Study of Gann concept and the implementations

Gann Angles - The Secret of Better Market Timing for Big Profits!

2011-11-29T19:52:00.000-08:00

W D Gann was an innovator in technical trading systems and made fortune of over 50 million dollars Gann died in 1955, but his methods live on and traders around the world use them for big profits.

Gann angles are a tool used by many savvy traders Quite simply Gann angles allow you to pinpoint your entry and exit levels for great profit potential. Let’s look at the effectiveness of Gann angles.

Gann based his investment strategy on the fact that by studying the Past, We Can Predict the Future. He assumed the following:

1. Price, time, and range are the only three factors relevant to market movement.

2. Markets are cyclical in nature.

3. The markets are geometric in their design and in function. Gann knew that market movements were a reflection of human nature which is constant over time, and this shows up in repetitive price patterns that can be seen with the right tolls and traded for profit.

Gann’s techniques & use of angles

Based on the above, Gann's used three ways to predict market behavior

1. Price study– This uses support and resistance lines, as well as pivot points and angles.

2. Time study – This looks at historically reoccurring dates derived from natural order.

3. Pattern study – This studies market swings using trend lines and reversal patterns.

Gann Angles

Using Gann angles requires practice, but here are the basics of what you need to do

1. Determine the time units - The way to determine a time unit is to study charts and look at the distances in which price movements occur.

Put the angles to the test and see how they perform.

The intermediate time frame (between 1 and 3 months) tends to produce the best amount of accurate patterns and is the time frame to focus on, rather than say, daily or multi year.

2. Determine the high or low from which to draw the Gann lines –

The best way to achieve this is to complement it with other technical tolls such as Fibonacci levels or pivot points.

Gann looked at what he referred to as "vibrations" or "price swings." He found these by analyzing charts using tools such as Fibonacci numbers.

After the above has done you then need to decide which pattern to use:

Gann looked at what he referred to as "vibrations" or "price swings." He found these by analyzing charts using tools such as Fibonacci numbers.

After the above has done you then need to decide which pattern to use:

1. The two most common patterns are the 1x1, the 1x2, and the 2x1.

These are purely variations of the slope of the line.

For example, the 1x2 is half the slope of the 1x1. The numbers simply indicate the number of units and the slope.

2. Look for patterns to trade the direction will be either downward and to the right from a high point or upward and to the right from a low point.

3. Always look for repeat patterns on the charts The whole basis of Gann’ theories are that markets are cyclical in nature and patterns repeat and can be traded.

Using Gann Angles for Trading Profits.

Gann angles are great for predicting support and resistance levels.

Many other trading methods use support and resistance lines; however Gann angles add a greater insight for traders - in that they are diagonal.

The best Gann Formation.

The optimum balance between time and price is when prices move identically in synch to time. This is present when the Gann angle is at 45 degrees.

There are nine different Gann angles to use.

When one of these lines is broken, the following angle will then provide the next level of support or resistance.

Gann made a lot of money, a fortune in fact of over 50 million dollars and Gann angles helped him to do it, so discover what they could do for you today!
http://www.gann.co.uk

Leonardo Fibonacci Biography

2011-11-15T21:59:00.000-08:00

Leonardo Pisano, now better known by his nickname Fibonacci, also sometimes used the name Bigollo, which may mean good-for-nothing or a traveller. He was born in Pisa, Italy around 1170. At the time, Pisa was an important commercial town and had links with many Mediterranean ports. He was the son of Guilielmo Bonacci, a diplomat for the Republic of Pisa. Guilielmo was responsible, beginning around 1192, for directing the Pisan trading colony in Bugia, Algeria where he represented the merchants of the Republic of Pisa. Bugia, later called Bougie and now called Bejaia exported wax candles. The French word for candle, Bougie, is derived from the Algerian port’s name.

Some time after 1192, Guilielmo Bonacci brought Leonardo with him to Bugia. Leonardo received a North African education under the Moors, and was taught their style of mathematics. Guilielmo intended for his son Leonardo to become a merchant and so had arranged for his education in calculational techniques, especially those involving the Hindu-Arabic numerals which had not yet been introduced into Europe. Later, Leonardo was assigned to do business for the Pisan republic and he travelled extensively around the Mediterranean coast. He was sent on trips to Egypt, Syria, Greece, Sicily, and Provence. He took the opportunity offered by his travel abroad to study and learn the mathematical techniques used in these various regions. He would have met with many merchants and thereby discovered their systems of doing arithmetic.

