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Issue #63
A Winning System
Fundamental Analysis
Objective Wave Analysis
July/August/September 2016
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Contents
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July/August/September 2016
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July/August/September 2016
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July/August/September 2016
MARKET VIBRATIONS
W.D. GANNS HOW TO MAKE
PROFITS IN MODERN MARKETS
BY GORDON ROBERTS
STATEMENT OF INTENT
This course presents a detailed analysis of the entire
sequence of 322 trades from 1915-1931 presented in WD
Ganns US Steel trading course. The specifics of these
trades and of Ganns Mechanical Method provide profound
insights into the mind of one of the greatest traders of
history.
With detailed charts accompanying the analysis, the
reader will discover great insights in reading market action
and learn to understand the specific rules and triggers that
Gann used to manage an account through every phase of
market activity.
This course shows how Gann could turn a $3000 account
into over $6 million in 15 years. But it also shows
extraordinary returns in shorter trading periods. For
instance, from his initial investment of $3000 in February
1915 until October 21 of the same year, Gann produced a
1,337% return increasing the account to $40,123.
WWW.SACREDSCIENCE.COM
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10
At the time, I included a trading signal for Soy Beans. Below, I resubmit that Soy Bean chart from
the initial sample marketing materials posted online in March. I provided this Bean setup in realtime because Im a swell guy and I had a purpose.
It was my hope that we could circle back to this at some future date and show you that Im not
making this stuff up on the fly. This was a public domain trading setup posted online that coincided
with the books release. All the following charts can be verified to have been posted in March at:
www.sacredscience.com/Roberts/Market_Vibrations_Author_Samples.htm.
Beans were basing and allowing accumulation to occur. They were also at buying points per my
research into Mr. Ganns work. Mr. Gann tells us how to think about these things. We need to be
patient sorts for these types of long-term trading thoughts.
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I never know what the markets will do. However, per Mr. Ganns teachings, I had pretty decent
odds to make a nice profit versus the risk Id take for embarking upon a long Soybean trade.
Thats all explained in the book. Its simple stuff that you might consider using for yourself. I
concentrate a very few of Mr. Ganns simplest teachings into a stew for you to consume.
Heres the updated bean chart as of 6/9/2016. Weve just passed Mr. Ganns Birthday. I try to
honor Mr. Gann throughout the year but his birthday is special. It was also D-Day of World War II.
But thats beside the point here. For Beans, from the low I identified to the recent high has been
around $14,800 (34%) per contract, if you were trading the commodity contracts.
I generally advocate attempting to avoid trading the commodity contracts while attempting to
grow my trading leverage a bit with other vehicles like options. Options also help me control my
risks but they can be illiquid markets.
In those same marketing materials, we also posted a recent buy candidate for Chipotle Mexican
Grill (CMG). Here is that original chart posted on the same page online in March
The next chart is from 6/10/2016. CMG has run up nicely and youd have needed to manage your
trade to protect profits. From the low to the high, the market advanced almost 36%. Thats not a
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12
bad return for 8 weeks, and using options as I do, the leverage provided a nice profit.
Another decision point is almost upon us. We could have a double bottom here. Honestly, Mr.
Ganns teachings have me happy to end up either long or short in this situation. Whatever the
direction, odds favor a nicely tradable move. My book explains how to approach such a trading
point and to read it as a specific setup, providing a clear strategy to take advantage of the next
move whichever way it goes.
In the same initial marketing materials, we also included an Apache Corporation (APA) chart. It
didnt elaborate publicly that we should have already been thinking about long trades, but it has
been further discussed in our Online Web Forum. However, anybody who has read my book should
have been thinking about the trading setup at the lows.
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In the book, we actually discussed Crude Oil in detail. APA is a proxy whereby we could hunt an
equity market versus the commodity market. You get to be your own decision-maker to hunt your
own opportunities. Heres the updated chart with an 85% increase from low price to high price
(thus far)
I also spoke of BABA. Thats the Chinese ALIBABA. On that chart I also didnt provide the specifics
publicly. But I was providing hints. BABA was interesting or it wouldnt have been in the marketing
materials.
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From bottom price to top price (thus far), thats around a 45% increase. If this one convincingly
breaks upward, it might present another interesting point to enter a long trade.
Heres is what has been happening with Crude Oil. I was long Crude from near the bottom, though
this was before the book was released. Finally, it has reacted in accordance with Mr. Ganns
teachings. From low to high is a 52% increase so far. This setup was also covered in pretty good
detail in the book for a few reasons.
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Those are a few examples that demonstrate that the market is ripe with opportunity to make
profits for the aware trader who knows what to look for. All of these trades (and more) were
clearly on my radar a few months back, and have added profits to my account. Someone who had
purchased my book a few months back could have already paid for its full cost, potentially many
times over by now.
Please note that some trades will lose. Thats part of reality. You need to approach losses like they
are a business expense. First, you have to define your business properly. Expenses are a lesser
part of profits. Losses are needed to help you understand gains.
Dont try to kick your way through a dark room filled with bedposts and ottomans. Markets are
designed to break toes that way. Television and news and subscription services probably dont
serve you well. They make their money off you trying to trade rather than them trading. Think
about it. You need to learn to make your own decisions.
You can learn some very simple things. You can then try to build them into your psyche. Its up
to you. It really is your choice. I cannot guaranty your success. Mr. Gann said that these proper
techniques and strategies pretty much ensure success. However, reality says that it really is up to
you and your ability to play the game.
I should note that my presentation above used the absolute top and bottom prices. Those are
THEORETICAL values for trades. Youll have to make your own entries and exits for whatever
market you choose to trade. Your returns and my returns will be lower than those values if were
following the rules.
I struggle to find the best trade for each trading situation. I can hunt home run trades. They are
out there to be found all the time. However, they arent what I consider to be the wiser trades.
After all, we can also hunt the types of market vibrations that Ive highlighted here. If you ponder
the potential, it really can be pretty hard to lose money if you catch 25%-85% market moves a
few times per year The charts above demonstrate that such returns can be found in only a few
months, if one knows where and how to look.
We will continue to post further updates of these trades and others that we have given in the book
or the Online Forum as they progress, since many of them are still in progress, being longer term
trades.
Gordon Roberts
Web: www.sacredscience.com/Roberts/Market_Vibrations.htm
Email: institute@sacredscience.com
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16
GOULDENS
COURSE INCLUDING
WWW.SACREDSCIENCE.COM/GOULDEN/SECRETSOFTHECHRONOCRATORS.HTM
STATEMENT OF INTENT
SEE:
Time
keys and simplified directions.
MOST IMPORTANTLY IT EXPLAINS HOW TO ISOLATE THE
The
Science
of Rectification - based on ancient
ASTROLOGICAL SIGNALS WHICH ARE "LIVE" AT ANY GIVEN
techniques,
including
a rectification of S&P500!
POINT, AND WHICH WILL HAVE AN EFFECT UPON A MARKET.
GOULDENS
WWW.SACREDSCIENCE.COM/GOULDEN/BEHINDTHEVEIL.HTM
&
FEEDBACK SEE:
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July/August/September 2016
17
DDD
BY DANIELE PRANDELLI
Prandellis 2014 & 2015 Soybean & Corn Forecasts were PERFECT! 95% Accuracy!
Each Bulletin includes a PFS TIME Forecasting Model giving the swing turning points & push impulses
for the year, combined with specific Key Price Levels determined by his proprietary Planetary Longitude
Lines. Subscription includes ongoing updates of analysis and Key Price Levels thru the year! $250.00
For Details & 2014-15 Results see: www.sacredscience.com/Prandelli/PFS-Forecast-Bulletin.htm
THE LAW
OF
Know In Advance!
WWW.SACREDSCIENCE.COM/PRANDELLI/LAWOFCAUSEANDEFFECT.HTM
MORE SEE:
July/August/September 2016
18
10
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20
Ganns Mechanical Method or swing indicator is based on the definition of trend. An up trend
has a series of higher highs and higher lows. A down trend has a series of lower highs and
lower lows. As long as the particular price movement is making higher highs and higher lows,
the trend indicator continues to move up to the highest level reached. The instant that the
market has both a lower high and a lower low, the trend indicator changes to down direction
to follow the duration of the declining price movement. It continues to follow the downtrend
as long as the market continues to make both lower highs and lower lows and moves down
to the lowest price level reached. As soon as the market has both a higher high and a higher
low, the trend indicator changes direction again to follow the new upward movement. In this
way, the trend indicator identifies the termination levels of up and down swings in the market
for both entry and stop loss placement. This can be expressed as a basic If, Then statement:
(1)
If todays high is greater than yesterdays high and todays low is greater
than yesterdays low, move the Trend Line up to the highest high.
(2)
If todays low is less than yesterdays low and todays high is less than
yesterdays high, move the Trend Line down to the lowest low.
Many software programs and trading platforms have several swing indicators that allow for
this specific type of charting or something comparable. The example below illustrates Ganns
Mechanical Swings from Market Analysts charting tools. The indicator is green for up mode
and red for down.
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A very basic understanding of this mechanical method is useful for identifying price levels
where protective stop loss orders should be placed. Here is what Gann himself published on
this topic:
WHERE TO PLACE STOP LOSS ORDERS: You must place STOP LOSS orders below the
lows of swings and not just below the lows on the daily chart. STOPS must be above old tops
or below old bottoms on a weekly or monthly chart. STOP LOSS orders placed below closing
prices on the daily or weekly chart are much safer and less likely to be caught because you
are moving your STOPS according to the trend. STOPS placed above closing prices on the
daily or weekly chart are caught a smaller number of times than if you place them below a
daily bottom or a daily top. The swings or reversals in a market are the prices to place STOP
LOSS orders one way or the other. It is of great importance to know where to place a STOP
LOSS order properly.
In terms of trade entry on either the long or short side of the market, Double Top & Bottom
formations, Triple Top & Bottom formations as well as The Fourth Time at the Same Level,
represent the main chart patterns for the swing indicator that were presented in the various
course versions of Ganns Mechanical Method. These patterns typically allow for smaller risk
exposure as the protective stop loss order can be placed fairly close to the entry level. The
following illustrations graphically demonstrate these specific trading patterns presented in
W.D. Ganns Mechanical Method.
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Pay close attention to these types of formations, especially when they occur on the weekly
and monthly charts and have taken considerable time to develop. Ganns market advice is
very straight forward in this regard. (1) Sell Short when price tops at or near the same price
level a second time (Double Top), use a tight stop loss order just above the prior high level.
In other words, keep the financial level of risk on the trade small. (2) Sell Short when price
tops at or near the same price level a third time (Triple Top), use a tight stop loss order for
protection. The inverse applies to the buying signals. (1) Buy Long when price bottoms at or
near the same price level a second time (Double Bottom). (2) Buy Long when price bottoms
at or near the same price level a third time (Triple Bottom). Always use a protective stop loss
order to keep financial risk at a minimum. These are the basics of Ganns so called: Mechanical
Method and Trend Indicator.
There are other tools such as geometric angles, support and resistance levels and timing
methods that can be incorporated as well, but because this particular subject requires more
space that a magazine article can accommodate, interested readers for a limited time can
obtain a FREE electronic copy of my book on Gann Analysis, Gann for The Active Trader
by simply sending an email to institute@cosmoeconomics.com with Free Book in the subject
line. In addition, Gann frequently talked about market cycles, history repeating and periodicity.
Those interested in this topic can also view a recent blog post article at danieltferrera.com.
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23
BY DANIEL T. FERRERA
ON
FOR A DETAILED WRITEUP ON THIS COURSE INCLUDING FULL CONTENTS, AND SAMPLE SECTIONS SEE:
WWW.SACREDSCIENCE.COM/FERRERA/THE_PATH_OF_LEAST_RESISTANCE.HTM
HTTP://WWW.SACREDSCIENCE.COM/FERRERA/
OUTLOOK2016.HTM
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24
www.kjtradingsystems.com
Full time trader and best selling author Kevin Davey can improve your
trading 2 ways:
Strategy Factory Workshop: Learn to build trading strategies the correct
way, by following the step by step process Kevin used to win the world's
premier futures trading contest:
Don't let your trading fall behind - get Kevin's help today
www.kjtradingsystems.com
DISCLAIMER: THERE IS A SUBSTANTIAL RISK OF LOSS IN TRADING. IT IS THE
NATURE OF COMMODITY TRADING THAT WHERE THERE IS OPPORTUNITY
FOR PROFIT, THERE IS ALSO RISK OF LOSS. COMMODITY TRADING
INVOLVES A CERTAIN DEGREE OF RISK, AND MAY NOT BE SUITABLE FOR
ALL INVESTORS. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF
FUTURE RESULTS.
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25
Step 1.
Avoiding the #1 Option Trading Mistake
Option trading has many more advantages than trading stock, but, as you probably know, it is a
bit more complicated, as well.
And, for the individual trader, options can be a little intimidating. Thats why many investors
trade options by purchasing Out-of-the-money options (often short-term options), since they
cost less than long-term options, and its a simple strategy.
For example, Out-of-the-money calls are especially popular because they are cheap and seem to
follow the old Warrant Buffet paradigm we all love: buy low, sell high.
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But dont let this glitter FOOL YOU . . . because not losing money is just
as important as making money!
One problem with short-term, Out-of-the-money options is that you not only have to be right
about the direction the stock moves, but you also have to be right about the timing.
That ratchets up the degree of difficulty.
To make a profit, the stock doesnt just need to go past the strike price but also must do this
within a defined period of time.
In the case of the $120 calls on FB, youd need the stock to reach $120 within 30 days to make a
profit.
This dual objective of having to be right on direction plus on timing really lessens the probability
of an option trade being a winning trade when buying options.
And everything that I teach my clients is based on managing risk and increasing the probability
of winning trades.
In the Facebook option trade, you are wanting the stock to move more than 20% in less than a
month. This would be like a 2 Standard Deviation move!
How many stocks are likely to do that?
Not many. In all probability the stock would not reach the strike price, and the options would
expire completely worthless.
Based on probability, using Standard Deviation, there is only about a 5% chance of this stock
reaching $120 to $121 by expiration.
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So as a Seller, all of the things in this example are the same, but in your
favor, instead of against you.
This is why a lot of people take advantage of Selling Options for Profit
Generation & Hedging . . .
By selling options, we are, in essence, selling time.
What a powerful dynamic . . .
And its a strategy thats yours for the taking . . .
An option is like a coupon that must be redeemed by an expiration date or else it is no longer
valid.
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Time Value ~ is used for trading strategies that take advantage of the accelerated Time Decay of
an option into its Expiration.
Option Income Strategies are very tied to Time Value and the impact it has on the price of an
option.
Take a look at the following chart to see just how predictable and
powerful this option paradigm is! And answer the question that follows:
So if the underlying security price was to go sideways, having no directional trend, would you
have wanted to have BOUGHT an option 120 to 90 days out, or would you have rather SOLD an
option?
This is the common natural time value progression for all options.
And its seriously like falling off a cliff . . . blindfolded!
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Step 3.
How Option Pricing Works
How to value an option
Time Value (x) Implied Volatility (x) Intrinsic/Extrinsic Value . . .
