Alan Andrews is famous for teaching traders about median lines. The most popular configuration available on modern charting packages is the Andrews Pitchfork, an attempt to project price and time forward from known price turning points (pivots). In most implementations, one selects 3 alternating high/low pivot points (either low/high/low or high/low/high), and the charting package draws the pitchfork as follows:
1. Draw a line (the median line) from the first point through the midpoint of
the second two points.
2. Draw a line parallel to the median line that passes through the second
point.
3. Draw a line parallel to the median line that passes through the third
point.
Andrews stated there is a high probability that:
Price will return to the median line 80% of the time after the third pivot is made.
Price will either reverse on meeting the median line or gap through it (he used daily stock charts, so a common modern interpretation is if the price moves quickly though the median line rather than gap across it).
When price passes through the median line, price will pull back to it (i.e. the median line acts as a price attractor).
If the price fails to reach the median line, it will move in the opposite direction for a greater distance than that which it missed the median line by.
Price reverses at any median line or extension of a prior median line.
Inside lines
Price can be expected to stay within the confines of a pitchfork. Sometimes the pitchfork drawn can be large, and price projection is more easily found when additional lines are drawn within the median parallels.
Warning lines
When price falls outside the pitchfork, the pitchfork is considered to have "failed". Price may, however, return to the pitchfork at a later time. Price may respect lines drawn outside of, but parallel to the original median line, at spacing equal to the distance between the median line and one of the median line parallels drawn from point 2 or point 3.
Andrews encouraged his students to contribute towards the technique. One of these was a trader named Jerome Schiff. He proposed that, when price does not follow the traditional pitchfork implementation, it may follow a modified arrangement where the start point of the median line is taken to be half way between the first and second pivots.
50% Pitchfork
Another variant, attributed to the Austin Financial Group [1] alters the first price to be the same as the third price.
Trigger (Hagopian) lines
Another student, Hagopian, suggested that, if price crossed either a line drawn from point 1 to point 2, or crossed a line drawn from point 1 to point 3, that this indicated a price failure and that a trade may be taken in the direction of the failure.
Andrews often drew pitchforks using alternate daily closing prices. These are referred to as "Mini Pitchforks". In this case, prices are aligned to the closing prices and not high/low prices.
Implementation
The FPS Pitchfork tool for MetaTrader4 supports:
1. The original Andrews pitchfork.
2. The Schiff pitchfork.
3. The 50% pitchfork.
4. The Mini pitchfork.
5. All of the pitchfork variants may have hagopian (trigger) lines, inside lines and trigger lines added by manually modifying the object description.
The tool is implemented as a script, which I have linked to a hotkey, so that it is called each time I press CTRL-F. Some other pitchfork tools are implemented as indicators. The indicator has 2 drawbacks. Firstly, you cant use it easily on a weekend, since redrawing is only done when quotes arrive. Secondly, they consume CPU on every quote, even if they decide they don't have any useful processing to do. Since I run 153 bots at the same time, this ends up being a significant factor.
The user draws a pitchfork using the Metatrader tool, then optionally modifies the object description to contain pitchfork type and lines required. The script then uses the object description information to both align the pitchfork and to draw the necessary ancillary lines.
Recommended reading (and recommended order)
1. Fisher, Greg - Using Median Lines as a Trading Tool.
2. Mikula, Patrick - The Best Trendline Methods of Alan Andrews.
3. Morge, Timothy - Trading With Median Lines.