Around 1200, Fibonacci ended his travels and returned to Pisa. On returning home he began to work on his own mathematical texts, and continued to do so for at least the next twenty-five years. His work played an important role in reviving ancient mathematical skills and he also made significant contributions of his own. The five works we know of from this period are: the Liber abbaci (1202, 1228); the Practica geometriae (1220/1221); an undated letter to Theodorus, the imperial philosopher to the court of the Hohenstaufen emperor Frederick II; Flos (1225), a collection of solutions to problems posed in the presence of Frederick II; and the Liber quadratorum (1225), a number-theoretic book concerned with the simultaneous solution of equations quadratic in two or more variables. Fibonacci lived in the days before printing, so his books were hand written and the only way to have a copy of one of his books was to have another hand-written copy made, in light of this we are lucky to have such record as we do of his work.

Frederick II had summoned Fibonacci for an audience when he was in Pisa around 1225. His achievements were clearly recognised during his lifetime, although it was the practical applications rather than the abstract theorems that made him famous to his contemporaries.

After 1228 by decree the Republic of Pisa awarded Fibonacci a yearly stipend for his pro bono advising to the Republic on matters involving accounting and related mathematical matters. Fibonacci died some time after 1240.

Gann Angles To Predicting the Market

2011-10-29T19:50:00.000-07:00

An Alternative Slant on Market Timing.

W D Gann was a prolific writer and trader, and created a fortune of over 50 million dollars (equivalent to 500 million today!).

Many of his trading predictions were the subject of public record.

For instance, he correctly predicted the 1929 crash a year in advance! Gann died in 1955, but he still holds legendary status as a technical innovator.

By predicting the market using Gann angles, you can add a valuable tool to your trading strategy.

Assumption: By Studying the Past, We Can Predict the Future
Gann based predictions of price movements on three premises:

1. Price, time, and range are the only three factors to consider.
2. The markets are cyclical in nature.
3. The markets are geometric in their design and in function.

Gann believed that human nature was constant, and this showed up in repetitive price patterns that are identifiable, and which can therefore be acted upon to increase profit potential.

Gann's Strategy for Trading Success
Based on the above assumptions, Gann's strategies revolved around three areas of prediction:

1. Price study- This study uses support and resistance lines, pivot points and angles.
2. Time study - This studies historically reoccurring dates derived from natural order
3. Pattern study - These study market swings using trend lines and reversal patterns.

Constructing Gann Angles
Predicting the market using Gann angles requires subjective judgment and practice.

Here is what you need to do:

1. Determine the time units - One common way to determine a time unit is to study the chart and look at the distances in which price movements occur. Then, put the angles to the test and see how accurate they are. The intermediate-term time frame (one to three-month) tends to produce the optimal amount of patterns compared to short term daily, or multi year charts.

2. Determine the high or low from which to draw the Gann lines - The most common way to accomplish this is to complement it with other forms of technical analysis i.e. Fibonacci levels or pivot points. Gann used what he called "vibrations" or "price swings." He determined these by analyzing charts using theories such as Fibonacci numbers.

3. Decide which pattern to use - The two most common patterns are the 1x1, the 1x2, and the 2x1. These are simply variations of the slope of the line. For example, the 1x2 is half the slope of the 1x1. The numbers simply indicate the number of units.

4. Look for patterns - The direction would be either downward and to the right from a high point or upward and to the right from a low point.

5. Look for repeat patterns on the chart - The basis of this technique is the premise that markets are cyclical.

Using Gann Angles for Trading Profits
The most common use for Gann angles when predicting the market is to indicate support and resistance levels. Many other trading methods use support and resistance lines, so what sets Gann's method apart from the rest?

Quite simply, predicting the market using Gann, angles add a new dimension to support and resistance levels, in that they can be diagonal.

The Optimum Gann Formation
The optimum balance between time and price exists when prices move identically to time. This is present when the Gann angle is at 45 degrees.

In total, there are nine different Gann angles. When one of these trend lines is broken, the following angle will provide the next level of support or resistance.
http://www.gann.co.uk

How Does Elliott Wave Analysis Work?

2011-10-15T21:57:00.000-07:00

Elliott wave analysis is based upon the Elliott Wave Principle, which states that investor psychology is the real engine behind the stock markets.

Robert Prechter, Elliott Wave International's founder and president, explains: “The Wave Principle is a catalog of the ways that the crowd goes from the extreme point of pessimism at the bottom to the extreme point of optimism at the top. It is a description of the steps human beings go through when they are part of the investment crowd, in order to change their psychological orientation from bullish to bearish. Since people don’t change much, the path they follow in moving from extreme pessimism to extreme optimism and back again tends to be the same over and over, regardless of news and extraneous events.”

Therefore, Elliott wave analysis involves deciphering the psychological orientation of the investment crowd through the wave patterns evolving in various stock markets. And since we here at Elliott Wave International use Elliott wave analysis on all of the world’s major stock indexes, we're confident we can gauge how investor psychology is trending.