Note: Once you know these variables, then you are ready to price an
option & know what its option premium should be.
Step 4.
The Market Makers Secret
What they dont want you to know . . .
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Broad markets tend to have 2 to 3 week cycles and will trade in sideways channels 70% to 80%
of the time.
Based on this sideways price movement Out-of-the-money (OTM) option buyers will lose
approximately 70% of the time.
Market makers know these statistics and, therefore, tend to trade from the sell side.
This is the professional money, so you need to think like a market maker.
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Trading Probabilities
Trading is a business of probabilities, and to be successful a trader needs
to focus on controlling risk. One important step is to know the winning
probabilities of any trade taken . . .
One simple & free tool for measuring probabilities is:
The Option Delta
It will tell you the value of an option based on the underlying move.
It is also used to measure the probability of a price move on the underlying move itself.
An Option Delta of 68/70 equates that the strike has a 68%/70% probability of being ITM at expiration.
An Option Delta of approximately +/- 16 is equivalent to the outside point of a 1 STD Implied move at
expiration.
This equates that the 16 Delta strike has only a 16% theoretical
probability of being ITM at expiration.
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Using this probability analysis provides traders with a very useful tool for determining price
targets to trade against and its also very useful for setting hedges.
So, based on the math of probability, you can see that approximately 68.2% of options
bought expire worthless, and, based on this, its a good idea for all traders or investors to
consider selling options as well as simply buying them.
This added option strategy for profits and hedging will make a dramatic and positive difference
in ones trading performance when used correctly.
Income Strategies
Covered Calls
Calendar Spreads
Diagonal Spread
Long Iron Condors
Credit Spreads
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1. Bear Call Credit Spread is best if you think the market is probably
going to go down.
Strategy: Selling one call with a lower strike while simultaneously buying
one call with a higher strike in the same month.
Selling a Bear Call Credit Spread 25% Return on Margin
Credit Spread/Max Profit: $100/Ct. Return on Margin: $100/$400 = 25%
2. Bull Put Credit Spread is best when you think the market will probably
go up
Strategy: Sell one put while simultaneously buying one put with a lower
strike in the same month.
Selling Bull Put Credit Spread
Credit Spread/Max Profit: $130/Ct. Return on Margin: $130/$370 = 35%
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Entry: May 1
Trading at: $207
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Strategy 2:
Entry: May 1
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Trading on Target
Free Newsletter
Visit TradingOnTarget.com
to receive a free newsletter
on Discipline for Traders
Adrienne Toghraie, Traders Success Coach, writes
articles that are dedicated to those of you who have mere
minutes a day to absorb helpful ideas and creative solutions
to nagging problems about discipline in trading.
July/August/September 2016
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Your ability to trust yourself will determine your ability to be disciplined in trading.
Without trust there is no dependable relationship between you and yourself, between you and
another person, or between you and your faith in your ability to follow your own trading rules.
All of these relationships exist, whether you are consciously aware of them or not, because your
conscious and unconscious mind divide up into parts, which have different and often competing
roles and belief systems.
The Four Elements of Trust
In order to gain long-term trust, four elements must be present. The first element is inner
security. The foundation of inner security starts when you are in the womb. Infants must know
that their basic needs are being met: they must feel that they are safe in their environment,
that their need for nourishment and comforts will be met, and that they are loved, wanted and
accepted.
Too many of the traders with whom I have worked did not feel loved as a child even though they
recognize the fact now that their parents loved them. But, being aware that they were loved
does not change the insecurity in their inner child.
The Second Element
The second element in creating self-trust is knowledge. Many people call me and say, Im ready
to trade because I just finished reading a couple of books about trading. Unfortunately, there
are many people who enter trading believing that they dont have to have an extremely good
education to become a successful trader. I know that a person is ready, educationally, to trade
when he says, Ive read almost everything in trading that is out there. I have a business plan
and a system that is back-tested which I believe will be profitable. Assuming what he says
is true, the only thing needed for his success is whether he has the inner security to trade.
Education builds trust in your ability.
The Third Element
The third element necessary to build trust is evidence. For a trader, the evidence he needs is
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If you can truthfully answer NO to these questions, you are well on the way to becoming a
disciplined trader or investor. However, if you give your unconscious mind the message that it is
okay to break the rules, it will be okay with your unconscious mind to support you in breaking
trading rules.
Breaking trading rules is like trading without a system.
Making Rules that You Can Live by
Is it ever okay to break your trading rules? The answer is No, Never! If you have anticipated
all contingencies, you will have a rule for everything, so you wont be breaking rules. Youll be
following the contingencies. For example, if you say, Im going on a diet and Im never going to
eat anything fattening, suddenly you will have an overwhelming urge to eat a piece of chocolate
cake. However, if you will make the rule about going on a diet to include a periodic slice of
chocolate cake as part of the diet, then you will not be breaking your rules. The result is that
you will stay on your diet.
The same principle of creating rules you can live by applies to your trading. Your rules must
cover special conditions and exceptions. When they are part of your rules, you will find it not
only possible, but easy to stay within your rules at all times. The message that you then send to
your unconscious mind is that you can be trusted.
What Do You Do if Youre Not Trustworthy?
Basically, you start by keeping your agreements. This may sound easy, but it is not. If you
are unable to trust yourself to keep even small agreements because of a pattern of broken
agreements, this could present a challenge. It is essential that you must keep all your
agreements. For that reason, if you want to send your unconscious the right message, you need
to make only those agreements which are very easy to keep and which you have a strong desire
to keep. They may be things which you want to do so that you know you wont break them. You
may develop back-up systems so that you cant forget. The important thing is to do this one
step at a time. Dont overwhelm yourself with agreements. The danger would be that you would
slip up and then fall off the wagon as soon as you fail once.
Each time you keep an agreement, acknowledge your achievement and reward yourself. Give
yourself a verbal pat on the back. You may even have a special treat you give yourself each day
for keeping all of your promises, agreements and rules. After a month of keeping each and every
agreement and then rewarding yourself, you will have established a strong pattern of self-trust.
From that point, trading discipline is no longer a problem.
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Conclusion
Self-trust is the backbone of trading discipline.
If you can trust yourself to do what you say
you are going to do, you can follow your own
trading rules. However, if you have been raised
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OBJECTIVE WAVE
ANALYSIS
By George Krum
In the realm of technical analysis few theories have captured the investment publics
imagination in the same way as the Elliott Wave Theory. After all, who would not get excited
about a theory that, in the modest words of its creator, claims to be based on Natures Law,
and to have revealed the Secret of the Universe?
When it comes to its practical application to trading, one must agree however with its key
proponent, Robert Prechter, who wrote that despite the basic simplicity of the concept itself,
Elliott wave analysis is not easy to do it is one thing to recognize that the Wave principle
governs stock prices, while it is quite another to predict the next wave and still another to
profit from the exercise. If that is not enough to pour cold water on your wave enthusiasm,
consider the well-known fact that no two self-respecting Elliott wave practitioners will agree
upon not only a future, but also a past wave count.
While none of this should detract from the major achievement of wave theory which
is that it gives investors a general framework for market and human society observation -the problems associated with its successful application to trading still remain and must be
addressed. The key problem stems from the complex wave count rules which open the door to
subjective wave identification and interpretation in order to fit the requisite number of waves
into a larger degree wave. Therefore, we sought to introduce an objective way for visualizing
waves or swings, which is immune to subjective definition and implementation, and can serve
as a basis for an unbiased and improved analysis.
The Swing Price indicator (Chart 1) is a swing/wave recognition overlay which marks the
beginning and end of price swings detected by the indicators algorithm. Up swings are painted
green, down swings are painted red. By overlay we mean that the indicator has no relation to
price levels but solely to pattern, and is overlaid over the price chart to merely highlight price
swings, not actual price levels. What sets it apart from traditional wave definition methods is
that the analysis is done automatically, in real time, based on precise mathematical rules, and
not on a forced, ex post facto 12345, ABC, xyz, etc. count. In addition, it incorporates a time
element, a subject which will be discussed briefly below:
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Chart 1
It doesnt take a fortune teller to predict that after glancing at the chart above, some wave
practitioners will not agree with the definition of the waves. We have no objection whatsoever
to them sneaking in or ignoring a wave in order to fit their count quota. They should remember,
however, that price is the ultimate indicator, and when they subjectively alter the waves, they
are finding fault with price, not with the indicator itself.
We are leaving the swings/waves unlabeled on purpose, to allow even those who are not
Elliott wave (EW) practitioners to incorporate them into their analysis. For those who use the
EW nomenclature, it will be easy to discern between motive and corrective waves, between
waves of equal duration and waves of different degrees, and they can feel free to apply any
count and labeling they see fit.
Besides objectivity, there are several other benefits to using this type of wave/swing
detection. First is the speed and ease of use, as the indicator will display automatically for any
instrument in any time frame. Second, you can display the indicator in its current and higher
time frame on the same chart (e.g. daily and weekly [thicker line], Chart 2):
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Chart 2
Third, you can use the data supplied by the indicator to extract information about the current,
maximum and average swing/wave duration of a particular instrument. The incorporation of
a time element into the visual depiction of the waves adds a new dimension to the analysis.
The SwingTime indicator (bottom panel, Chart 3) takes care of this task, and displays the
duration information for the respective time frame. It should be noted that waves which fall
short of the average wave length are usually of the corrective variety:
Chart 3
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Insight into the swing duration of a particular instrument can be invaluable for fine tuning
many other indicators. There are entire books devoted to the topic of adapting the default
settings of the most popular TA indicators, so we will not delve into the subject. Suffice it
to say that armed with the information from the SwingTime indicator, you no longer will be
confined to the default settings club, but will be able to adapt many indicators (think MAs,
MACD, RSI, Stochastic, etc.) to the requirements of a particular instrument in a specific time
frame. In addition, the indicator makes it very easy to figure out when to be more liberal or
conservative with your stop/loss levels.
We have used this insight to fine tune our Hurst channels, which helps us to identify price
targets months in advance to within a few cents, as documented here. And we also use this
information, among other things, to calibrate our market breadth studies, which have a good track
record of signaling price turns (Chart 4):
Chart 4
If a price overlay looks too abstract to some, we have also developed an indicator which
combines price pattern and pivot point recognition into one simple but very effective tool
(chart 5):
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Chart 5
The SwingPivot indicator gives you the added benefit of highlighting pivot levels directly
on the chart, making it very easy to use them as long/short, support/resistance levels, and as
price targets above/below which to place stop/loss orders. For options traders, they provide a
convenient tool for choosing strike prices for executing their favorite option strategies. Most
importantly, they help tremendously with identifying higher highs and higher lows, or lower
highs and lower lows, which is indispensable for an accurate definition of trend.
In summary, the indicators discussed above have one goal in mind: to make your technical
analysis objective, easier and more relevant. You can use them as a stand-alone tool or for
a variety of other purposes, such as helping you with placing your stop/loss levels, with your
wave identification and count, with fine-tuning the default settings of the many other traditional
indicators included in most charting packages, and as a stimulant for further research.
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www.OddsTraderApps.com
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51
a binary option signal service for only $99 per month. Simply visit our website at www.
tradershelpdesk.com or www.gailmercerbinarysignals.com to find out more information.
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52
The Bear Trend from the May 2014 High is Probably Not Complete
Chart 1 is a EUR/USD monthly chart. Lets first look at the facts. The May 2014 high
completed a corrective high off the July 2012 low and resulted in a very strong bear trend to
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the March 2015 low. Since the Jan. 2015 close, the EUR/USD has had a very small net change
as of the time of this writing (mid-June), characteristic of a consolidation. While there may be
a breakout up from the consolidation range (in this case, the March 2015 Aug. 2015 range),
a consolidation may also be a correction. The pattern off the March 2015 low has strong
corrective characteristics (better seen in Chart 2, weekly EUR/USD data). Corrections usually
have overlapping wave patterns just like the pattern from the March 2015 low. If the rally off
the March 2015 low is corrective, once the correction is complete, if not already complete, the
bear trend off the May 2014 high should continue to eventually below the March 2015 low.
Lets now take a look at the monthly momentum or oscillator position. Chart 1 has two
oscillators in which their settings have highs and lows that correlate relatively well with the
swing highs and lows of the monthly EUR/USD. Both oscillators are currently Bear, a strong
momentum signal the outside reversal month of May is very likely a multi-month high. So
regardless if a corrective high off the March 2015 low is complete or not, the net trend of the
EUR/USD should be down for at least a few, if not several months. Lets now talk about the
possibility a corrective high off the March 2015 low may not be complete.
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determine. The main factor that makes the probable corrective rally off the March 2015 low
complex is there are Bullish and Bearish corrective patterns. The March 2015 Aug. 2015
rally unfolded in an ABC corrective pattern, the Aug. 2015 Dec. 2015 decline also unfolded
in an ABC corrective pattern and the May 2016 high has potentially completed an ABCDE
corrective pattern off the Dec. 2015 low. Here is where it gets tricky and confusing. If the May
2016 high is a corrective high, then Dec. 2015 low should eventually be taken out. However, if
the Dec. 2016 low is a corrective low, then the Aug. 2015 high should eventually be exceeded
and it has not yet been exceeded. This is a warning that a corrective rally off the March 2015
low may not yet be complete. Lets take a look at weekly closing data to see if it helps clear
this up.
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should be in a bear trend for several months to below the March 2015 low, if not further.
The ABC corrective pattern in weekly closing data and the Bear monthly oscillators suggest
an ABC corrective high or at least a multi-month high should be complete. Lets discuss what
other signals may suggest this may be the case.
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FUNDAMENTAL ANALYSIS.
By Jacobs Singer
Long term analysts are calling for a correction in the stock market that should last
approximately five years. Elliott Wave charts are suggesting that the present wave is major
WAVE V up, with an ABC correction to follow. This can be seen in the chart in Figure 1, where
the Elliott Wave count is suggesting a WAVE V failure, a very bearish indicator.
With computer trading gradually taking over market trading, a wave five failure is becoming
more and more common. In the book, Elliott Wave Principle, by Frost and Prechter, published
November 1978, they show charts in the initial pages, where WAVE 5 is equal to WAVE 1. For
the most part, five-wave formations have clear-cut wavelike characteristics with infrequent
irregularities except for what are known as extensions.
The book further explains Failures. (page 32) Elliott used the word failure to describe a
five-wave pattern of movement in which the fifth impulse wave fails to move above the end
of the third. Failures give warning of underlying weakness or strength in the market and tell
us more about the reality of stock market life than most of us care to hear.
In all my years of stock market trading (I started in 1969), I have found that a WAVE 5
failure leads to a long term Bear market. In recent years, with computer trading becoming
more and more active, I have noticed that WAVE 5 failures are becoming more and more
common. Is this because of the algorithms used in the computer programs or is it because
computers are becoming more and more intelligent in analyzing the market? Time alone will
tell.
My chart in Figure 1 is a monthly chart of the S&P500 index with an Elliott Wave count
suggesting a WAVE V failure. This is confirmed by both the RSI 14 and MACD indicators which
are both in SELL mode.
