Andrew’s use of confirmations and unique applications of his methods did not stop there. He maintained the positions placed during these strong impulse moves for several months. Once in a trade, he used action-reaction lines to find correction points where he would establish additional positions (see “Above and beyond,” below).
In basic terms, Babson’s action-reaction lines position two lines parallel and equidistant from a centerline, drawn across two pivots, with one line (the action line) keying off past price action and the other line (the reaction line) identifying key points of potential future price action (see “Roger Babson and the arrow of time”). It was his study and application of action-reaction lines that inspired Andrews to develop his pitchfork techniques several years later.
Andrews’ use of these various tools, and adaptations thereof, demonstrate the importance of a complete approach. A properly formed trading strategy requires several layers, from gauging the initial mood of the market to trade execution, management and, ultimately, liquidation.