Charles Drummond – P&L Accumulation Distribution
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Here is a sample segment from the “Accumulation/Distribution Seminar.” The Drummond Envelope is introduced in this work:
“Before we go ahead, we have to make clear what “Distribution and Accumulation” is and why we use it.
Distribution relates to how resistance performs.
Accumulation relates to how support performs.
For example: as you all know,,,, when the pldot starts to hold on top, you have some energy to the downside. You could say that the pldot is distributing. It is resistance, and having some effect. It is knowing when that pldot is going to distribute, that gives you the edge in trading. Our thesis is that one can know when to expect this to happen, as we get to know the theory of the envelope. Added to this, is the concept, that a lower time period will start to show distribution of a higher time period pldot, and we do this by using the geometric tools presented herein.
Before we go ahead, we have to ask why we are using an envelope concept.
The reason for this, is that if we can know what to expect as prices deal with the envelope, then we develop a clear, simple overview as to how the market is supposed to behave.
You will be finding the following, with the envelope concept: Prices will move from bottom of the envelope to the top of the envelope. If prices are going to exit the envelope, the pldot will push it. Once outside the envelope, prices will stay outside until opposing energy will force it inside, and we observe this energy by knowing what patterns do the job. It is consistent, and reliable.
Before we start, I wish to explain one terminology. It is that when prices exit an envelope, that like the wave of an ocean, it expresses true force. We call it a ‘seawave’. On the charts that follow, there will be many text passages mentioning the word ‘seawave’.