Using The New Andrews Pitchfork Indicator
By Ron Jaenisch
Alan Andrews is well known for the use of the median parallel lines in trading. These are used by many traders to determine the trend and about how far prices are likely to go. What is now known as the pitchfork, utilizes three pivot points with the general concept that prices are likely to reach the median line. In Figure 1 the pivots are labeled as A B C. The midpoint between B and C is found and a median line is drawn from pivot A. Parallel lines are then drawn, this gives the appearance of a pitchfork.
Roger Babson, at the Gravity Research Foundation meetings, taught Professor Andrews how determine the approximate location of pivots as prices travel in a trend. Babson's technique utilized Newton's third law of motion to make this determination. The specifics concerning the technique are covered in the Ebook "Roger Babson's Action Reaction Techniques" and in a previous article in the archives of the Gravity Research Foundation, by this author.
Professor Alan Andrews was well known for advising his clients through his weekly course letters, which would arrive on Monday morning. In each newsletter there was an orders indicated section which the client was to read verbatim to their broker. The objective was to turn a $5,000 account into over $50,000 in less than a year. Records, which are now part of the 800 page Expanded Andrews Course, show that in the 1960's and early 1970's he was able to accomplish this regularly.
Along with the weekly course newsletter came charts and explanations of various concepts related to trading. Some covered how estimate to how far prices will go in the future. This was using Newton's first law of motion. This concept was very different than the median line concept.
With the median line there are various choices that the user gets to make in terms of which pivots to use to draw the line from. In some cases, when prices go past the MLH a question comes into play as to if a stop needs to be triggered or if drawing an SH (Sliding Parallel) is applied. After prices reach the median line there are other considerations like whether to exit the trade or wait for prices to get to the far parallel. All of this adds to the complexity of trading.
In the writings of Professor Andrews was a concept that has been historically tested and turned into an easy to use indicator. In his honor it is referred to as the new Andrews Pitchfork Indicator. The benefit of this indicator is that it is not optimized and not optimizable. It is well known that optimizing indicators for use with historical data is much like a lumber yard because you can build anything you want with it.
Not optimizing, and a lack of being able to vary the indicator in different situations has its drawbacks. As a result some moves cannot be forecasted.
The new Andrews Pitchfork Indicator has a considerable value when it comes to knowing when to enter a swing point and about what percentage the swing will be and how far the move will go in respect to the most recent median line.
When a pivot is labeled a five, the result is prices go past the green far parallel line.
Figure #2 shows examples of moves that were labeled a five and that prices went beyond the far parallel. Note that the moves were over five percent measuring peak to low.
When the indicator only reaches three, a move of three percent or more is anticipated.
In this case prices either make it past the median line (as seen in Figure #3) of get very close to it before making a swing in the opposite direction. In the original video to this indicator on youtube it showed the days where the value is one or two. These still exist, however they are not being published in the charts any longer. The higher numbers give an average of 13 signals per year which result in swings which are nearly always between three and fourteen percent. The exact formula for determining the New Andrews Pitchfork Indicator has not yet been patented and as a result is not divulged to the public.
The indicator value is available, when the market opens. This is free to the public. It should be noted that this value may change between market open and market close. On the published charts at andrewspitchfork..com the value at the end of the day is posted. If the charts contain the words early or noon they have a last day value that may change when the market closes.