Figure 1.
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The other charts I watch that are suggesting that the market could be moving into a
recession, are the Presidential cycle (Figure 2) and the Kondratieff Wave (Figure 3).
Figure 2.
Figure 3.
The Presidential cycle in Figure 2 shows how the share market always tends to correct in
the final year of a Presidents term of office, and only starts correcting upwards when a newly
elected President starts exerting his influence on the financial market. With President Bush,
the chart shows that it took two years before the market started recovering. With President
Obama, recovery was immediate. What for the year 2017? Whoever the next President will be,
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one can only guess how long it will take for the Index to start recovering. Of course this will
depend on the financial policy of that President.
The Kondratieff Wave shown in Figure 3, was developed by the Soviet economist Nikolai
Kondratieff and brought to international attention in his book The Major Economic Cycles, in
1925. The K-Wave is calling for a minor correction in 2016 with a major correction in 2019.
This does tie in with an Elliot Wave ABC correction, Wave A being a down wave, Wave B an
up wave and Wave C a major long term down correction. As we can see from the chart, the
corrections down never occurred exactly as called for by the K-wave, and the recovery always
occurred before the recovery date predicted by the K-Wave. This is because the Kondratieff
Wave is an analysis of the economic cycle, and the S&P500 index is a measure of the stock
market cycle. However, the K-Wave does give us an indication of what to expect for the future.
Combined with the Presidential cycle, it is something that should not be ignored.
So, what is the strategy one should follow when the market goes BEAR? Sell everything
and hide the money under the mattress, or are there other strategies one could follow?
Many investors buy conservative dividend or interest paying stocks. Their strategy being
that as the market falls, hopefully the cash they receive as the dividend/interest, will cover
the loss of the share price. Other investors go for gold, believing that price of gold will rise
as the market corrects. Still others however follow the strategy of a very successful market
investor. His name? WARREN BUFFETT.
Warren Buffet looks for solid companies; companies he knows will survive a major market
correction, and recover strongly. His BUY and HOLD strategy is well known, but many smaller
investors find it emotionally difficult to handle. Buying shares that Warren Buffett owns can
be expensive.
So, following the Buy and Hold strategy, and looking for little known companies that have
a solid financial position can be difficult. However, below is a strategy I developed to analyze a
company fundamentally and tell one whether the company is one that can be bought without
fear of a major collapse as the market corrects.
In 1986, I worked for a stock broking company in South Africa as a technical analyst. In
the office, next to me, was a fundamental analyst. We would often sit and chat over a cup
of coffee and he taught me a great deal about how to analyze a company fundamentally.
With his assistance, I developed an excel spreadsheet strategy that would tell me whether a
company was a sound company that should be invested in. The strategy worked so well when
combined with Technical Analysis, that the South African Securities Commission accused
me of insider trading after I advised investors on what to buy. I spent a nervous morning
explaining to their committee the method I used to analyze a company.
Figure 4.
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The chart in Figure 4 is a copy of a portion of my spreadsheet that shows the values I would
look for.
I adopted four targets for investing.
If the Buy If = 5, then I would analyze the company technically looking for a possible entry
point.
If the Buy if = 6, I would look for that entry point and advise investors to raise an overdraft
at the bank to buy the share.
If the Buy if = 7, I would advise investors to raise an overdraft, put their house in mortgage
and buy the share.
If the Buy if = 8, I would advise investors to raise an overdraft, mortgage their house, sell
their motorcar and golf clubs and buy the share.
In all my years of analyzing companies, I had only one Buy if = 8, and that was when the
South African Securities Commission accused me of insider trading after I had advised clients
to buy the shares of the company.
If you, the Reader, are interested in using the spreadsheet, you may contact me at jaxxinn@
gmail.com, and I will send it to you. There is a charge for it, however. You have to place $1 in
the tin cup of a female beggar sitting on a street corner. I must add that one shareholder in
Spain did so well using the strategy, that he put $1000.00 in the tin cup of a female beggar,
then had to call an ambulance because she fainted.
So, to conclude. With a major market collapse in the offing, looking for a share to buy
following the Warren Buffett strategy of Buy and Hold, use the Fundamental Analysis strategy
shown in Figure 4. Identify a company you would like to own shares of and then use technical
analysis to determine the entry point to buy the share.
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After their March meeting the FOMC stated that they were now only forecasting two rate
hikes in 2016 and that their inflation target may not be met in 2016. In addition European
Central Bank (ECB) President Mario Draghi stated that he expected inflation in the Eurozone
to remain low for quite some time. These statements helped push gold even higher.
Using my proprietary software one can see the double buy divergence on the weekly chart
for gold. The first buy divergence is the stochastic getting oversold with a positive MACD. The
second buy divergence is the stochastic getting oversold with a rising ADX. With this double
buy divergence gold rallied almost 100 dollars from a low of 1207.70 in the week ending
April 1st up to a high of 1306.00 in the week ending May 6th. In addition the KnowVera
Trend Channel was very strong during this pullback into my 10-bar weighted moving average,
setting up a beautiful pattern.
Currently the central banks of Denmark, Sweden, Switzerland, Japan, and the Eurozone
have negative interest rates. Denmarks central bank has been experimenting with negative
interest rates for the longest period of time, setting their interest rate below zero for the first
time in 2012. The experiment of negative interest rates has not been effective in stimulating
economies.
Gold is in a perfect scenario for a move to higher levels. The technicals are significantly
bullish for gold on the daily, weekly, and monthly charts. With the worldwide economic
slowdown and weak U.S. economic data expectations for hikes in the federal funds rate during
2016 are low. Central banks are attempting to be as dovish as possible in both their language
and approach. Gold traders do not believe that the Federal Reserve will be raising the federal
funds rate with the current worldwide economic slowdown. I do not believe that the FOMC
will choose to raise the federal funds rate at any meeting before the November presidential
election. I believe there is a 50-50 chance that they will choose to raise the federal funds rate
during 2016 after the election is over.
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In the last 8-9 years the Federal Reserve has spent over 4.5 trillion dollars on quantitative
easing. After all of this spending the second estimate of U.S. 2016 first-quarter GDP was
reported at a mere 0.8%. In addition durable goods and retail sales are significantly sluggish
and the U.S. manufacturing sector is weakening. Investors are losing faith in the Federal
Reserve. The Federal Reserve is under significant pressure to kick start the economy; however
its mandate is to maintain price stability and monitor employment. The employment was the
bright hope for the U.S. economy but is now pulling back. In April nonfarm payrolls increased
by 160,000, less than the expected increase of 200,000. In May nonfarm payrolls increased
by 38,000, much less than the expected increase of 158,000.
Now is not the time for the Federal Reserve to even be thinking about raising the federal
funds rate. In 2012 when the unemployment rate was above 8.5% the Federal Reserve stated
that they would look to start raising the federal funds rate once the unemployment rate fell
below 6.5%. If they had done so the federal funds rate would now be around 1.0%, providing
the Federal Reserve the option to cut the federal funds rate. The unemployment rate was at
5.1% when the FOMC decided to raise the federal funds rate by 0.25% at their December 2015
meeting. The Federal Reserve waited until too late in the recovery cycle to begin raising the
federal funds rate.
A hike of the federal funds rate would be bearish for gold. If the FOMC does choose to raise
the federal funds rate at any meeting before the presidential election it would be for political
reasons. It would be done with the goal of strengthening the U.S. dollar to help the Bank of
Japan and the ECB by devaluing the yen and the euro. A devaluation of their currency would
make their exports more attractive, giving a boost to their economies. I believe there is only
a 15% chance of the FOMC choosing to act for these reasons.
-Stephen Kalayjian is the Chief Market Strategist of KnowVera and the creator of Pattern
Recognition 101. More information on Pattern Recognition 101 can be found at www.
patternrecogition101.com. Sign up for his daily newsletter, The Kalayjian Report, at www.
kalayjianreport.com. Follow Steve on Twitter at @stevekalayjian.
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Algorithmic Trading;
Stocks, Options,
Futures, FOREX
SOFTWARE
Real-time charts with no annual
fees.
EDUCATION
Highly efficient one-on-one
training and coaching.
TRADE ALERTS
Assets ready for a price move.
DOCUMENTATION
Photo sharp documentation.
Individual session recordings.
Day Trading
Swing Trading
Long-Term Investing
contact@NeverLossTrading.com
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Markov chains are mathematical systems that hop from one state (a situation or set of values)
to another. For example, if you made a Markov chain model of price behavior, you might include
upwards moving, sideways moving, and down moves as states, which together with other
behaviors could form a state space: a list of all possible states. In addition, on top of the state
space, a Markov chain tells you the probability of hopping, or transitioning, from one state to any
other state---e.g., the chance for a price move from currently being sideways will move up in a
defined time period, without moving down first.
You might see now, why simple moving-average-based systems like MACD, Stochastic, CCI, RSI,
and Bollinger Band do only consider one dimension of trading, relating the happening of the
past to portray the future. Ask yourself, what does the price move from the last 50 and 200 days
have to do with the price action of now? If trading or investing was manageable with such simple
math: one moving average crossing over the other is giving an indication to go long or short in
an asset; everybody would be rich already.
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However, considering a Markov chain alone is not good enough for a high predictive system;
hence, additional help was found in the chaos theory, where a disorder is detectable: a disorder
is a happening that can be measured and extrapolated by filtering and portraying an underlying
pattern to describe the actual- and future happening and how to react.
Using this knowledge and combining chaos theory and Markov chain with filtering mechanisms
from the signal transmission theory: Hamming distance and analogue digital conversion,
NeverLossTrading was developed into a high probability trading system, where mathematical
relations are used to predict the future by the happening of NOW.
Chart-2: How Filtering Models Help to Find Price Turning Points
Chart-2 shows our newest development: NeverLossTrading TurnPoint trading, where multiple
algorithms help you to determine new price directions, price limiting and price breakout lines
(horizontal lines: NLT Box Lines).
Why does signal theory help to determine future price moves?
You take the help of a computer to analyze the underlying price pattern, filtering patterns which
more likely lead to a directional price move from others that do not.
In technical terms: you are filtering the signal from noise, determining instances that have the
underlying pattern that might lead to a price action from those that do not produce a predictable
future happening.
Math is the science we use to translate the natural model of changes in supply and demand
into something predictable: Institutional investments stand for more than 85% of all market
happening and help us to make the price action predictable.
When institutional leaders take action, other market participants notice this and act. When a new
price direction develops and is confirmed by the price action of other institutional investors, it is
time to participate in a directional trade:
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The action of one, leads to the action of another. This is why we call our model activity based
trading. It follows a natural model, using computers to determine and follow underlying price
action.
Our models are not auto trading systems: the final decision is yours and we share with you
how to balance the power of the human mind with the power of data analysis by real time
computers, which you can operate from the comfort of your home or any place with internet
connection.
Chart-3: NeverLossTrading Price Move Model
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Chart-4 demonstrates how to spot those repetitive patterns, allowing you to act on all
considerable times, ticks, or ranges; however, we also share in our mentorships preferred and
meaningful considerations.
Based on this knowledge, NeverLossTrading and TradeColors.com were developed and are shared
as mentorship programs; working together one-on-one with experienced- and new traders over
longer periods of time to ensure the learned is applied accordingly.
In summary: there are four dimensions to measure and extrapolate a pre-price-move
happening:
Price Momentum Change measured as acceleration in the price move of the underlying.
Statistical Volatility Change: price moves per observed time frame.
Price Move Constellation over time.
Volume Momentum Change in the observed time frames, similar but measured differently to
price momentum change.
In a simple summary: with the help of multiple algorithms, pre-stages of a change in supply and
demand are detected and dissected that might lead to a directional price move; however, trades
are not immediately accepted, other market participants have to confirm the new price direction
and only when this is given, a trade or an investment is accepted: see chart-3.
Using real time data, NeverLossTrading algorithms paint the happening with the help of modern
vector graphics on your chart, helping you to easily spot and follow supply and demand patterns
that repeat themselves based on the happening of NOW for all asset classes and all considerable
time-, tick- or range-frames and is applied by day traders, swing traders and long-term
investors.
NeverLossTrading is not a promise that you never lose a trade, the brand name comes from
teaching trade repair concepts: when a trade goes against you, you have the ability for a trade
repair, with the potential that you can even turn a loser into a winner: Never Stop Loss Trading
was a bit lengthy.
After a lot of theory, let us give you some practical examples:
Many traders rather prefer short- to long-term engagements.
If this is the case, how can you benefit from long-term price happenings that are for example
expressed in the NLT Long-Term Investor Alert?
In our teaching, we share the relation of weekly- and 4-hour charts; however, the question is:
How to put this into action?
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At the above chart, the chosen trade was with the direction of the PowerTower candle; however,
if you find a confirmed NLT TurnPoint signal that points in the opposite direction, it is valid too.
We report symbols with the referring chart setups on multiple time frames.
When you are using NLT Top-Line, you are even in possession of a scanner that helps you to find
symbols with a desired strong individual price move setup.
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To help the beginning trader, our basic system: TradeColors.com has a watch list indicator that
helps you to filter up to 50 symbols for the desired trade setup, at the click of your mouse.
From the NLT Alert, JPM came on the 4-hour watch list and is traded with one of the NLT
TurnPoint signals that was developed to identify assumed institutional buy- and sell programs: a
strong price happening with high predictability.
Chart-6: JPM 4-Hour Chart
On the JPM chart, the lower study signal is moved to the price chart for demonstration purposes,
indicating that an institutional buy program was confirmed and followed through for 4-candles.
The stop is set 2%-of-1-SPU below the low of the trade initiation candle and produced a very
favorable reward/risk constellation on a one- or four-bar trade.
Let us continue to validate the JPM signals, moving to the left, looking at the orange earlyup signal (scroll up and see the JPM Weekly Signal Chart) on the weekly chart on 01-25-2016
candle at the price action of the 4-hour chart.
Chart-7: JPM 4-Hour Chart 2/1-2/5/2016 with two confirmed signals on 2/2 and
2/8/2016
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The JPMs signal confirmation in this case was opposite to the original NLT Early Up signal and
good for a solid directional price move with favorable reward/risk setup.
If you are not yet subscribed to the NLT Long-Term Investor Alert, you can subscribe online:
http://neverlosstrading.com/Alerts.html
In case you are not yet familiar with NLT TurnPoint trading, our latest development, please feel
free to email us: contact@NeverLossTrading.com
Another alternative to participate with a limited risk in weekly NLT Top-Line setups is to engage
into specifically defined option trades, with the following imperatives:
Assumed 2-week duration.
Favorable SPU-based price-offer to buy put or call options inexpensive; allowing for high
leverage, as demonstrated below in our SPU-related calculation table: Option trades carry a high
risk; hence, you want to trade for solid returns.
This type trading is explained in the NLT-mentorships and we also show you how to repair trades
that do not work in the desired direction.
SPU is an NLT-in-house development to calculate the expected price move after institutional
engagement is detected and confirmed: SPU stands for speed unit, a statistical volatility
measure specific to NeverLossTrading.
Please take a look at our offeringclick.