In order to utilize Elliott wave analysis, you must become familiar with the Elliott Wave Principle. The Elliott Wave Principle enables you to properly decipher the wave patterns unfolding in each stock market and then make predictions on which wave patterns are most likely to occur next — this is the basis of Elliott wave analysis.

Each Elliott wave structure carries with it unique personality traits and is followed by another specific and unique structure. Studying these patterns eventually allows analysts to be able to predict both what may occur next, and — possibly even more importantly — what won’t happen next.

http://www.elliottwave.com

The Secret Of Better Market Timing & Profit Potential

2011-09-29T18:27:00.000-07:00

The Fibonacci number sequence and golden ratio is important throughout nature, but traders such as W D Gann made great use of the sequence as a trading tool.

The numbers helped make Gann millions in profits and are useful for any trader to maximize profits.

So what are they and how are they applied to trading?

Let’s find out: Support and resistance levels are important for traders as they help identify entry and exit points when trading.

Fibonacci percentage "retracement" levels based upon the Fibonacci number sequence and golden ratio are used by many savvy traders to improve their entry and exit points.

Fibonacci Numbers and the Golden Ratio
The Fibonacci sequence was printed in the Liber Abaci, written by Leonardo Fibonacci in 1202. It introduced Hindu-Arabic numerals for the first time To Europe, which are at the time was still using roman numerals.

The Fibonacci number sequence came about from the following question:

How many pairs of rabbits can be generated from a single pair, if each month each mature pair produces a new pair, which, from the second month, starts producing?

While the Fibonacci number sequence and golden ratio came about form the above question it produced a number sequence that has importance throughout nature.

After the first few numbers in the sequence, the ratio of any number to the next higher number is approximately .618, and the lower number is 1.618. These two figures are referred to as the golden mean or the golden ratio.

The golden mean and golden ratio
The proportions reflected in these numbers are pleasing to the human senses and appear throughout biology, art, music, and architecture.

A few examples of natural shapes based on the Golden Ratio include: Snail shells, galaxies, and hurricanes DNA molecules, sunflowers and many more.

Many traders have found these numbers important in trading as well and such traders as W D Gann for example, used them to amass huge profits.

Retracement Levels
The two Fibonacci percentage retracement levels considered the most important for traders are: 38.2% and 62.8%. Other important retracement percentages are: 75%, 50%, and 33%. Fibonacci Numbers 3 Uses For Traders

1. Fibonacci numbers Define exit numbers
For example, if three or more Fibonacci price levels come together in a tight zone, a stop loss can be placed above the area which denotes important support or resistance.

Setting stops using Fibonacci retracements give important areas that act as support or resistance, allowing traders to set pre defined exit points in a disciplined manner.

2. Fibonacci levels Decide Position Size
Depending on the risk you are prepared to take per trade, Fibonacci numbers can also define the size of position taken. This is because the distance from the stop is different in monetary terms on all trades.

A stop close to resistance and support may warrant a bigger position than one where support or resistance is further away.

3. Fibonacci numbers Define Profit Objectives
With Fibonacci numbers, once a pattern completes against a Fibonacci price area traders can use them for profit objectives. This clear view of where trades may go helps traders to lock in profits at set levels.

The advantage of Fibonacci numbers are: They allow traders to have specific stop loss and profit objectives IN ADVANCE.

One of the keys to trading any market is discipline most traders simply don’t set profit and loss objectives in advance. They therefore let emotions take over, they get greedy or rely on hope and this creates losses over the longer term. Profits are run to long and lost and losses become bigger than they should.

“Run your profits and cut your losses is the way to make longer term capital gains and Fibonacci numbers incorporated in your trading plan will help you do this.

W D Gann was a trader who understood that using Fibonacci numbers could make large profits and used them with stunning success.

Fibonacci numbers combined with the techniques of WD Gann can help any trader achieve long term capital gains. Check out these great profit tools and incorporate them in your trading as they will help you increase your profit potential.
http://www.gann.co.uk

What is an Elliott Wave and What Does it Look Like?

2011-09-15T21:55:00.000-07:00

Elliott waves are the basic building block of the Wave Principle.

The Wave Principle is Ralph Nelson Elliott's discovery that social, or crowd, behavior trends and reverses in recognizable patterns. Elliott discovered that the ever-changing path of stock market prices reveals a structural design that in turn reflects a basic harmony found in nature. From this discovery, he developed a rational system of market analysis. Elliott isolated 13 patterns of movement, or “waves,” that recur in market price data and are repetitive in form but not necessarily repetitive in time or amplitude. He named, defined and illustrated the patterns. These patterns are Elliott waves.

