Bestbuy eBooks - Median Line Study - Price Near The Median Line.

Put Andrews' Median Line
to the Test!
Dr. Alan Andrews developed a technical market analysis tool called the Median Line and taught the method in the 1960's and 1970's. He determined there was a high probability price returned to the Median Line - a line drawn on a stock or futures price chart - after making three alternative pivots. Dr. Andrews stated in his Action-Reaction course:

"…drawing a single line will enable you to know
where the price of any stock or any future is now headed
and the probable time it will reach there."

AND, the method would,

"…enable the user to be one of the few who can
tell where the prices are headed, and the place
they will reach about 80% of the time,
and when approximately that place will be reached."

Which brings a number of questions to mind:
Does such a simple method apply to today's markets?

If so, which markets?

Does price return to the Median Line more often than not?

What happens when prices NEAR the Median Line?

What is the probability prices will reverse
and change trend NEAR the Median Line?

When I first found some of Dr. Andrews' work, I gave it little thought. It seemed simple – TOO simple. I thought I would give it a try and started using it in my trading. I mistakenly tried to use the method with REAL money, and I quickly found out that there was much more behind Andrews' words. Most likely SEVERAL years of market study.

Although the initial "failure" ( I hate to use that word) was disheartening, the method continued to intrigue me. I decided to give it a real test drive. I set up a study of the Median Line method to put it to the test!

I wanted to know if this old fashioned method worked. I extracted some of the major observations Dr. Andrews' made and used them as a basis for the study. Dr. Andrews' was an engineer by training and often referred to the probability of prices acting according to his observations. So I thought, why not start there!

I determined the probability of price acting according to Dr. Andrews' observations for a few of the markets I liked watching. What did I find? To be honest with you, it really doesn't matter what I found. Why?

Because I drew the lines on certain charts of certain markets and certain time frames under certain conditions. Would the results I found apply across all markets, all time frames, and all conditions? I don't know – probably not. Could the way I drew the lines differ from the way others would draw the lines – probably.

But, if the way I drew the lines worked for me, and I found that it applied not only to past price charts, but gave me an idea of what to expect price to do in the future – that information would obviously be valuable.

So, if YOU found that the way YOU drew lines on past price charts gave YOU an idea of what to ...

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