Let us know if there is a system that catches your attention and feel free to receive a personal,
live demonstration: contact@NeverLossTrading.com
If you are not yet part of our free trading tips, reports, and webinars, you can sign up hereclick.
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In the next example, we are sharing a US stock market opening trade with you:
Many of the US-stocks trade at other exchanges around the globe and thus, new price points
are established prior to the US-market opening and investors will quickly catch up to those. Our
scanners use an algorithm to find stocks, which have institutional pre-market attention and we
can take trades on various time-bases to follow the anticipated directional price moves.
In this publication, we focus on what we call the NLT Speed Trade, which is showing the
following repetitive chart setup:
A price-move signal on the selected stocks, initiated in the first five minutes of the market
opening; closing the trade the latest by 9:46 a.m. EST.
From our NLT Pre-Market Movers Alert, we also accept trades initiated at or after 10 a.m. EST, for
day trading the selected stocks, which we will not further explain here.
The NLT Pre-Market-Movers-Alert is sent out on a daily basis prior to 9 a.m. EST, highlighting
stocks, futures and FOREX pairs, where our scanners found institutional activity and trade
potentials.
Chart-9: NLT Pre Market Movers Alert
Pre-Market P/E Ratio
Movers
BHI
APA
CAT
CL
BIIB
TEVA
C
COF
MET
BABA
QIHU
ADSK
Sector
NASDAQ Stock
Yes
Yes
Last
$
$
$
$
$
$
$
$
$
$
$
$
44.82
54.01
72.43
71.98
267.25
50.92
44.47
69.95
43.42
79.80
70.43
59.03
Expected Expected
Gap
Potential Opening Price Opening Yesterday's Yesterday's NLT
Yesterday's Yesterday's Yesterday's Pre- Weekly
Opening Opening Announcer
Point
Price Move Momentum Trend Reference Purple Zone NLT NLT Volume Market Options
Move Move (careful)
Indicator
Volatility
Volume
Return
(mill.)
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
1.29
1.55
1.19
0.63
3.91
1.15
0.63
1.05
0.66
0.98
1.16
0.88
2.9% Potential
2.9% Potential
1.6% Potential
0.9%
1.5% Potential
2.3% Potential
1.4%
1.5% Potential
1.5%
1.2% Potential
1.7% Potential
1.6% Potential
0.45
0.54
0.42
0.22
1.37
0.41
0.22
0.37
0.23
0.34
0.41
0.31
1.0%
1.0%
0.6%
0.3%
0.5%
0.8%
0.5%
0.5%
0.5%
0.4%
0.6%
0.5%
higher @
higher @
higher @
higher @
higher @
higher @
higher @
higher @
higher @
higher @
lower @
lower @
$ 44.80
$ 54.06
$ 72.95
$ 71.98
$ 268.01
$ 51.00
$ 44.73
$ 67.70
$ 43.46
$ 80.11
$ 67.75
$ 56.00
0.0% down
0.1% HF up
0.7% up
0.0% up
0.3% HF down
0.2% down
0.6% down
-3.2% down
0.1% down
0.4% up
-3.8% up
-5.1% down
up
new up
down
up
down
down
up
up
down
up
down
up
Breakout
Change
Strong Down
Breakout
Diff. Down
HF Down
Power Tower
Strong Down
Strong Down
Strong Down
Strong Down
Strong Down
Strong Down
Strong Down
Strong Down
Trend
Strong Down
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.2
0.1
Yes
Yes
Symbols highlighted in: red and green preferred stocks with less expectancy for an intraday
gap. Yellow symbols might show an intraday gap, based on spotty volumes.
P/E-ration (not important for this trade).
Sector: helping you to not select multiple stocks from one industry sector.
NASDAQ stock, highlighting preferred assets.
Last: yesterdays closing price.
Expected 20-minute price move, when the opening NLT Box is surpassed.
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Time Based Exit: If the target is not reached by 9:46 a.m. EST, close your position.
Odds Evaluation: When a very big first candle is drawn, never risk more than the expected price
move. When our stop price level violates this rule, do not take the trade. The idea of the trade is
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75
to rather trade for a bigger distance than the risk you take.
Chart-11: BP on May 10, 2016
Chart Summary:
The stock was on the list of highlighted symbols on the NLT Pre-Market Movers Alert and opened
higher.
The first candle drew a NLT Box, meeting the pre-conditions for the trade.
The second candle highlighted the breakout and gave the buying opportunity, with a buy stop
order at the NLT Box Line or a market order below.
The expected price move from the NLT Box-Line was18-cents (blue line).
The initial stop was 18-cents wide, however was adjusted to 15-cents by the Box Line.
The setup fulfilled the minimum conditions that we do not accept a risk higher than the reward.
The time based exit was triggered prior to a target being reached.
Had you stayed for further 2-minutes in the trade, you would have harvested at the original
target.
We also operate with clear cut rules for Futures- and FOREX trading. You experience in our
mentorships how we work one-on-one with you, focusing on your personal wants and needs,
developing a business plan for you: Financial plan and action plan.
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77
The news has always had a trying effect on the financial markets. Stock markets,
commodity markets, stock markets, futures and forex markets all can be attributed by how
the news is projected within certain world events. News and information that deal with the
economy, finance and politics tend to be leading indicators on how global markets may react,
in most cases. Corruption in governments, financial and political policies, Federal Reserve
statements and economic policies have impacted or somehow subjected a certain role on
how the markets distribute certain outcomes, because of how information and the news are
portrayed to the public invariably.
When global uncertainty is are on the horizon, stocks tend to be more negative and begin
to falter downward or drop. When good information or news is brought about, for example a
companys earnings beat expectations or analysts predicate the economy with a good bill of
health the stock market tends to make drastic progress and raise higher. Federal Reserve
policies have enormous effects on the global markets. When the Fed increase or decreases
the interest rates, the market reacts and the reaction may be good, subtle or bad. This is
all relative to the trader and the position he/she has on their trading techniques. In trading
(depending on the side that you may be on); there is a massive inclination that either you will
profit or you will lose money. Your stop losses minimize your losses and assist you to maximize
your gains. The Feds policies have an effect on the financial markets and the position one may
take, because when the news and information if forthcoming; enlists how the global markets
will move entirely.
Information is important when coming to the global markets, when new information is
presented the markets have a field day, no one quite knows which direction the financial
markets will tend to lean toward but news presented on certain information can sway market
directions instantly and probably decisively in some occassions, either up or down, sideway
movements, directly or indirectly, this can all be approached because of the how the markets
decipher information and relevant news sources, along with price action and other indicating
variables.
All news and information may not be credible and rumors can play a major role on how the
markets take in the information and news that is relayed upon. Rumors of false information
can mislead investors and traders, which then can leads to false returns for the investor,
speculator or trader. Traders, analysts, speculators and Investors seek information and news
sources to anticipate the trend of the markets they are dealing with. Information and news
for the day approaches, then the speculators, traders and investors along with analysts can
take an educated and systematic approach on their trades to get the best and highest returns.
The news perceived to them has a huge effect because they want to foresee if they are in the
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78
money or out the money and know how to proceed if they are in the wrong side of the
trade. All these factors can bring about how the movements of the global markets are swayed
and which angle or direction the markets will move in. The news detail how and if the markets
will respond accordingly or spontaneously, given certain responses.
World views inclination of the markets and the news that is issued is important to monitor
in all cases because this shows how information or world views can shape policy; which
then shapes how the markets should scale the information that is coming to it. Once news
andinformation comes about and is out there for the public, the trajectory is wide and clear
and the outcome is totally dependent on what the markets want to do with that information
that has come about. A person cant predict the direction or trend of the market even if he/she
is a fortune teller; they still would get the prediction wrong. The market has its own mind; it
decides if it wants to be choppy or if it wants to be trend like and most times it will both factors
in one. The portrayal by the investor, trader, and/or analyst is to monetize from the market s,
and to scope out what direction the markets may or may not want to go in, in hindsight the
choice is entirely up to the global financial markets.
The big news story and credible information that being perceived lately as of the spring of
2016 has been the BREXIT, Great Britain instituting a referendum vote to leave the European
Union. The global markets have been carefully treading the outcome of the decision by the
citizens of Great Britain, and seeing how the outcome can affect the markets significantly. Great
Britain leaving the EU would have a serious effect on the currency markets, and possibly every
other market associated with the economic and financial stability of the global community. The
domino effect on the euro currency as well as the British pound may have serious implications
as well, or it may not, no one truly knows yet. No one can really know what the outcome
may be until it actually happens. There will be strong volatility because the markets had
anticipated being friction with the outcome, if and when Great Britain was to leave.
Analysts, spectators and observers are watching how the outcome may affect the European
region and the markets, when one sees financial reporting on the subject no one or news
entity has a clear indication on how the markets will respond to it, but one thing is for sure
that strong volatile and fluctuations of the markets; will continue to occur and the outcome
may not be what most expect to happen, it really comes down to how an individual will trade
the market when the vote is announced at the end of it all.
The news and the information relayed have an effect on the global financial markets in
many ways, whether one looks at it objectively or subjectively; the implications could not
be clearer. The trend that the markets portray are fundamental and technical in nature, but
major political, financial and economical information that is released to the public masses
tend to reflect the state of emotion; that can presented by the markets anticipation and trend
settings. Does one use his and her emotion to trade most of the time? Absolutely, in fact the
majority of people who invest or trade use their emotions to relay on their unique trading
styles, this may come from information and/or a news sources they read, heard about, and
rely on; now whether the information or news sources they attain are credible; in retrospect
that is a different issue. SB
INFO ABOUT THE WRITER: Samuel Bassey has an MBA degree, he is an avid and loyal
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The United Aircraft Corporation was an American aircraft manufacturer formed in 1934 at the break-up of
United Aircraft and Transport Corporation. In 1975, the company became the United Technologies Corporation. Our historical data begins tracking this equity from January 1972 it incorporates the major low
traded in Dec,73 at 0.64 which also defined the end of major declines for benchmark indices such as the
Dow Jones Industrial Average (570.00 Dec.74).
The Dec.73 low synchronises with cycle wave 4 in all major U.S. indices. The following medium-term uptrend is labelled cycle wave 5 so far this remains incomplete. Original upside targets to 240.18 have now
been raised to 392.81-410.74+/-. An attempt to this area is consistent with our prolonged cycle degree uptrend for major indices.
Cycle wave 5 must ultimately unfold into a five wave expanding-impulse pattern, in primary degree. Primary wave 5 began this final advance from the financial-crisis low of 37.40 with ultimate targets to 392.81410.74+/-, it is considered an attempt will still take several more years, ending into the end of this decade,
perhaps extending into the first few years of the next.
Shorter-term, we consider the Feb.16 low at 83.39 as ending a counter-trend phase of declines that began
from the all-time-high of 124.45, traded exactly one-year earlier, in Feb.15. Even though there remains
an outside risk of a break below 83.39 to 73.56+/-, this would only occur if major indices break below the
equivalent Feb.16 lows and even if it does, it would not change the implications of continuing the mediumterm uptrend unless the Oct.11 low is breached below 66.87.
Elliott Wave Analysis
The medium-term uptrend updated in our last report remains intact with UTX building higher from the
financial-crisis lows as primary wave 5 see fig #1. It must be said however that the depth of its decline during
the last year, from all-time-high of 124.45 has been deeper by comparison to the major indices, the Dow Jones
(DJIA) and the S&P 500. This means its relative wave count changes too, although the implications for the next
several years remains bullish, within its dominant uptrend.
Medium-term upside targets for cycle wave 5 that began from the Dec.73 low of 0.64 are raised to
392.81-410.74+/- as a direct result of the depth of more recent declines over the last 12-month period.
Cycle wave 5 must ultimately subdivide into a primary degree five wave pattern, labelled 1-2-3-4-5. Wave
3 can be seen undergoing price-expansion, is the longest impulse wave sequence beginning from the March
82 low of 1.95. Furthermore, it resonates to perfect Fibonacci-Price-Ratio measurements that coalesce into its
high at 82.50 of Oct.07. This is derived where intermediate waves (1)-(4) are extended by a fib. 61.8% ratio.
This validates the authenticity of primary wave 3s completion. This is corroborated where primary wave 1 is
extended by a fib. 161.8% ratio (0.64-4.11) measuring to close proximity, at 83.30!
Primary wave 4s decline during the financial-crisis collapse ended into the March 09 date, the same as
all major U.S. indices. Primary wave 5 has since begun a final advance as part of this medium-term uptrend
that is already 36-years of age. Its ultimate targets are derived as follows - by extending the beginning of the
medium-term uptrend, the initial 1-2-1 sequence that incorporates primary wave 1 to intermediate wave (1)s
high (0.64-7.56) by a fib. 161.8% ratio, projecting 410.74+/-.
Primary wave 5 is subdividing into a five wave expanding-impulse pattern, labelled in in intermediate
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degree, (1)-(2)-(3)-(4)-(5). Extending intermediate wave (1) to 91.83 by a fib. 161.8% ratio projects a final high
at 392.81+/-.
Final Remarks
Note that the overlap of the July 11 high of 91.83 with the Feb.16 low at 83.39 necessitates labeling
primary wave 5 as beginning a 1-2-1-2 sequence, i.e. (1)-(2)-i.-ii. There is a short-term risk that minor wave ii.
two could break the 83.39 level and seek lower support at 73.56+/-, but this is considered unlikely given major
lows for indices. The medium-term uptrend will only be negated below the Oct.11 low of 66.87.
Peter Goodburn is the senior Elliott Wave analyst at WaveTrack International and is the author of the
monthly institutional Elliott Wave-Navigator report and the bi-weekly private client Elliott Wave-Compass
report. Details at www.wavetrack.com
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A Winning System
by Ron Jaenisch
When using the Andrews techniques, Professor Alan Andrews suggested that one should make
well over one hundred percent per year. When he demonstrated the techniques, he was known
for easily performing at that level in a three month period, trading leveraged futures.
Technical Analysis takes study and historical testing, to find what actually works. Many part time
traders have careers that take up considerable time. Is there a technique that one can verify
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historically that has proved to be useful, and can be easily improved upon?
Lets start with a technique that has shown positive results in the S&P Index. One that has
resulted in a substantial gains over the last 80 plus years. The test showed a net result of 2000
S&P points by going long only and 2057 by taking longs and shorts.
The results are from using the fifty week and one hundred week moving average cross over.
Now its time for you, the reader to come up with ways to improve upon this and test it out.
To see Ron Jaenisch live with Alan Andrews go to:
https://www.youtube.com/watch?v=wgRkVFb3iLU
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Returns here are generally not much better than breakeven. It does not appear there is
a strong directional edge following a 1% drop from 50-day high. Now lets look at times the
1% drop followed a 50-day low.
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Here there appears to be a strong bullish edge based on many of the metrics shown. The
% Profitable, Win/Loss Ratio, and Profit Factor are all impressive, as is the Average Trade.
Next, lets look at instances that initiated between a 50-day high and a 50-day low.
Results here come in between the two extremes better than coming off a 50-day high,
but not as compelling as following a 50-day low. Overall, there appears to be a slight bullish
edge in these situations.
