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For TradeStation
The ADAM Theory Price Reflection indicator has been developed for the TradeStation platform by Jan Arps based on a concept originated by Jim Sloman and perfected and popularized by Welles Wilder in his excellent trading book, The ADAM Theory of Markets, or What Matters is Profit. This TradeStation 2000i indicator will plot a set of Adam mirror-image reflection bars on any price chart on any data stream on any time period. In the "invert" mode it plots a mirror projection as described by Michael Jenkinsin his book, "Geometry of Stock Market Profits". In Wilder’s words, ADAM Price Reflection plots "the market’s own prediction of the highest probability of where it will go in the future. [It contains] All information known by the market…information that cannot be improved by adding anything to it. " Trading with the ADAM Reflection Indicator When you are considering a trade entry or exit, use the Expert Commentary icon to click on the price bar from which you want to plot an Adam projection. The ADAM Reflection Indicator will plot a string of predictive price bars into the future and display in the Expert Commentary window the highest high and lowest low values of the prediction. Look at the prediction made by the indicator and ask yourself the question, "If what I see is what the market will do in the future, do I want the trade today?" The answer will be either "Yes", "No", or "I’m not sure". Only take the trade if the answer is YES. Once you are in the trade and a pullback occurs, re-run the ADAM Theory Reflection indicator on the most recent bar to project the anticipated extent of the pullback and subsequent resumption of the trend, if any. Then put your protective stop below the projected pullback level. Continue to raise your stop levels, using the information generated by the ADAM Theory Reflection indicator, until you are stopped out of your position. There are three clues to indicate it is time to apply the ADAM Reflection Indicator and make a decision to get aboard a trend: Clue # 1: A breakout: The market has moved above many or all of the previous tops that can be seen on your chart. This situation shows that there is enough power behind the move to propel the price into new ground. The longer the time frame for the breakout, the more significant is the move. Clue # 2; A trend change: The market has broken out above a long well-defined downtrend and has taken out several previous highs of the new uptrend. Clue # 3: Gaps and/or wide-range days. The market is relatively dull and suddenly gaps up and/or the daily range increases significantly showing that the market has awakened and something is happening. This is especially significant if it happens in combination with clues #1 and #2 above. When one or more of these clues appear, it’s time to apply the ADAM Theory Reflection indicator to your chart.
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