These Elliott waves link together to form larger versions of those same patterns. They, in turn, link to form identical patterns of the next larger size, and so on. The result is the illustration you see below:

In markets, progress ultimately takes the form of five Elliott waves of a specific structure. As you can see below in the most basic Elliott wave structure, waves (1), (3) and (5) actually affect the directional movement. Waves (2) and (4) are countertrend interruptions.

The two interruptions are a requisite for overall directional movement to occur. And though there are several variations of Elliott waves, all of them fit into the basic structure you see above. The stock market is always somewhere in the basic five-wave pattern at the largest degree of trend. Because the five-wave pattern is the overriding form of market progress, all other patterns are subsumed by it.

http://www.elliottwave.com

Jesse Livermore Vs. W.D. Gann – Who Was Better?

2011-08-29T18:20:00.000-07:00

Jesse Livermore is known to most as the best market player Wall Street has ever heard about, rivaling perhaps even Gann. Livermore is alleged to have engaged in every single biggest stock and commodities moves from 1910 – 1940. He needed to be doing something right to just have survived monetarily for three decades.

Livermore might be a very good model for today’s computer stock trader. In the Livermore era there was no tv, no computing devices, and no world wide web. Even if were able to afford to pay a staff to chart stocks and futures you would not have had 24×7 immediate access to financial data files to keep those charts up to the minute. Any profitable stock trading system that could stand up to the test of time had to use easy to get data, be clear to understand, and be simple to apply. Contemporary technical analysis tools like stochastics and the elliott wave oscillator were out of the question.

His method was based on a trend following system. Livermore only took positions in the direction of the major trend. He opened his position with a minor stake and added to it as the trend persisted in its expected direction. Jesse Livermore said “Just recognize that the movement is there and take advantage of it by steering your speculative ship along with the tide.”

In or out. Long or short. Regardless of how many gigabytes you might have for your cutting edge, computer-based trading system it all comes down to those two choices. He set objective stop loss levels and bailed out immediately from his entire position whenever a stop was touched. Livermore did not feel pressured to trade each and every single day, neither did he try to catch every jiggle in stock prices. He followed only the major, cyclical trends.

The Livermore System defines the trading ticker in terms of trend and swing. An upswing, for example, is a consecutive series of higher pivot highs and higher pivot lows. An uptrend is a consecutive series of upswings. A downswing is a consecutive series of lower pivot lows and lower pivot highs. A downtrend is a consecutive series of downswings.

Trends and swings are determined by two filters. A larger swing filter and a penetration filter that is one-half the size of the swing filter. A change in trend is a retrace of swing filter size from the last up or down swing. A pivot is the high or low point of each swing. Time is not a thing to consider in the Livermore System or in the making of a swing chart.

Livermore utilized hand drawn swing charts that looked somewhat like a point and figure chart. As a substitute for Xs and Os and box sizes, a Livermore swing chart is a vertical line drawn when prices have moved by a fixed number of points in the opposite direction from the previous high or low pivot.

Livermore utilized penetrations of the pivot points to either add new positions when they occurred in the direction of the trend, or as stop-loss levels when they occurred in a direction opposite to the trend. The Livermore System is somewhat unique because of the role of the penetration filter. Many other swing trading systems use any breakout of a prior pivot high pivot or low pivot as the signal to add positions or as a stop loss level.

All positions were liquidated at the first penetration of a stop-loss level. A second penetration of the next occurring pivot in the direction of the new trend confirmed the new trend. A new trend “failed” when the second confirmation did not occur. In those cases Livermore would reenter in the direction of the prior trend when prices exceeded the size of the swing filter from the failed trend’s highest high or lowest low.

People that are looking for more information about the topic of retirement investing, please visit the web page which was quoted right in this line.
http://stockmarketchat.us

How Can I Apply the Elliott Wave Principle?

2011-08-15T21:50:00.000-07:00

How Can I Begin Applying the Elliott Wave Principle?

When investors first discover the Elliott Wave Principle, they’re often most impressed by its ability to predict where a market will head next.

And it is impressive. But its real power doesn’t end there. The Elliott Wave Principle also gives you a method for identifying at what points a market is most likely to turn. And that, in turn, gives you guidance as to where you might enter and exit positions for the highest probability of success.

So, how do you begin applying the Elliott Wave Principle? By starting at its most basic level. The Elliott Wave Principle works by identifying patterns in market prices. So, in other words, we start by analyzing waves on a chart.

Elliott’s pattern consists of “impulsive waves” and “corrective waves.” An impulsive wave is composed of five subwaves. It moves in the same direction as the trend of the next larger size. Acorrective wave is divided into three subwaves. It moves against the trend of the next larger size.

As the figure below shows, these basic patterns build to form five and three-wave structures of increasingly larger size (larger “degree,” as Elliott said).