So we see here that market position matters. The 50-day low results were by far the best.
But lets also make sure that the strong drop was a factor in creating the edge as well. To do
this, I created a study looks at times SPY closed down from a 50-day low, but it did not suffer
a 1% drop on the day.
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As you can see, without the 1% drop, the edge just isnt there.
These studies suggest that both the magnitude of the move and the place that the move
is occurring from make a difference in future price action. In our Acceleration measures at
InvestiQuant we do not use crude measurements like 1% drops, but the general concept is
similar. We are looking to see how fast the market is moving and where it is moving from.
Because as we saw in the examples shown, both of these things matter.
Next lets look at Seasonality. Seasonality indicators will often take into account things like
long-term cycles, day of month, time of year, holidays, and more. I have found great use in
Seasonality studies over the years. I especially like them because they utilize different data
than price-based indicators.
One seasonal influence I have studied in-depth and found great value from is Fed Days.
Fed Days are the 8 days each year in which the Fed concludes a policy meeting and then
announces any policy or interest rate changes. While there tends to be a lot of build-up and
anxiety leading into many Fed Days, they have performed very well over the years. The study
here shows results of buying the close before every Fed Day and the selling at the close on
the Fed Day.
As you can see, these days have generated strong gains over the years. They have been
profitable 60% of the time. Gross gains have more than doubled gross losses. The average
Fed Day netted a profit of about 0.32%. And total profits reached over $58k. Lets keep
these numbers in mind as we look and see how the market has done since 1993 on all days
excluding Fed Days.
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The difference here is striking. On the 5700 days that were not Fed Days the market
did not make a whole lot of headway. Despite there being more than 30x as many non-Fed
Days, these days only generated 2.3x the amount of total profits. The average Fed Day
outperformed the average non-Fed Day by 13-fold. This certainly seems to make a case that
traders should pay attention to Fed Days.
So a trader could take either of these concepts and create a winning trading system.
Acceleration can stand on its own, and Seasonality can stand on its own. But the real power
comes when concepts like these are combined. So as a last study, lets look at what happens
if we combine the 1% drop (not from a 50-day high) and the Fed Day edge above.
There are not a whole lot of instances, but the returns are very powerful. The average
instance posted a gain of over 1% the next day. That is substantially better than either a Fed
Day or a 1% drop strategy would have produced on their own.
Groups of indicators or ensembles of systems will almost always outperform a system based
on a single indicator or concept. At InvestiQuant, our Swing Edges guides also utilize a 3rd
concept called Momentum. Momentum looks at the persistency of a move. I am often asked
which group of systems I favor - our Acceleration, Momentum, or Seasonality systems. The
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About Rob
Rob Hanna is InvestiQuants Co-Founder and Vice
President of Research. Rob graduated with aBS from Boston
College in 1992 and has been a full-time market professional
since 2001. He has served as president of Hanna Capital
Management, LLC since that time. He first began publishing
his market views and research in 2003. From 2003 to 2007
his column Rob Hannas Putting It All Together could be
found twice a week on TradingMarkets. In January of
2008 Rob began Quantifiable Edges. In 2012 Rob opened
his 2nd website, Overnight Edges, which is now part of
InvestiQuant. Both sites use historical analysis to assess
current market action and odds. His work has been widely
referenced and quoted over the years, and is often linked
to in blogs, tweets, Stocktwits messages, magazine articles
and more.
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Dec. 10, High 283.5, a lower top and below the 45 degree angle from 292.5
Trend still down.
Dec. 14, Low 274.5 (is 36, as per previous Soybean article, July/August 2008 on secret
Soybean scale, 36 + 180 = 216), (Gann most likely wrote this small piece to show Mercury on this
day hit 14 Sagittarius). Had a wide-open gap. Never sold below the opening and closed at the top,
a Signal Day and an indication that the market was ready to rally. Note the low on that day was 274,
marking this a double bottom.
There are a number of documents that is in public domain; one is the price scale in degrees to
price and time in relationship to The Average of Planets.
There are: 1. 60 degrees = 1 point price or time
2. 12 degrees = 30 points price or time
3. 18 degrees = 20 points price or time
4. 24 degrees = 15 points price or time
5. 30 degrees = 12 points price or time
6. 36 degrees = 10 points price or time
7. 42 degrees = 8.5 points price or time
8. 48 degrees = 7.5 points price or time
9. 54 degrees = 6.5 points price or time
10. 60 degrees = 6 points price or time
11. 66 degrees = 5.5 points price or time
12. 72 degrees = 5 points price or time
13. 78 degrees = 4.5 points price or time
14. 84 degrees = 4.10 points price or time
15. 90 degrees = 4 points price or time
16. 96 degrees = 3.45 points price or time
17. 102 degrees = 3.5 points price or time
18. 108 degrees = 3.25 points price or time
19. 114 degrees = 3.10 points price or time
20. 120 degrees = 3 points price or time
THE SECRET SOYBEAN SCALE
After a while I worked out his scale of converting price to degrees. This scale is lows and highs
swings from 1932 to 1950.
1.
2.
3.
4.
5.
6.
7.
8.
9.
44 = 22 Pisces
67 = 26 Virgo
68.5 = 8 Libra
69 = 12 Libra
170 = 11 Sagittarius
131.5 = 1 Pisces
154.5 = 1 Virgo
164 = 20 Scorpio
182.5 = 21 Aries
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either 6-degree movement or 12-degree movements. Another scale he had was for commodities was
12 degrees for Jupiter, 30 degrees for Saturn and 84 degrees for Uranus going through the zodiac
therefore for example 30 degrees of Aries using Jupiter scale had a price ending at 360 (30 x 12), 720
at the end of Taurus (60 x 12) etc. Uranus would be 2520 (30 x 84) .I reproduced these scales about
20 years ago for myself, you can do the same. If you were looking for example for cotton a date say
25th January 2017, and just looking at Jupiter, Jupiter on that date is at nearly 23 degrees Libra, this is
203 degrees of a circle.
203 X 12 = 2436 or 24.36 cents/lb. The next major level would be 6036
(2436 + 3600). On the same day if we took Uranus at 21 degrees Aries, which is 21 x 84 = 1764.
1764 + 3600 = 5364, 1764 + 1800 = 3564, 1764 + 900 = 2664. Since the cycles are down you would
watch the price support levels. Enclosed Gann scale chart. You can see that he has 18,900 = 30
degrees Sagittarius at 30 points it equals this degree. When you use 18,900 at 84 points per degree it
equals 15 degrees Scorpio, at 12 points per degree it equals 15 degrees Leo. You would have never
seen this written before and if you look at the chart you should be able to see what commodity he is
using this on.
Some homework for you there fore sure, wait!! You could find it on a $60 DVD somewhere in the
world.
As you can see to study what Gann did, you need be working by yourself, have enough time
to put in 8 hours a day (full time in 1990 havent worked for anyone since then) and start doing
this in your 20s. I started when I was 23 years old and still learning more after 35 years (not like
others know it all now, after only 5 years), feels like Im just scratching the surface of what he was
doing. The reason Im covering these periods when Gann was trading was that he wrote booklet on
soybeans dated 24/1/1955 where he explains weekly time periods. Part of the article is below on May
Soybeans.
He has all the Time periods from 1920 to 1954 in his article.
1920 High 405 on 7.75 years
1932 low 44 down 361 on 7/8th year and 7 years
1933 High 104 up 60 on 2 years and 1-1/8th years
I wont list them all but there is another full page like this to November 1954.
What it means 104 High equals 2 years, because the is 52 weeks in a year time two equals 104.
th
1.1/8 years equals 60 weeks (60 weeks minus 52 weeks). If you were to go to say high in February
2016 from 1920 would be 4992 weeks. So in February we divide the price by 2,3,4,6 and 8 we get: 2496, 1664, 1248, 832 and 624. If May soybeans are below or above these numbers it will be
in a strong or weak position. To get another price you just keep adding 52 to 405, which is 457,509
,561,613,665,717,769,821,873,925, 977 etc. if say market is at 821 it would be up 416 cents from
405 which would be in the 8 year column. Therefore it would be in the 96-year column and the 8-year
column. So you do all highs and lows up to today in conjunction with his square of 52 overlay to
determine the position of a commodity of stock.
You have to make up the tables, hand draw charts of each commodity you wish to analyse. You
have to also do all the other highs and lows in this article written in 1955 and study the position of
May Soybeans. There would be very few people who have the time or want to do this Gann system
correctly; especially people teaching Gann, you just dont have time to teach. This is why I have done
one workshop in the last seven years, I never did workshop for money. I only write to show you the
amount of work Gann did which no one else is doing to his level, and its a level again way above
what Im writing.
Gann quoted Before you make a trade, analyse the position on the daily, weekly and monthly
high and low charts.
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In the Hindu Tea Calculator article written in 2015, I said grains would be happy and fall in
price, wheat went to 5 year lows, so I shorted Wheat and Soybean on a rally and made great profits.
If it was just based on the Saturn line of 599 (239 + 360) wheat was in a bearish position below that
number on the high date of 30th June 2015 at $6.22.
625 is the square of 25 of course. The number 617 is opposite on square of nine chart as well.
On the wheel of 24 which I wrote an article about 10 years ago here, 15 x 26 = 624, Gann had the
Egg chart (this chart the public has seen) which was 45 days to a scale of 45 points, which is only the
a simple 15 degrees to 15 days x 3, or 3 hours on the wheel of 24 as the earth rotates 15 degrees
every hour. When wheat dropped below 576 it was below the square of itself of 24 and in a weak
position. Of course you would know that
30-degree movement of the Earth is only a two-week chart. Of course there many more things I
look at as well. Enclosed this chart of Ganns for the D.J.I.A
If you are a true Gann person you would do exactly do what he does, that is dont reveal
important information, so far thats covered, no one has got any good information from what I have
seen over my 35 years of study. Now the best way to study is buy all Gann books, read them once a
month for 12 months, draw hand charts that are in the book and follow what hes saying. Follow all his
rules. This would keep you busy alone for a five years full time. When I did teach workshops and told
people not to do astrology, they didnt listen, when and did House Wife Astrology and havent heard
from them since, I guess they a lost in the planets somewhere. Gann wasnt an astrologer; he never
said he was astrologer. This is all you need, doing what I do is way to hard for people (the harder the
better for me), but I enjoy it, so best not to start is my recommendation, you will only get confused
and lost, then drop out. 99% of people drop out of everything (straw man, this is why people want
handouts) in life and this is one of the hardest subjects in the world to understand. Theres no need to
do astrology to trade the Gann way and be successful. Economics 101, sell high, buy low, save and
have no debt. No need to go you university, its that simple.
The amount of work Gann did was remarkable; here is his work, which is a video of 200 pages
on the Lottery work alone. On his ephemeris he wrote won lottery, some $3,700 which in those days
was nearly a cost of a house, so maybe about $500,000 today.
https://www.facebook.com/113109448709650/videos/vb.113109448709650/899677126719541/
?type=2&theater
How many Gann experts are in the world again? Wouldnt be close to what he was doing as
you can see from the above video. Why do you think Gann never wrote books on financial astrology,
horse racing and lottery? Its simple its to valuable to him, and people just copy stuff and package it
up and resell it. He knew this, he didnt trust people until they proved they were worthy, this also a
Masonic philosophy. From what I have seen people doing financial astrology they just print out all the
aspects of planets and say these are the aspects of planets, any ape (Gann said humans come from
apes) could do that.
HOW TO KEEP SECRETS?
Three may keep a secret, if two of them are dead.
Benjamin Franklin, Poor Richards Almanac
If you want to keep a secret, you must also hide it from yourself.
George Orwell, 1984
The best way of keeping a secret is to pretend there isnt one.
Margaret Atwood, The Blind Assassin
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Text reads:
I shall die September 22 at 4 oclock in the morning. The sun, Saturn and Mars will be in such positions
at that time that I cannot possibly survive. I give warning, as there is no possible hope of my surviving that
date. Let us be prepared for the end and meet it calmly. -- Statement made to his family August 22 by Dr.
Luke D. Broughton, astrologer, who died on the day and at the hour he had set.
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You would also notice that the above address of 120 x room No.1206 = 144,720 the square of 12 and
two circles of 360, hes telling you something there. Only three adds had the room number, 3 x 120 = 360.
144,720 adds up to 18, which what hes charging a monthly subscription of $18. (18 X 12 = 216)
144 + 72 = 216.
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In the above ad he talk about an author which is on his book list called Popular Astronomy by Flammarion,
this is 686 pages and of course I have this book. There is what Gann mostly study was astronomy of the
ancients. So how can any Gann expert be a astrologer? They have to be astronomers, he said astrology
didnt work, I agree with him. He made two great statements I will never reveal my secrets or sell them.
Why would you? Just because you cant work out what Gann was doing (Larry Williams calls Gann a fraud)
theres no need to call him a fraud.
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Example of one of my many prediction on weather, also used for horse racing and markets.
Below I sent an email to India on 28th November 2015, I found some thing on the Law of vibration on
weather not in any books. They had the worst floods in 100 years, with 490 mls in a day, on 1st December
2015. 400 hundred died. Of course I didnt tell him how I did it, or sell it. Gann said My secrets arent for
sale, his secrets went to the grave, except his coding in his books like TTTTA which I have decoded.
Hello Mr. Burton,
Your predictions were spot on !!! See this web site. It is the number one private meteorological
web site in Indiahttp://www.skymetweather.com/
How did you make it? Kindly explain astrologically.
Sincerely,
Sachin
On Sat, Nov 28, 2015 at 8:26 AM,
Hi
Im looking at something on the weather, see if theres heavy rain after the 1st Dec in India
Regards
David
Most of you would have one of the last articles Gann wrote which was a nine-page article called Cash
and May Soybean futures dated 24th January 1955. All his dates seemed to be coded, firstly you would
notice that was the date that Robert Gordon made his first trade in TTTTA on 24th January 1927, which is 28
years or 4 x 7 years. This date also points to date in 1940, remember the book is called TTTTA or looking
back from 1940, what dated in 1940 is related to 24th January 1955? This a very simple one, good one to
ask those Gann experts dont you think? He is using coded dates, which point to astrological timing; bible
chronology and this is why its so hard to decode his stuff for 99.9% of the Gann students.
This is Ganns reading list for students I believe:
Most people wouldnt even have bought or read these books that claim to be Gann experts let alone
studied them. You couldnt study his book list in under 20 years. Gann was in a class of his own. Gann also
would have had Sepharials private Key books which you will having trouble getting them today:
London bullion Exchange (private subscription only)
Key to market operations
Key to successful market operations
Key to market trading
Key to successful trading
Secret progression
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It doesnt take much trading experience (or many losses in the markets) for us to understand
just how foolish that kind of assumption can be. But sometimes our ability to shoot ourselves in
the foot doesnt stop there. We compound our problems if we are oblivious to the true nature of
planetary cycles.
