Intro to MIDAS
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Welcome to our Introduction to MIDAS
You have reached this page either because you’re unfamiliar with the MIDAS system or because you want a refresher.
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A brief note on the Blog arrangement between Andrew Coles and David Hawkins
Before we introduce the MIDAS system, attention needs to be drawn to the different approaches Andrew Coles and David Hawkins will be taking in the blog. To reflect these differences, AC and DH will be writing separate blog entries categorized under their own names.
There are two reasons for this. First, DH is a position (long-term) trader focusing on stocks, stock options, and bonds. AC on the other hand is a short-term trader (day and short-term swing) focusing exclusively on the futures markets.
The second reason is that like most traders AC and DH have different approaches to technical analysis. These approaches center directly on MIDAS but they’re still different enough to justify separate Blog entries. For example, one prominent consequence of these differences is in their choice of chart format.
DH, like Dr Paul Levine, for the most part has a preference for Equivolume charts, a charting technique developed by Richard Arms Jnr and based on the principle that the market is a function of volume and not time. To accommodate this idea, price and volume in Equivolume charts are combined in one chart pane, so that times of heavy trading volume are emphasized while light volume periods are deemphasized.
DH prefers this method because the horiztonal x-axis is proportional to cumulative volume and not time. One consequence is that MIDAS S/R curves and TopFinder/BottomFinder (TB-F) curves will often plot more smoothly. More importantly, Equivolume charting easily allows the combination of MIDAS analysis with other complimentary volume analysis techniques of Richard Arms. Finally, an additional advantage in the case of the TB-F curves is that a linear regression extension line can be applied to price to intersect at the termination of the duration (cumulative volume) of the move required to create a TB-F curve. For the moment, this will sound a little technical but it will soon be explained in the following essay.
AC by contrast has a preference for conventional candlestick charting, which has time along the horizontal x-axis and not cumulative volume. Two advantages of using time-based candlesticks is first that their familiar reversal patterns can act as a filter for signals provided by the MIDAS system; and second, that they allow robust trade-management approaches in the setting of market stops.
It is possible of course to use MIDAS in other chart formats besides these two, and we shall be discussing other chart formats in our book.
Readers more familiar with the MIDAS system will note that the following introduction is a very brief outline of the MIDAS system. Much more detail can be found in the articles that DH and I have written either separately or jointly for Technical Analysis of STOCKS & COMMODITIES. Even more detail – plus new departures – will be found in our forthcoming book.
Readers are now recommended to continue to the short introductory essay on the MIDAS system by clicking below or on the navigation bar above.
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Continue to first page of essay
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