or a government bond is based on the level of interest rates, political risk, inflation and other major macroeconomic figures. On the other hand the price of a stock-market share is based on factors such as earnings, dividends, business risk etc. In the long-run, financial markets are wise enough to give credit to real market performers. But are the same markets wise in short-periods too? The answer is probably no.

Technical Analysis is the King in Short-Term Periods

In the short-term, as market conditions change radically, retail investors can’t deal with them in the same way as in longer periods. New technologies, changes in the legislative landscape, and other major developments can alter the strategic ‘Status Quo’ of any industry. During such periods fundamental analysis becomes obsolete as it cannot longer provide realistic valuations. At this exact moment when fundamental valuations are changing financial markets tend to become highly irrational and extremely volatile.

Take for example the Nasdaq market and the .coms madness of the year 2000. As the world realized that the internet economy was about to change everything, Nasdaq valuations became absolutely irrational. Startups with zero assets achieved valuations of P/S=100 and P/E=400. This was an obvious market bubble.

As we mentioned before, when the market is becoming irrational in the short-term only technical analysis can explain what is really happening. That is exactly what TCI is designed to recognize, short-term irrationalities.

Image: TCI on Google Share (TCI-Long spots an uncommon pattern)

TCI-Long spots an uncommon pattern on Google Share

 

The Core of the TCI Formula (2 MAs)

The TCI model like any other technical analysis model incorporates several price action data such as open, high, low, close, and volume. The TCI formula incurs two main Moving Averages. Each of the two Moving Averages includes tens of different sub-formulas:

Two-Moving Averages SystemMoving Average-A generates daily valuations based on main price action

Moving Average-B is corrects results (on a daily basis)

 

Analyzing the TCI Historical Results/Forecasts

TCI generates daily valuations that may indicate the overbought/oversold levels of any financial traded asset at any given time. Based on the row of TCI results excellent charts may be displayed. Furthermore, TCI is able to recognize the general time pattern and indicate the perfect timing for executing a trade. The time pattern recognition includes local highs/lows and high-probability trend reversals.

TCI Forecasts Answer Two Main Questions

Here are the two main questions that TCI is designed to answer:

(i) Has a Financial Traded Asset reached crucial overbought/oversold Levels?

(ii) When is the perfect timing to enter/exit this overbought/oversold market?

 

Looking both Backwards and Forwards –What to Trade and When to Trade it

The key feature that distinguishes TCI from any other technical analysis model is its ability to be turned backwards and forwards. The two moving averages which are found in the core of TCI can be setup to analyze any past time frame and then forecast any future time frame.

(1) TCI looks backwards to identify overbought/oversold markets or assets

(2) TCI looks forwards to identify the perfect timeframe to enter or to exit an overbought/oversold market or asset.

“Looking backwards to identify trading opportunities (WHAT) and looking forwards to identify when to trade them (WHEN)”

 

TCI Specifications

Here are the basic specifications of the TCI system:

(1) It is based on the daily price action including closing prices, pivots and volatility measures

(2) It contains two moving averages (basic valuation and correction) –Each moving average contains tens of sub formulas

(3) It may be used to analyze any financial market (stocks, indices, bonds, currencies, metals, energy)

(4) It may fit any time frame

(5) Time frames within TCI follow the Fibonacci sequence of numbers

(6) It can be setup backwards or forwards

(7) It can draw unique historic charts on any time frame

(8) It can provide unique Trading Signals

 

Adapting to New Market Conditions -The New TCI v.1.2

Since the creation of the first TCI model the formulas incorporated within TCI are continuously evolving and adapting to new market conditions. Every system should adapt to new market conditions in order to prove reliable in the long-run. For example, at periods when market volatility suddenly booms, all trading systems must re-set their timeframes to fit in shorter periods.

TCI Long & TCI Short

The new v.1.2 TCI framework includes two separate Indicators, TCI Long and TCI Short. TCI Long analyzes any market via a long-term perspective and that is important for identifying long-term market cycles. TCI Short is designed to identify short-term cycles and that is important for optimizing entry/exit timing.

 

Testing TCI Historical Results

Here are some general conclusions regarding historic TCI results:

(1) TCI is more effective on high volume activity assets than low volume activity assets

(2) During periods of major fundamental changes, TCI-short is almost useless, and only TCI long can identify overbought and oversold levels

(3) TCI is more accurate when analyzing Currencies and Indices than when it is analyzing individual stocks (volume activity is the key)

Image: TCI on GBPUSD (When TCI closes to -10%, the GBPUSD market is highly oversold)

When TCI closes to -10%, the GBPUSD market is highly oversold

 

TCI Signals on TradingCenter.org

TradingCenter.org publishes trading signals based on TCI. These signals may concern any financial market such as Foreign Exchange, Commodities, Stocks and Indices. In general, the trading signals published on TradingCenter.org focus on popular assets, as popularity leads to high volume trading and high-volume trading leads to better information and low-cost trading. Popular assets enjoy tighter spreads and better trading terms in general than less-popular assets.

Popularity adds value when trading the Global Financial Markets.

 

■ Giorgos Protonotarios, Financial Analyst

Founder of Qexpert.com, TradingCenter.org

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