For example, we may observe planetary correlations with the markets just enough to conclude
that there is a direct correspondence between the movement of Jupiter through the degrees of
the tropical zodiac and the price cycles in the equities markets. That was certainly true in the
early decades of the 20th century, and its a correlation that still has some merit today. On that
basis, we may conclude that trading tops in the stock market are likely to coincide with Jupiters
passage over 15 degrees of Gemini.
But even if that conclusion proves correct when Jupiter next hits that point in the zodiac, its
actually of little practical use to us as active astro-traders. Thats because Jupiter takes 11.875
years to complete a full circuit of the zodiac, so this correspondence will only offer us trading
opportunities every 12 years, no matter how reliable the correlation of Jupiters position in the
zodiac to stock market trends may actually be.
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SLOW PLANETS
Jupiter
Saturn
Uranus
Neptune
Pluto
Chiron
Eris
Transneptunian Factors
Kuiper Belt Objects
Simply looking at the correspondences between price fluctuations and the cycles of a fastmoving planet can often give us helpful information. For example, there is a fairly strong
correlation between the Suns passage over 8 degrees of Capricorn and trading lows in Gold.
As Figure 1 illustrates, this particular zodiacal phenomenon doesnt always coincide with the
exact bottom in the Gold market. Our back-testing shows that this solar alignment marks trend
reversals in Gold about 75% of the time, with those reversals evenly divided between trend
changes up and trend changes down. Considering those odds, we can certainly conclude that it is
useful in identifying potential entry points for profitable positions in the yellow metal.
[figure 1]
While it is certainly more useful to have a planetary trading signal that comes once a year
instead of one with a 12-year cycle, using this recurring position of the Sun can open the door
to even greater benefits. We can also use this planetary factor as a springboard for further
explorations of the relationship between solar dynamics and price trends in Gold.
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[figure 2]
The heavier diagonal lines moving through the chart indicate the first-harmonic positions of the
Sun which are direct correspondences in price to the Suns sequential positions in the zodiac.
The intervening diagonal lines divide these first-harmonic planetary dynamics into 60 spans,
giving us a sixth-harmonic projection.
Note that while these sixth-harmonic solar price lines do not define all the trading actions for
Gold, they do help us see some instances in which Gold has traded specifically within solar
channels as it has made significant price movements. Whenever the yellow metal has been
trading in a solar channel, and then breaks out of that planetary trading range, it is often a
powerful indicator of important price action just ahead. This is especially true if other technical
indicators provide a confirmation for a trend reversal.
As astro-traders we are offered a clear advantage through the use of planetary price line
dynamics like the one we have illustrated here for Gold. But those planetary dynamics become
even more effective as tools for forecasting and trading when we look at the impact of pairs of
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planetary forces.
[figure 3]
When we add sixth-harmonic projections of Kronos to our chart with the sixth-harmonic
planetary price lines for the Sun, we get the result shown in Figure 3. Because of its slower
movement, the planetary price lines for Kronos are more evenly horizontal than the Suns sixthWWW.TRADERSWORLD.COM
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harmonic lines.
The first thing that we notice after adding the
planetary price lines for Kronos is how often
they define key levels of support or resistance
for the trading action in Gold. This is especially
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with the 8-Year Cycle of Attacks Against America and the transition of a 40-Year Cycle of
Muslim-inspired attacks against America. Could any one of these cycles have an impact in
2017?
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culmination of a 4-year period that saw their industrial output plummet by ~25%. As their
global clout plummeted, the once-expansionist Great Britain signed a deal to return Hong Kong
to China.
Economic & currency malaise returned 8 years later - in Sept. 1992 (many of these 8-Year
Cycle events occurred during the month of September) - when George Soros broke the Bank
of England on Black Wednesday forcing them out of the Exchange Rate Mechanism in Europe
while pummeling the value of Britains currency.
3 of the latest 4 phases (1968, 1976 & 1992) - of the 8-Year Cycle - involved Sterling-bashing.
8 years later, in Sept. 2000, it was an inflationary debacle - on the heels of the Pound declining
for 8 years (to its lowest low in 13+ years) - with Britain possessing the highest gas prices in
the developed world. That triggered fuel protests & blockades, resulting in ~90% of petrol
stations running dry. It also prompted the instituting of food rationing as a result. The
plummeting Pound created chaos as the 8-Year Cycle continued to wreak havoc!
8 years later, in Sept. 2008, the UK joined the rest of the world in a global economic meltdown
as the Pound was again pummeled, dropping about 35% in 14 months and to its lowest low
since 1985.
1960, 1968, 1976, 1984, 1992, 2000, 2008 an uncanny, 8-Year Cycle at work!
Could another UK financial crisis be about to emerge - in/around Sept. 2016? Could the Sterling
be in for another pummeling??
The actual price lows in the Pound have also come on a very consistent 8-Year Cycle, slightly
offset from these debacles. It has seen multi-year lows set in 1985, 1993, 2001 & 2009. So, it
is reasonable to conclude that another multi-year low could ultimately take hold in 2017.
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2016/2017 is 240 years & 160 years from two British Empires being dealt severe blows.
In the ensuing ~80 years, Britain suffered two massive depressions - with the first one (1873-1896) culminating at the 40-Year Cycle midpoint (1856--1896--1936) and the second one
unfolding throughout the 1930s.
The 1930s were also a time of great transition between the UK and Asia - another critical
component of the Second British Empire ...
Leading up to 1936/1937, Britain was redefining her relationship with both China & Japan - a
delicate balancing act. All that led to naught as the Second Sino-Japanese War broke out and
ultimately dealt a 3rd & final (knockout) blow against Britains global empire. The 80-Year Cycle
was recurring with great precision.
2016/2017 is 240 years, 160 years AND 80 years (higher-degree 8-Year Cycles) from the British
Empires being dealt severe & ultimately fatal blows.
2016/2017 is also an exact 800-Year Cycle (larger-degree 8-Year & 80-Year Cycle) from the
French invasion of England - under Prince Louis (later to be Louis VIII) - during the First Barons
War in 1216--1217.
The invasion - and the War - were a direct result of Englands King John refusing to abide by the
Magna Carta of 1215 (ultimately influencing the US Constitution in 1787).
Could 2016/2017 perpetuate this 8-Year AND 40- / 80-Year & 800-Year Cycle in the U.K.?
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Trading makes so much sense and seems so do-able when looking at it from a distance.
After getting comfortable with the theory and assumptions, the student of trading can see
the rules that govern success in trading. Intellectually its really not that hard to grasp.
Everybody knows that trading is about managing Probability. Everybody knows that no one
trade is important. Everybody knows that success is found in a statistically large enough
sample size where you trust the edge you have developed in your methodology over time to
extract capital from the markets. No reason to get fluxed over a couple of trades that dont go
your way. At a distance, it is easy to understand. Everybody knows this. All traders know
this in theory until they are put to the test and discover they dont know how to apply their
knowledge in practice.
Then, in another part of your brain, a circuit is tripped, without your ever knowing it, and
all your knowledge becomes mush. This is where the two worlds of trading collide. You know
the drill. And youve experienced the gap between Logic and Emotion. Youve been there a
thousand times, day in and day out. You know this stuff at a distance. Then when you
actually trade, with capital at risk (not at a distance, but viscerally in the here and now) you
discover again and again that you dont know what you thought you knew. Not really. All
that understanding just flies out the door. If only you could force the markets to conform
to your beautiful mind.
Hordes of traders stay for years at this threshold until they burn out, only to be replaced
by scores of new dreamers starting afresh having no idea what they are getting into. All are
mesmerized by the possibility of success that trading offers and are sure they can learn how
to extract capital from the markets consistently.
As they mature, they stay stuck in almost there, running from one teacher to another
and buying stuff and more stuff to help them get the edge. They earnestly believe that the
answer (the Holy Grail) is out there. Then, all their troubles will be over! But no matter how
seductive the promises of trading may be, success remains right around the corner. Each
day, each week, each month, and each year they pick up the broken pieces and try again
the next day. This is how performance-challenged traders fritter their time and capital away.
This is the experience of trading for the vast amount of people who are striving to become
successful traders.
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very fabric of your being, so, of course, you are bringing it to trading as part of your historical
baggage. And you come to trading with a hardwired need to deny Uncertainty, even at the
cost of irrationally believing something that is not supported by evidence. So, you come
equipped with an evolutionary bias bred into your genes for untold generations to believe
you can control outcome and avoid uncertainty despite evidence to the contrary. If you want
to see these principles in action, look no further than the Fallacy of Almost There. It is this
biologically rooted bias that keeps you hanging on to consistently under-performing ways and
customs in your trading while you maintain hope that things will turn around.
This is not trading psychology. This is trading biology, or what can be called the behavioral
or emotional finance embedded in your brain that creates flaws in your trading psychology. It
is primitive; therefore it is happening below the threshold of conscious awareness for those
who are not trained to look deeper. A psychology develops around these primitive drives.
Applied to other endeavors before trading, these drives led to the development of a psychology
of winning by taking control ( - alpha) or a psychology of not losing by virtue of being right
(perfectionist). These biases proved successful in other endeavors and were wired into the
psyche as personality traits. These new psychological biases, so successful in those other
endeavors before trading, quite naturally were brought into trading along with the biological
drives of Self-Preservation for short-term survival.
They feel right, so the trader acts as if they are true. This is the tragic mistake that traders
makethe assumption that the rules of success learned outside of trading will apply to trading.
They do not. They are different animals, but the brain (and then the traders mind) feels they
are the same. And out of that feeling, traders discount evidence to the contrary including
the evidence provided by their trading account balance.
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real life. The trader is forced to face consequences of his actions much faster than in real life.
Because of that, traders are faced with recognizing their real lack of control over outcome
much faster than people living in an earthquake prone area where an earthquake probably
will not happen in the near future. And one may not occur for another 20-30 years out of
sight, out of mind.
The almost there crowd in trading is only just beginning to become sensitive to the
near-term future. When they started, many traders began with good-sized capital at their
disposal. Over time, that capital dwindles until a short-term alert begins to go off. The end
is in sight. If you dont get your act together, you are going to run out of capital. Youve got
to do something. In trading, the short-term and the long-term come to have a mutual time
frame for evaluation, unlike an earthquake.
It is at this time that many traders wake up to the self-induced deception of Almost
There Success is just around the corner. They may feel that their perception is still right
almost there but the distance to danger is so close at hand that the belief can no longer
be maintained. Cognitive Dissonance has met its match in urgency to avoid financial disaster.
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out as a 2-3 week process to get started and evolves into a lifelong skill to be maintained.
Applied Mindfulness.
Mindfulness is like a telescope that, when handled properly and focused correctly, can
allow you to discover new possibilities where, before, nothing could be perceived. You find
that you did have the raw talent all along, but you did not know where or how to look to find it.
Even discovering the empowering aspects of the hidden gold mine within you is not enough.
The talents have to be honed into usable skills.
Nearly everyone has the hidden talents, but few awaken the talents and develop them into
skills that are available when exposed to the trading environment where Uncertainty and
Probability are the norm to acclimate to. This is a much larger task than to stay stuck in the
fallacy of Almost There and the feeling of Certainty in your beliefs. But the difference is
competency as measured by equity growth.
In professional sports, such as golf, nearly all elite athletes have psychologists working with
them to achieve the mind that produces peak performance. All golfers on the PGA tour can
drive and put. But only a few become the elite money players. At this level of competition,
psychology of performance is what separates the leader from the pack.
It is no different in trading except that trading is probably a tougher mental game to
master than golf. Good enough is not good enough to get to the top. Being stuck in Almost
There is not going to help you become an elite trader. Almost There traders are the
pack trying to get better without understanding what they need to get better at. The jump
between the pack and the elite is found in the mind that the trader brings into the moment of
performance.
Getting from Almost There performances to elite performances requires change that is
scary to the brain of the pack trader. Why not stay in the Comfort Zone its, well, comfortable
there. But when you watch an elite trader consistently extracting capital out of the markets,
dont you wish you were there? You could be if you are willing to challenge the organization
of the Self that keeps you in the pack and re-order the mind that you bring to trading. Thats
the difference maker.
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The lateral trading range that has developed over the last year or so is a big reason why
investors are feeling so glum. Even though the SPX isnt far from its all-time high, to many
participants it feels almost like a bear market. If it feels like the doldrums to you, thats
because the market has made no net progress since this time last year. In fact, the SPX is
even a little below the year-ago high as the following graph testifies.
It has been observed that nothing spoils investors appetite for equities faster than a
sideways trend. Trading ranges can actually exert a devastating influence on mass psychology
sometimes even more so than even a market crash. Thats because humans are hardwired
for progress and trading ranges represent the opposite of progress, namely stagnation. Most
investors, if theyre honest, would rather experience a market crash than several months (or
years) of sideways equity prices. Thats because at least a crash brings excitement and the
sense of movement. Even if that movement is to the downside, anything is better than going
nowhere for a prolonged period (or so they reason).
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Thats why investor participation tends to drop off dramatically once the major indices settle
into established sideways patterns. According to Gallup, for instance, only about 52 percent of
Americans say they own stock, which matches a record low set in 2013. By comparison, stock
ownership peaked just prior to the 2008 financial crisis, with nearly two-thirds of Americans
then investors in the stock market. This is quite extraordinary given that the economy isnt in
recession and the major indices, while range-bound, are closer to multi-year highs than lows.
One way of graphically describing the total lack of interest in equities right now is the latest
AAII investor sentiment poll. This week the percentage of bullish investors dropped to a mere
19 percent the lowest since the bottom of the 2008-09 credit crash. Its extremely rare to
see bullish sentiment this low given that the market hasnt actually experienced a significant
decline.
Yet the percentage of bearish investors isnt much higher, either. For much of this spring
the AAII bears have averaged 25-30 percent. On any given week the majority of respondents
have been neutral in their intermediate-term market outlook. Thats very typical of a rangebound market that is finally being recognized as trendless by the great masses of investors.
Sideways trading range markets have their own unique characteristics both technically
and psychologically. More than any other emotion trading ranges tend to elicit frustration
from investors. Nothing, after all, is more irritating to an investor than having to sit through
long periods where stocks are making little or no progress. The longer the trading range
persists, the more frustrated and impatient investors tend to become.
If the trading range is established in the midst of a longer-term uptrend its not uncommon
for investor sentiment to remain stubbornly bullish for an extended period. Investors have
become so conditioned to rising stock prices that it often takes several months of a grinding
lateral trend before they finally lose their enthusiasm. Its when investors finally become
more pessimistic on equities that the market commonly breaks out from the trading range.
In other words, investors normally have to be head faked before the market can proceed to
a higher level.
Whats happening now certainly cant be called a Great Depression (in terms of mass
psychology). But it could be called a Great Malaise. The dictionary definition for a malaise is
a general feeling of discomfort, illness or uneasiness whose exact cause is difficult to identify.
I think that pretty well describes what investors are experiencing right now. Theyre not
actually suffering, but to them it feels like something is wrong with the financial market and/
or economy. They just cant quite put their finger on whats bothering them.