In the above illustration, waves 1, 2, 3, 4 and 5 together complete a larger impulsive sequence, labeled wave (1). The impulsive structure of wave (1) tells us that the movement at the next larger degree of trend is also upward. It also warns us to expect a three-wave correction — in this case, a downtrend.

That correction, wave (2), is followed by waves (3), (4) and (5) to complete an impulsive sequence of the next larger degree, labeled as wave 1. At that point, again, a three-wave correction of the same degree occurs, labeled as wave 2.

So, in applying the Elliott Wave Principle, our first task is to look at charts of market action and identify any completed five-wave and three-wave structures. Only then can we interpret where the market is and where it’s likely to go.

But while applying the Elliott Wave Principle to any chart, we must keep in mind an important point. The Elliott Wave Principle does not provide certainty about any one market outcome. Instead, it gives you an objective means of determining the probability of a future direction for the market. At any time, two or more valid wave interpretations usually exist. So, it’s important for any investor or trader to carefully assess the probability of each interpretation.

View the Elliott Wave Principle as your road map to the market and your investment idea as a trip. We start the trip with a specific plan in mind, but conditions along the way may force us to alter our course. “Alternate counts” are simply side roads that sometimes end up being the best path.

Elliott’s highly specific rules keep the number of valid interpretations (or “alternate counts”) to a minimum. The analyst usually considers as “preferred” the one that satisfies the largest number of guidelines. The top “alternate” is the one that satisfies the next largest number of guidelines, and so on. Alternates are an essential part of using the Elliott Wave Principle.

Another key to applying the Elliott Wave Principle is Fibonacci ratios. Few investors realize that Fibonacci analysis of the markets was pioneered by R.N. Elliott. The use of Fibonacci ratios requires a valid Elliott wave interpretation as a starting point. Elliott had two chief insights concerning Fibonacci relationships within waves. First, corrective waves tend to retrace prior impulse waves of the same degree in Fibonacci proportion — common wave relationships include 38%, 50% and 62%. Second, impulse waves of the same degree within a larger impulse sequence tend to relate to one another in Fibonacci proportion.

Wave interpretation rules and Fibonacci relationships together are powerful tools for establishing investment strategies and reducing risk exposure. Applying the Elliott Wave Principle aids investors in deciding where to get in, where to get out and at what point to give up on a strategy. Thus, the Elliott Wave Principle lets you identify the highest probability direction for the market.

The basics of the Wave Principle remain as Elliott formulated them. Those basics are fully described in the standard textbook of wave analysis, Elliott Wave Principle — Key to Market Behavior, by A.J. Frost and Robert R. Prechter, Jr. (Prechter is founder and president of Elliott Wave International.) That book rescued the Elliott Wave Principle from obscurity and propelled it to worldwide acceptance as perhaps the most sophisticated form of technical analysis. Remember applying the Elliott Wave Principle is simple, but mastering that application takes years of practice and hard work. Yet, it is worth it to take the time and learn how to make proper counts. There are several Elliott Wave software applications out there that claim to do all the best wave counts for you, but with all the variables in the market, it is much better to make the counts yourself.

http://www.elliottwave.com/

Using Gann Swing Charts In Futures Trading…

2011-07-29T18:17:00.000-07:00

One of the largest problems in trading any kind of financial instrument is how to analyze price action. Present 10 different traders with a given candle chart and ask them to classify market trend, support and resistance and chart patterns and the chances are you will receive 10 different looking sets of analysis in return. Not only is it likely that traders will differ substantially in the important areas identified, present the same trader with the same chart, at a different time, it is highly likely that the two charts you will now have will be different to each other.

The majority of traders who do not have an objective technique for analyzing price action will suffer from this inconsistency in their identification of market trend, support and resistance and chart patterns as their analysis is purely subjective – based upon human judgments and as we all know, humans do make mistakes and the decisions we make are often affected by the circumstances we find ourselves in. For example, place a human under pressure and we are more likely to make those mistakes. Being in danger of losing your own money in the financial markets, is one of the highest pressure situations you can find yourself in.

Consequently, as a trader, being able to make consistent and correct decisions in this environment is very important. Not only is your own money at stake, but the environment in which you find yourself each day encourages to make mistakes in managing that money. It is for this reason at Swing Trends, we aim to remove as much of the subjective decision-making as possible from trading. This removes pressure from a trader, lessens the chance incorrect decisions being made and helps keep emotions in check. All of which can increase ones profitability.

By using W.D. Gann’s 3 period swing charts as an objective guide to market trend, support and resistance and chart pattern formations we achieve this.

What are “Gann 3 period swing charts”?

