True Correction Method

A method I often use is one I call the "True Correction" method. It's similar to the segment method but it differs in that a line connecting two segments cannot be drawn until a true correction has taken place.

I'll show the difference between the two methods side by side. TCM SM

The difference is that under the True Correction method I cannot count a segment until there has been a takeout of the low. A segment cannot be counted until a new low is made.

No difference here because the correction has taken out the intervening lows.

But look at the difference in the count when there are progressively higher lows. Obviously, the True Correction method is more conservative. Ranked in order from most conservative (top of the list) to most liberal (bottom of the list) they are:

True Trend method Successive New Extremes Sagging Highs and Rising Lows True Correction method Segment method

It's best to pick out one that fits your temperament and style of trading and stick with it. When you become proficient in using one, begin to master another. Eventually you will become extremely good at detecting a trend just as it is being born. Don't become entirely mechanical in using these methods. Mix and blend them with good judgment. Always look at the big picture. Get perspective. Move to a greater time frame. Step back and view the entire chart. Squeeze the price bars closer together and take a broader outlook on the entire situation.

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