Allow me to diagnose the root of their uneasiness: the trading range itself. The trading
range was first established in the NYSE Composite Index (NYA), which is the broadest measure
of the U.S. stock market, almost two years ago. The cause of this in my estimation was the
loss of financial stimulus after the Fed brought to a close its quantitative easing (QE) program
in late 2014. Since then the stock market has lost forward momentum with each year, as
reflected in the NYA chart shown below.
One of the problems with a trading range is that while stock prices appear to be going
sideways, if you look at the market from a rate of change (momentum) perspective, youll see
that its actually going lower. This is why it feels like a bear market to many investors; the
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markets longer-term rate of change has declined since the heady days of 2013 even if prices
have more or less remained steady. Since investors are primarily governed by their feelings
instead of their intelligence, they have missed out on some of the worthwhile rallies that have
occurred within the boundaries of the 2014-2016 trading range. Theyve allowed the malaise
to undermine their confidence and enthusiasm, which in the long run has cost them.
Another aspect of trading range psychology is what I call trading range trepidation. I
coined this term back in 2005 and have long observed its repeated influence of investors
collective psyche. Trading range trepidation is a mental state which investors collectively feel
when the major indices have spent many weeks or months in the lower portion of a range,
then rally up to test the trading range ceiling. As the upper range is reached, investors become
apprehensive. Theyve long been conditioned to seeing stocks rally to the former price highs,
only to fall back and fail to pierce through the upper trading range boundary. Skepticism has
been thoroughly established at this point and scarcely anyone believes that the market will
break free from the confines of its upper limit. Trading range terror by contrast occurs when
prices decline to the lower boundary of an established trading range.
When prices reach the upper band of the range, participation even among active traders
tends to wane except among short sellers. Few traders are interested in buying along a
trading range ceiling. Only when a decisive breakout is made above the ceiling do investors
begin to show any interest.
Breakout shock is a term that describes the psychological state experienced by investors
once the major indices finally push out from a long established trading range. Investors
have become so numbed to the lack of action in the market that theyre simply unable to feel
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Introduction
Let me start by introducing myself. I am a full time trader and trainer in the futures
markets. I run a real time trading room two hours each trading day. I have traded for over
20 years, and concentrate primarily on the currency (FOREX), crude oil, gold, and stock index
futures markets, such as the S & P E-mini. In a previous career, I was a practicing C.P.A . in
the state of Florida.
I have developed a full suite of charts and indicators known as the Trendicators and
a market analyzer known as the TradeFinder, as well as a number of automated trading
systems and automated buy, sell, and trade management systems.
What follows are the fundamental elements you need to be consistently profitable in the
futures markets. I have also included information below that is crucial to your overall success
and in managing your risk.
Preparation for trading profitably consists of market observation over a period of time so
that the trader can build confidence in knowing what usually happens in the market, and how
to profit from the recurring market behavior that repeats itself every day. To take advantage
of cycles in the markets, observe the typical move that a market moves after it moves up or
down out of a range contraction pattern.
The real objective is to build a knowledge of probabilities of market behavior so as to
take consistent profits out of specific trading instruments. The following are observations of
market behavior that will help to put the probabilities in your favor.
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Making money in the market is a matter of being on the right side of the market. Specific to
the futures markets, there are both up and down moves each day that provide many trading
opportunities. One approach to the market is to look for evidence of major support and
resistance levels based on chart history. Many people ask me to identify which time frame I
look at for my trading. My best answer is that I look at all of them. A good analogy would
be that if you were going to buy or short a stock, you would most likely start by looking at
a weekly or daily chart. Why would you approach the futures markets any differently? To
put the odds in your favor, you must find things that occur over and over and trade with this
information.
Below, you will see two examples of Navi-Renko charts for the S & P Futures E-mini. These
charts have buy and sell signals. The buy signals are the Green arrows pointing up and the
sell signals are the magenta arrows pointing down, as noted on the chart.
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The above charts and the system displayed by the charts represents an example of signals
that will enable you to objectively test a signal on any chart time frame or data series that
you would like to test. Other examples would be using indicators such as moving averages
for buy and sell signals One method of testing is to use a trade simulator such as the Market
Replay function of the Ninjatrader platform. You can download market replay data and test
based on historical data taking trades based on your entry and exit criteria. You will be able
to test various stop and profit target levels over a series of trades. I would suggest that you
test during the time periods in which you plan to trade. An example would be to test the S
& P futures from 9:45 AM Eastern time through 11:00 AM Eastern time if that is the part of
the day that you intend to trade.
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Example:
(
.7 x
200 )
.3 x
100 )
110
When you have a positive value from this calculation, it means that you have a positive
expectancy based on your data. In other words, you have a system that has put the probabilities
in your favor of being profitable.
Probabilities favor the continuation of a trend, therefore you want to trade or invest in the
direction of the major trend.
For purposes of intra-day trading or even investing, a daily
chart is a very good place to start to analyze the major trend. To put the odds even further
in your favor, I recommend that you analyze whatever you want to trade to find out the
consistency of the trend. This can be done by measuring the trend in various time frames all
the way from short term trends such as a five minute chart all the way to daily, weekly and
monthly charts.
Risk Management
A primary downfall of beginning traders lies in not knowing how to manage risk. The use
of protective stop losses (known as stops); is one important tool in trading futures. An even
more important tool is known as position sizing. Position sizing answers the question of how
many contracts you should trade in the futures market as well as how many shares you should
buy or short in the stock market.
We know that trading is all about how to react to your successes as well as how to react when
trades dont go your way. No discussion of trading would be complete without a discussion of
risk management. For futures trading, risk management is established with a combination of
the use of stop orders combined with position sizing.
You need to pair a proven strategy
along with risk management. Risk management is accomplished, in general, by never taking
a big loss on any one trade. I suggest that you start by making sure that on any one trade,
you do not risk any more than one percent of your trading account. You will need to calculate
before you enter a trade whether you would be risking more than one percent of your trading
account.
To calculate position-size, you need to know some basic information such as the following:
Account Size
Risk Percentage that you are assuming
Tick value of contract you are trading
Number of ticks of your initial stop loss order
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= $100
$100 x 1 contract =
In this example, you would be able to trade 1 contract $10,000 x 1% = $100 maximum
risk
Like any profession, you need to be prepared to take on the markets in a structured and
methodical manner. If you study the above principles, you will better understand overall
market behavior and you will be equipped to begin to consistently benefit from the great
opportunities that exist each day in the markets.
Platform:
As you develop your trading skills, I suggest that you use a professional trading platform
that will allow you to trade directly from the charts. Be sure that the trading platform allows
you to trade in simulation mode as well as execute trades in your live futures account. In my
opinion, it only makes sense to utilize the very best that technology has to offer in todays
world. Using a professional trading platform will improve your odds of success and help to
eliminate trading errors. As with any skill, the more that you practice, the better you get at
it. It is important to develop your skills regarding the proper use of your trading platform
while in simulation mode so as to minimize trading errors after you are trading your actual
trading account.
Trading in simulation mode will help you to develop your confidence and an overall
methodology that fits your personality.
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SIZE MATTERS
By Al McWhirr
www.eminiscalp.com
No, no, no, its not what you think, so lets get back to your trading screen.
It is a fact that many traders have a difficult time earning consistent profits trading. From
what I have read as well as what I have observed when I attend various webinars, it seems
as though many traders believe that the cause of their lack of success is due to the method or
methods they are using. To be honest, I do attend some of the webinars. Is it because I am
looking for a method? Absolutely not. My EminiScalp methods are just fine and there is no
reason to even attempt to use something else. I am just curious as to what is being offered
by others and I am more curious as to why, with the variety of methods that are available,
why the lack of trading success is still prevalent. This has been an ongoing issue for years
and unless something changes, it will continue. I have written about our EminiScalp methods
in previous articles. This article will offer my personal insight on trader account size and the
relation to trader confidence.
Many traders believe that their lack of success is due to the terrible method they are using.
When I visit a vendors website and read the testimonials on just how great the method is, I
have to wonder what is going on. Why is it that some traders seem to be doing very well with
a method while others are struggling. Are the testimonials false? In most cases, I would like
to believe they are true, although there may be those that are questionable.
No matter how many testimonials and great reviews a vendor receives, there seems to be
as many unhappy and frustrated traders who cant make heads nor tails from the particular
method, not to mention a profit. So, what gives? How is it that some can prosper but many
fail. Does it have to do with discipline? Or is it focus. How about determination. Ahh, could it
beemotions. Is it a combination of all of what was just mentioned, or is it something else?
One vendor says only $1000 is needed in the account to trade their method, and another
vendor says $2500 may be required for their method. I have seen some vendors who insist
that a trader have an account of at least $10,000 in order to trade their method
Experience has taught me that trading confidence can be attributed to account size. Traders
are more apt to take risks if their trading account has a substantial balance. The confidence
begins to erode as the trading account dwindles.
I believe that the rule of thumb is never to risk more than 2% of your trading account on
any one trade. Of course, this is not a hard and fast rule, but it is one that seems to be the
industry standard. For many traders, 2% is not a huge amount (taking in consideration the
average size of a trading account), but unfortunately, it can also be unrealistic. I am not sure
if many traders adhere to that rule, or if they are even aware of it. This 2% rule can work out
just great, or it can mean the temporary or permanent end to a trading endeavor.
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I believe most day traders are far more focused on the stop amount for a particular trade
rather than a percentage amount. No matter how the risk is determined, the size of the
trading account must be considered.
I believe some brokers allow a trading account to be opened with as little as $500. Not
a good idea to trade live with this account size, but it is certainly a way to learn when using
it to SIM trade. Over a period of time, as a trader progresses, more funds can be added to
the account. When the trader feels he or she is ready to go live, there will be sufficient funds
available.
What amount is sufficient? What should an account size be? This may be difficult to
determine as there are many factors that may have to be considered. As we move on, hopefully
our readers can get some insight on this.
I would like to share an experience I had with one of our traders, who we will call James.
His situation was not very different from the many, many traders who have contacted and
joined our EminiScalp team. It all started with an email from James asking if I could call
him. We spoke on the phone at length, and this was his story. About 13 months prior to
him contacting me, James had purchased a method for $3000 that featured an 8 tick target
with a 5 tick stop. I asked him if this was the same management for all markets and he said
it was, although he was encourages by the vendor to focus on the ES. This meant that every
time a trade was entered, the trader was either going to hit the 8 tick target or be stopped
at 5. James was disciplined and stayed with the rules. To make a long story short, his trading
account was just about cleaned out by the time he contacted me. Unfortunately, the outcome
was not what he had expected.
Was there a flaw with the method he was using? Not necessarily. The issue may have been
with the management. There is no way that for every market, every trade, every time of day,
that there is a strict hard and fast stop and target rule. In trading, discipline is certainly a
necessary attribute, but so is logical flexibility. I asked James if he had taken profits at 3 or 4
ticks for each trade, would there be a possibility of a more positive result. Thinking about this,
he believed he would still have money in his account. But he commented, there would have
been an imbalance between risk and reward because the stop would have been more than his
target. As far as I am concerned, there is no relation between stops and targets. Commentary
regarding this will be reserved for a future article.
In any case, logical flexibility over discipline, for a method that really did not understand
risk and reward, could have possibly put James in the profit column. I am not saying that
the method was not working, as the method itself seemed to be fine. The risk and reward
just needed tweaking. Anyway, James began trading this method with an account size of
$3000. Since a 5 tick stop for the ES would be $62.50 per contract, this would have exceeded
the 2% rule by a small amount. If the method claimed an 80% success rate, then all should
have been fine, as long as this claim was true. But, even if this was the case, trading with
an account size of $3000 could be a problem. On a given day, if the first two trades were not
successful, then the account would have been down to $2875 not including commission. I am
not saying that the first couple of trades will not be a success, but this certainly does happen.
If it didnt, the success rate for trading may be different. Anyway, now that the account size
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is less, there is a confidence issue. After losing a few trades, the fear takes over. Actually it
may not be so much that any subsequent trades will lose, it is the anxiety one feels when the
funds in the account begins to shrink. The mindset is different when there is $10,000 in the
account. Losing trades with an account of this size still enables the trader to continue because
there is a financial cushion that a smaller account does not offer. The fear is not so much that
a trade will not be successful, the fear is anticipating a loss of money. As the funds dwindle,
so does the confidence, and the anxiety builds.
There were many instances where James had at least 2 losses in a row. Hypothetically,
if you have 2 losses in a trading day, then the next eight should be successful, assuming the
vendor claims an 80% success rate. This can be misleading as well. Does this mean that if 10
trades are taken each day, 8 will show a profit? Or is it calculated over a period of time, such
as a month. If so, there could be considerable draw downs over a short period of time, to be
possibly made up in the near future. For the most part, small trading accounts are not able to
withstand this instability.
The chart below is an illustration of the type of trades James had encountered with his
method. This was not a trade James took, it is just an example. As shown, the method called
for a long at A. It was a good entry point, but not the best. With his account size of $3000,
the 5 tick stop, at B was not enough leeway to keep James in the trade. Unfortunately not
many methods make allowances for the way a market may trade, such as highs, lows, recent
activity, etc. The two blue arrows at the bottom of the chart show EminiScalp ABL auto trade
long entries. The ABL does take into account the various market conditions. In any case,
having the knowledge of where trade areas may occur, would have allowed for a very nice
trade. The EminiScalp ABL knew where to take this entry.
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I believe that the rule of thumb is for every $500, one contract can be traded. With an
account size of $3000, that would be 6 contracts. Under those conditions, $375 would have
vanished from the account with this stop. That is over 10% of the account size. It would be
very difficult emotionally for a trader to continue trading if this happened to be the first trade
of the day. Of course, not all trades are stopped, there are certainly profitable trades. The
question is though, why is it so difficult for the majority of traders to be successful? Possibly
because of tight stops, unrealistic targets, human emotion, or account size. If James had
$10,000 in his account, his confidence may not have eroded as fast as his funds did.
What is my point with all of this? Working with aspiring traders through the past years, I
have found that adhering to specific rules as required by vendors, is very difficult, especially
when account size decreases. Trading is a very emotional business and the lack of funds
compound the anxiety.
After all my years of trading, I have come to the conclusion that auto trade methods are
probably a better solution for many traders. The rules are preset, there is no emotion involved
and stops and targets are set prior to an entry. There is no real reason for a day trader to
learn the internal workings of the market. If one wants to learn, it can be done while auto
trading and not when the trader is physically attempting to take entries and looking for exits.
If the opportunity presents itself, become profitable first, then take the time to learn the
market internals, assuming this is what is important to you.
Trades need room to breathe, so stops must be determined accordingly. If you know the
critical trade areas, then you should be fine. If not, consider an auto trade such as the ones
offered by EminiScalp.
Traders with deep pockets have the ability to let a trade go against them because , in many
cases, they recognize that there will be an eventual pullback or reversal. Knowing where
trade areas are is a big plus because a trader will have an indication where price may move
in her or his favor.
So, in conclusion, if James gave trades more breathing room and took a little less profit for
each trade, he is certain that he would not have had a need to contact me. In order for this
to have happened though, he agrees that a larger size trading account would have definitely
helped him. So, size matters.
Thanks for taking the time to read my article. If you have any questions, please do not
hesitate to contact me at info@eminiscalp.com.