Simply, a Gann “swing chart” is an objective way of assessing market price action and judging where market “highs” and “lows” have occurred. These highs and lows can then be used to judge trend, the location of support and resistance and to define chart patterns. It is termed a “Gann” swing chart as it was “invented” by William Delbert (W.D.) Gann. “3 period” describes the minimum number of candles needed to form a price “swing” and acts a little like a smoothing mechanism…(shorter period swing charts tend to feature more swings and react more quickly to changes in market trend, but equally are more prone to whipsawing and false signals, whereas longer period swing charts tend to react slower to changes in market trend but produce fewer false signals).

Now how does one draw a Gann 3-period swing chart?

Drawing a “Gann 3 period swing chart”:

A swing chart is a line superimposed on a bar or candle chart of price action, highlighting the “swing highs” and the “swing lows”. A candle with a higher low and a higher high than the previous candle is known as an “up candle”. As prices rise (due to a series of consecutive up candles) one draws a line connecting the highs of each candle. Inside candles (those days with a higher low and lower high than the previous candle) are ignored.

Down candles are also ignored until (according to W.D. Gann) 3 consecutive down candles occur. At that point the line you have been drawing between candle highs “swings” to the bottom of the 3rd down candle. Again “inside days” are ignored, as are “up” days until 3 occur consecutively.

The result on a large scale tends to look like a set of irregular waves.

Although this is normally simplified using a “Manhattan chart” that simply picks out and links the Gann swing highs and Gann swing lows.

Gann swing trend is then simply calculated using the placement of each consecutive Gann swing high and low – with a series of higher highs and higher lows forming a Gann swing uptrend, and a series of lower highs and lower lows forming a Gann swing downtrend.

That all sounds nice easy doesn’t it?

However, in the real world, it is very rare that you will see “3 consecutive” down candles without one, or sometimes even two up candles in between, which would mean normally, even if price moved a significant distance, one wouldn’t be able to class it as a Gann price swing. For example:

Observe diagrams A & B. (Assume trend is up). The “standard” Gann 3 candle pullback is shown in diagram A. A swing low is established at point X. According to W.D. Gann, point Y in diagram B would not qualify as a swing low, because down days are not consecutive. In reality I suggest there is little difference between diagram A and B, so little in fact, one can suggest they are substantially the same. Consequently, I have chosen to modify a traditional Gann 3 period swing chart by relaxing the requirement for there to be 3 “consecutive” days in order for a Gann swing to be formed. I use the definition of 3 lower lows (without there being a new higher high – i.e. higher than “Z” in-between).

Uses of a Gann 3 period swing chart

Defining Market Trend:

Defining support and resistance:

Defining Chart Patterns

These three uses perform possibly the three most important functions in futures trading. At Swing Trends we use these techniques every day (along with a few other technical analysis techniques) to build a specific trading plan for each day, before the market even opens.

All the best of luck for today’s trading!
Duncan

http://club.ino.com

What is the Elliott Wave Principle?

2011-07-15T21:41:00.000-07:00

The Elliott Wave Principle is a detailed description of how groups of people behave. It reveals that mass psychology swings from pessimism to optimism and back in a natural sequence, creating specific and measurable patterns.

One of the easiest places to see the Elliott Wave Principle at work is in the financial markets, where changing investor psychology is recorded in the form of price movements. If you can identify repeating patterns in prices, and figure out where we are in those repeating patterns today, you can predict where we are going.

The Elliott Wave Principle is named for its discoverer, Ralph Nelson Elliott.

Elliott Wave Principle measures investor psychology, which is the real engine behind the stock markets. When people are optimistic about the future of a given issue, they bid the price up.

Two observations will help you grasp this: First, for hundreds of years, investors have noticed that events external to the stock markets seem to have no consistent effect on the their progress. The same news that today seems to drive the markets up are as likely to drive them down tomorrow. The only reasonable conclusion is that the markets simply do not react consistently to outside events. Second, when you study historical charts, you see that the markets continuously unfold in waves.

Using the Elliott Wave Principle is an exercise in probability. An Elliottician is someone who is able to identify the markets structure and anticipate the most likely next move based on our position within those structures. By knowing the wave patterns, you’ll know what the markets are likely to do next and (sometimes most importantly) what they will not do next. By using the Elliott Wave Principle, you identify the highest probable moves with the least risk.
http://www.elliottwave.com

Traders Toolbox: Forward to Gann theory

2011-06-29T18:16:00.000-07:00

To TRULY be a success at almost any profession takes commitment — the type of commitment which comes from the heart, not the mind. Most successful people I know have a dedication towards their chosen path which was forged through hunger. Hunger for knowledge, hunger for power, hunger for wealth, and, in many instances, the hunger associated with survival. It’s hard to be “rich” if you haven’t been “poor”; “happy” if you haven’t been “sad”; or “satisfied” if you haven’t been “hungry”.

I believe Gann’s biggest secret consisted of hard work and common sense. Hard work follows a true commitment and a desire to learn. Common sense is sharpened by the process of learning from experience. In my opinion, THERE IS NO SUBSTITUTE FOR HARD WORK AND AN OPEN MIND.

In trading commodities, a critically important early step towards success is learning about yourself and how you function. You can learn about yourself quickly in the marketplace. By far, the weakest tool in a trader’s arsenal is the TRADER. In this business, it is so very true that you are your own worst enemy. It is critical to understand yourself and to bring your emotions under control.

Emotions are tamed by confidence. Confidence is gained by knowledge. Knowledge is achieved by dedication to study and willingness to learn from experience. The entire process takes persistence. Persistence is fed by desire and hunger. You stay hungry by realizing and believing there will always be more to learn Never reach the point where you consider yourself an “expert” instead of a student. Stay humble, lest the markets humble you.

Become an independent thinker. Don’t concern yourself with what “they” say. Don’t conform your opinions for the sake of conformity. I constantly tell myself, “don’t take the advice of another unless you know they know more than you know. Dare to be a success without fearing failure.

Do not apologize for failures nor be embarrassed by them. Instead view failures as an opportunity to learn. Much more will be learned from losing trades than from winning trades. Failures are a challenge of your commitment and can make you stronger if you will meet the challenge. Failures are the fuel to keep the hunger burning.

Through the learning process, you will develop the important patience and discipline needed to become a winner. In his book, “How to make Profits in Commodities”, which I highly recommend, W D Gann listed 28 rules for success in the commodity markets. The vast majority of these deal with money management and/or mental discipline. Some of the sharpest analysts I know are not successful traders because they cannot overcome their own mental weaknesses.

Success does not come easily, nor should it. I CANNOT OVER EMPHASIZE the importance of mental preparation and self-examination. As an additional aid, I suggest Rudyard Kipling’ s poem If.
http://club.ino.com

Where Did the Wave Theory Come From?

2011-06-15T21:35:00.000-07:00

Ralph Nelson Elliott is the father of the Wave Theory, which is commonly called and more accurately described as the Elliott Wave Principle. Born on July 28, 1871 in Marysville, Kansas, Elliott reached his ultimate achievement late in life by a circuitous route.

After a long career in various accounting and business practices, R.N. Elliott was forced into an unwanted retirement at the age of 58 due to an illness contracted while living in Central America. Needing something to occupy his mind while recuperating, he turned his full attention to studying the behavior of the stock market.

Elliott examined yearly, monthly, weekly, daily, hourly and half-hourly charts of the various indexes covering 75 years of stock market behavior. By November 1934, R.N. Elliott's confidence in his ideas of what is sometimes called the Wave Theory had developed to the point that he presented them to Charles J. Collins of Investment Counsel, Inc. in Detroit.

Collins had traditionally put off the numerous correspondents who offered him systems for beating the market. Not surprisingly, the vast majority of these systems proved to be dismal failures. Elliott's Wave Theory, however, was another story.

The Dow Jones averages had declined throughout early 1935, and advisors were turning negative with the memories of the 1929–32 crash fresh in their minds. On Wednesday, March 13, 1935, just after the close of trading — with the Dow Jones averages finishing near the lows for the day — Elliott, citing his Wave Theory analysis, sent a telegram to Collins and flatly stated:

“NOTWITHSTANDING BEARISH (DOW) IMPLICATIONS ALL AVERAGES ARE MAKING FINAL BOTTOM.”

The next day, Thursday, March 14, 1935, was the day of the closing low for the Dow Industrials that year. The 13-month “correction” was over, and the market immediately turned to the upside. Two months later, as the market continued its upward climb, Collins agreed to collaborate on a book on the Wave Theory. The Wave Principle was published on August 31, 1938.

During the early 1940s, the Wave Theory continued to develop. Elliott tied the patterns of collective human behavior to the Fibonacci, or “golden” ratio, a mathematical phenomenon known for millennia as one of nature's ubiquitous laws of form and progress.

Elliott then put together what he considered his definitive work, Nature's Law — The Secret of the Universe. This volume includes almost every thought he had concerning his Wave Theory.

As a result of Elliott’s pioneering research, today, thousands of institutional portfolio managers, traders and private investors use the Wave Theory in their investment decision-making.