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Trading Plan
Here is my Intraday Futures trading plan. I have a similar plan for End-Of-Day equities/options
plans and I'll write about them in my future articles.
All the ideas and tools I use are well designed and tested in real time and end-of-ay analysis in
auto/discretionary trading styles for the past 20+ years of my full-time trading.
1. Trading decisions are made using "Trading tools" only, whereas "Support tools" are used to
validate/support the "Trade Tools." An example of "Trade Tools" are pattern recognition tools like
Auto ABC, Auto Gartley, Head & Shoulders etc. and an example of "Support tools" are part of
market context tools like moving averages, pivots, fib. bands and gaps etc.
2.Trade in the same direction of Market Internals direction. Current pattern or setup trade
direction must be same using Combined Market Internals indicator.
3. Trade pattern based and computed entry, stops, targets only, and never guess or overthink
non-computed price levels.
4. Current Volatility (VLTY) must be within the tradable condition.
6. Entry, Exit and Targets must fit my Trading Plan and risk profile.
7. Never trade micro chart patterns and never scalp counter-trend based chart patterns. Check
for the confluence of target levels or zones with other key support/resistance levels.
8. Must adhere to strict discipline for my entry and exit rules and money management rules.
9. If any point during the trade, if my trade decision is violated or becomes wrong, exit the trade
regardless of Profit or Loss.
10. Scale-In and Scale-Out must be planned before the trade started. Never add to a losing
trade.
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3. Market Internals indicator (for Intraday Trading only) -- Combined Market Internals (CMI)
4. Follow underlying trend detection tools (SuperBars, EVTrend)
5. Market Volatility (VLTY) tools.
Fib. Bands
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Fibonacci Bands are derived from Fibonacci ratios expansion from a derived key moving average
and standard deviation. These bands help traders find key areas of support and resistance.
Fibonacci bands are computed by adding a Fibonacci ratio distance (Up and Down) from a key
dynamically adjusted moving average.
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to Trend based methods. Super-Bars is a methodology to detect the underlying trend based
on multiple trend techniques to build a composite trend and project the super-trend on the
pricebars.
Superbars provide trend information at a quick glance using color scheme.
plotted in all markets and in all time-frames. Super-bars
underlying trend in the simple color scheme.
Superbars can be
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Example Trade 1:
Confluence zones from multiple pattern or trade setups act as key areas for price-action.
Trading solely with these price levels may not be the best choice for any trader, but using these
confluence zones with pattern setups may result in profitable trades. Here I present a trade how
I anticipate these confluence price zones and trade ABC chart pattern with market context.
Following chart shows an ABC Bullish pattern in @ES 1220 tick chart with a C retracement of
58%. ABC Bullish trades are made when price trades above Entry Level (EL) level. Notice also
price closed above mid-Fib. band and 200 SMA. Now monitoring the market context elements,
the price is trading above Mid Fib. Band and VLTY are comfortably less than 50 (normal).
BarTime is showing about 60-90 seconds for ES 1220 Tick (my trade chart). CMI is also green
signaling potential ABC bullish setup.
Trade Info.
A long entry was taken at 1383 with an initial stop set 1381. Targets are computed from 'C'
using AB Length and Fibonacci numbers. I look for projected targets confluence with other pivot
levels, MAs or any other support or resistance levels. About 30mins after trade entry, ABC long
trade from 1383 level reached its first Target: 1386.5. I exited half of my position at 1386.5 (3.5
pts profit) and then I waited for my next target 1389 and raised stop from 1381 to 1385. Price
went up to 1387.5 (79%AB) to complete target zone.
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Trade Exits
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Making money investing and trading is a difficult business. Much is written about it and it is
made out to be simple accessible and even glamorous. The truth is that 94% of people who
open a trading account are out of business within nine months. They have either lost the entire
contents of their account or decided to give up. This means that 6% of traders, which include
all the professionals, are taking money from the 94% who are losing it or put another way one
person in twenty succeeds! The professionals have many secrets that they dont want the
public to know about and I am about to reveal one of them. Most private individuals do not take
the time to educate themselves so that they can be successful. However, once an individual
has mastered markets they are firmly on the path to untold wealth.
You may well have heard of the phrase Sell in May and Go Away referring to the stock
market and specifically the UK FTSE 100 index or the American Dow Jones Industrial Averages
or the S&P 500. This is a very broad statement that introduces us to the concept of seasonality
in markets. By the way, as our market chart below shows, this is not really true. Just as the
natural world has four seasons ranging from spring through summer, autumn to winter during
the course of which we experience cold weather, warmer times, as well as wet and windy times,
markets show similar tendencies. However these tendencies are somewhat veiled in as much
as they do not fall into four quarters. However markets do exhibit up moves, down moves and
sideways moves which can be likened to times of the market year.
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The curving thick Red Line shows the average movement of the S&P500 Index over the
course of the year. You can see that the lowest point is in January and typically the high falls at
the very end of the year at the end of December.
A significant high comes in around May 4th on average. It is not necessarily followed by a
large sell off. A major low comes in around October 5th from when some years see a major rally
into yearend. Students of W D Gann will recognize these dates!
What is not commonly known to the public is that commodity markets generally display even
stronger seasonal bias in trend with some very high probability opportunities. Historically, these
markets have not been so easy to trade but now with the advent of commodity ETFs (Exchange
Traded Funds) there is greater access for the general public to these markets. These are
in addition to the more complex instruments or futures contracts and options which are also
available.
Crude Oil shows definite seasonal trending.
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Most noticeable is the big move down from October to December as shown on the charts
below.
The data from our system shows that since 1983, Crude Oil has closed lower on the 10th
December than it was trading on 17th October on 71.9% of occasions. This represents 23
occasions. This does not mean that the market went straight down. It merely shows that the
close was lower on the December date than the market was trading on the October date. In
some years the market may have traded in the opposite direction creating a drawdown for
some period of the duration. Hence money management is essential. However this information
is useful to us and does give us a potential edge. So what can we do to enhance this system?
At the Market Timing Report we are able to find high probability turning points using our
Profit Finding Oracle System. This gives seasonal trading a massive boost. We do this is
different time frames from super macro down to weekly and daily cycles. Using these latter two
types we can get confirmation of whether seasonality is likely to work this year.
Take a look at the following chart. There are several points to note. Firstly, this chart is
showing a medium term cycles histogram set underneath it. Looking at the bottom left you will
note that where the histograms spike, as shown by the vertical blue lines, the market usually
reverses direction. Returning to our seasonal set up above, we would be looking for a change
for the week of 17th October 2016. There is already a histogram spike coming into play at
that time point this year. Remember these histograms are derived from a completely separate
methodology. So this is already providing a degree of confirmation for the seasonal move. If the
oil market is heading up into the October time window then a reversal can be expected. As the
time approaches we would check our indicators and money management setups to see if the
trade can be entered safely and with good risk reward. If on the other hand the crude oil market
is selling off into that point then an up move is possible as an inversion may be taking place.
This would be counter to seasonality so a more risky set up. Future potential turning points are
making themselves evident to the bottom right of the chart.
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The use of seasonal trading knowledge when combined with trading strategy and sensible
money management such as the use of stop losses can become a very effective tool for trading
and investment.
Exchange traded funds come in different forms and avoid the issues of contract rollovers etc
which occur in futures markets. Futures markets are traded by month for delivery. Additionally
some ETFs are geared so, for example, if you expect a market to rise in price, then you would
buy an ETF. If the ETF is geared then for every point or penny that the underlying market
moves, then the geared ETF will move up twice or even three times as much.
The Market Timing Report is published monthly and gives information on forthcoming
potential turning points and seasonality on the S&P500, Crude Oil, Gold, Dollar Index and
EURUSD.
Try it risk free with a 28 day no questions asked money back guarantee!
https://ws227.isrefer.com/go/mtratw/larry/
www.markettimingreport.com
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Patterns List
1. ABC Bullish
2. ABC Bearish
3. AB=CD Bullish
4. AB=CD Bearish
5. Ascending Triangle
6. Butterfly Bullish
7. Butterfly Bearish
8. Cup & Handle
9.Descending Triangle
10. Diamond Top
11. Diamond Bottom
12. Double Bottom
13. Double Tops
14. Flags & Pennants
15. Gartley Bullish
16. Gartley Bearish
17. Head & Shoulders
18. Inverse Head & Shoulders
19. MegaPhone (Broadening)
20. Parabolic Arc
21. Rectangle Channel
22. Rising Wedge
23. Falling Wedge
24. Symmetric Triangle
25 V-Top
26. V-Bottom
27. 3-Drives Bullish
28. 3-Drives Bearish
29. 5-Wave Bullish
30. 5-Wave Bearish
Suri Duddella, is a 20+ year full-time Patterns based Algorithmic Trader. He trades Futures/
Equities/Options markets using his mathematical and algorithmic models. He is also the
author of Trade Chart Patterns Like The Pros book and many other markets related articles.
His website and blog for Automated Patterns/Research and Tools is: http://www.suriNotes.
com and his email: suriNotes@gmail.com
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Module One:
Dow Theory
Trend Analysis
Trend Change Confirmation
Indicators
Module Two:
Simple Elliott Wave Theory
Wave Counts
Impulsivity Versus Correcting Waves
Using Dow And Elliott Together
Module Three:
Risk Management Theory
Risk Of Ruin
Trade Size Calculation
Scaling in Adding Two Positions
Module Four:
Trading Rules
Trade Setups
Risk Reward Analysis
Trade Entry Criteria
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Trade Management
Trade Exit Criteria
Module Five:
Trading Business Plan
Tracking Results
Trading Psychology
Dealing With Losing Trades
Module Six:
Scanning Techniques
Scanning Tools
Sector Analysis
Instant Chart Pattern Recognition
The first module is really about trend analysis.
Are you in a trend and when did it start and
when did it change. He talks about the rules
and the data around that. He talks about Dow
Theory. He touches on a few indicators that can
help with that analysis.
In module two he jumps into a simple approach
to Elliott Wave Theory. He talks about wave
counts and impulsive vs corrective waves and
how to use Dow and Elliott together.
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which explains what they have done to find their own trading method.
If you have a trading method that gives you a predictable profit, then that type of objectivity
contributes to your trading edge. The problem with most traders is that being inconsistent
will never allow them to have an edge. After you find your trading method that you feel
comfortable with, you must have the following:
An overall plan to:
1) Set your rule set and plan and then stick with it in all of your trading.
2) To give you a trading plan for every day.
The trade plan then should:
1) Have an exact entry price
2) Have a stop price
3) Have a way to add positions
4) Tell you where to take profits
5) Have a way to protect your profits
By reviewing all the methods given in this book by the expert traders, it will give, you the
preliminary steps that you need to find your footing in finding your own trading method.
Reading this book and by seeing the actual recorded presentations on the Traders World
Online Expo site can act as a reference tool for selecting your method of trading, investment
strategies and tactics.
It took many of these expert traders in this book 15 30 years to finally come up and find
the answers to find their trading method to make consistent profit. Finding your trading
method could be then much easier when you read this book and incorporate the techniques
that best fit your personality and style from these traders. This book will enable you to that
fastest way to do that.
So if you want help to find your own trading method to be successful in the markets then
buy and read this book.
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Trading, trade with the smart money following volume, understand and use the Ultimate
Oscillator, use high power trading with geometry, get better entries, understand the three
legs to trading, use technical analysis with NinjaTrader 7, use a breakout system with cycles
for greater returns with less risk, use TurnSignal for better entries and exits, trade with
an edge, use options profitably, learn to trade online, map supply and demand on charts,
quantify and execute portfolio rotation for auto trading.
Written by Many Expert Traders
The book was written by a large group of 35 expert traders, with high qualifications, most
of who trade professionally and/or offer trading services and expensive courses to their
clients. Some of them charge thousands of dollars per day for personal trading! These
expert traders give generally 45-minute presentations covering the same topics given in
this book at the Traders World Online Expo #12. By combining their talents in this book,
they introduce a new dimension to finding a profitable trading edge in the market. You can
use ideas and techniques of this group of experts to leverage your ability to find an edge to
successfully trade. Using a group of experts in this manner to insure your trading success is
unprecedented.
Youll never find a book like this anywhere! This unique trading book will help you uncover
the underlying reasons for your lack of consistency in trading and will help you overcome
poor habits that cost you money in trading. It will help you to expose the myths of the
market one by one teaching you the right way to trade and to understand the realities of
risk and to be comfortable with trading with market. The book is priceless!
Parallels to the Traders World Online Expo 12
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them a trading edge over other traders. If you want to be successful at trading, you too must
have your edge. One needs to find successful trading strategies and implement them in their
own trading method.
The purpose of this book is to present to you the best trading strategies of these traders so
that you might be able to select those that fit you best and then implement them into your
own trading style. I wish to express my appreciation to all the writers in this book who made
the book possible. They have spent many hours of their time and hard work in writing their
section of the book and the putting together their video presentation for the online expo.
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Seasonality
MACD
Stochastics
Moving Averages
Trailing Stops
Fibonacci Retracements & Extensions
All of the charts in this book are produced using my favorite charting software Market-Analyst.
I have also arranged for you to get a FREE trial so that you might have the chance to actually
work with these indicators with a real charting platform.
You will also be able to view the video presentations that I personally created so you can
see how these indicators can be setup and followed with clear and concise step-by-step
instructions. After you understand how these indicators work, I would then recommend that
you go to WorldCupAdvisor.com and consider following Craig Haugaards real-time trades.
This one-of-a-kind book teaches you how to identify the direction of the markets and trade
the markets by using popular trading indicators. This is done by concise instructions backed
by learning videos, hands on practice with real trading software and by following real-time
trades of a master trader.
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This book is an enhanced Edition which means that the articles are backed with audio visual
presentation links. Most of the presentations are in HD quality and are put together by the
writers of the articles in the book and really help the learning process.
Successful trading is based on knowledge and having the right psychology to trade the markets.
This book will lift your trading to a much higher level and will save you an enormous amount
to time.
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in the championship. You can then actually see and understand how his ideas work.
I am not going to tell you exactly how Takumaru used the ideas to make his return of 122.6%
on a $10,000 investment. That information is not public and belongs only to Takumaru.
I will tell you which indicators he used and help you understand how these indicators work.
Michael Trading: Learn about some of the trading tools he used $4.99
Michael Cook, was the first-place finisher in the 2014 WORLD CUP
Championship of Futures Trading with a 366% net profit. In this
book there is a detailed interview with Michael with questions and
answers of exactly what he used to win the championship. In this
book I will explain to you the indicators that he said he used in the
interview. You can then actually see and understand how they work.
Here are some the indicators and methods that he said he used: 1)
Moving Averages 2) Seasonality 3) Cycles 4) Seasonality 5) Price
Patterns 6) Williams %R 7) Long with Stops 8) Commitment of
Traders Report You will also be able to download a video presentation
that I personally created so you can see how these indicators can be
setup and followed in a step-by-step manner. After you understand
how these indicators work, I would then recommend that you go to WorldCupAdvisor.com and
consider following Michael Cooks trades.
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