This article on the history of the Wave Theory was excerpted from a detailed 64-page biography in R.N. Elliott’s Masterworks (New Classics Library, 1994). This book contains all of R.N. Elliott’s books and articles, plus highlights from his market letters on Wave Theory.
http://www.elliottwave.com

Fibonacci Model's description 3

2011-06-05T22:41:00.000-07:00

Final Results

Then, and based on the model developed to prove the original hypothesis, we came to the following results:

Pair EUR/USD:

Pair USD/CHF:

Pair GBP/USD:

Pair YEN/USD:

If after finishing this job, someone ask me if it is possible to predict the future, mi answer will still be “NO”. I don’t believe that could be, in fact, I don’t believe either we can predict what will happen in the next minutes…

Although this seems the opposite of the objective of this work, I personally want to remark the difference between one thing and the other.

As a technical analyst and according to what was explained above, I maintain technical analysis postulates, and use them with statistics and mathematical tools, to forecast probable target price zones.

And here is the difference: in one hand, you have the certainty, in the other the probability. I personally believe there is no complete certain of what will happen, but using some specific tools, you can determinate probabilities in a defined scenario.

We use mathematic and statistics tools to analyze hundreds of data in order to prove the objective of this work.

That’s why we can affirm than more than 70% of the times, using Fibonacci retracements and ZigZag oscillator, we can determinate the target zones where prices will go, when they show retracements against major trend.

As a conclusion of this work, we propose to you to use Fibonacci tools in intermediate time frames, in order to obtain better results in markets with a defined trend, excluding moments of excessive volatility, but with enough price fluctuation, becoming and excellent tool for short term technical traders.

Finally, I want to invite you all to extend the application of this system to smaller time frames, and to the rest of the currencies in FOREX Market, and also, to other markets, such as futures, options, or any stock market.
http://www.fxstreet.com/education/

Traders Toolbox: More basic Gann

2011-05-29T18:14:00.000-07:00

One of the most important ways a contestant can prepare for competition is to know as much about the opponent as possible. In trading commodities, the primary opponent is the trader’s own emotions. Once the emotions are under control, the “opponent” is the marketplace.

Know your market! While there are many analytical tools which may be applied to all markets, not all markets are identical. Markets have individual personalities or tendencies. It is important to study individual markets to learn specific identities.

A clear example of individuality is seen in seasonal patterns. The seasonal tendencies of each commodity are somewhat unique. Identifying a historical pattern can be very beneficial in the process of trade selection. To illustrate, a study of the monthly corn chart reveals March is a poor month in which to initiate a major short position.

With the exception of 1977, since 1972, a sale made in the corn market during March could have been bettered by waiting until later in the year. While impressive on the monthly corn chart, this pattern is even more clear for the December contract (not shown). How is such information applied?

Corn Belt farmers typically face a large portion of production expenses from late February through early April. Obviously, corn is a primary source of income for these producers and the need to generate capital spurs sales of corn in the period of need. By knowing March is a low probability month for favorable prices, plans can be made to market corn prior to the period of seasonal weakness or to postpone sales into later months. Also, producers should avoid selling the new crop (December) during March as the probability of selling at equal or higher prices later in the season is 100 (since 1972).

The applications for traders are rather obvious. If a trader is bearishly inclined, the information would suggest patience needs to be exercised to wait for a higher period of probability to initiate a short position. Bullish traders would try to accumulate long positions during March.

Seasonal tendencies are only one of many individual traits to study. Many markets have certain types of top or bottom formations which occur more often than not. For example, soybeans generally post some form of a triple top when marking a major high. Some markets respect support or resistance levels much better than others. Certain markets like to post a high percentage of turns on a specific day of the week or month. The list goes on.

There is only one way to learn market tendencies: study and study some more. Through hard work comes knowledge. W.D.Gann stated the importance of knowledge very well: “The dif- ference between success and failure in trading commodities is the difference between one man knowing and following fixed rules and the other man guessing. The man who guesses usually loses.”

http://club.ino.com

Gann Trading For a Living

2011-05-15T20:13:00.000-07:00

W D Gann was one of the most famous investors of all time and a portrait hangs of him in the New York Stock Exchange in recognition of his achievements.

This article is all about trading for a living and how to create wealth.

Let’s look at Gann’s methods and how you can use his tools to make yourself some big trading profits to.

Gann’s Methods:-

Gann’s trading methods were all based upon the theory that market action repeats itself.

As humans our psychology is constant and as we are ones who create market prices this psychology repeats itself again and again in price action.

Gann used technical analysis to make his trades and when he traded at the turn of the century he employed a team of draughtsman to construct the charts.

Today, traders can simply use computer programs to do the work and there are many good ones about and plenty of Gann’s courses, so you can learn the basics and apply them easily.

There are also money managers who use Gann’s methods to trade and many have outstanding track records of success with 30% annualised gains and more. If you don’t want to trade yourself then this option is open to you.

Trading to build success and wealth:

In fact, you can do all your trades in under an hour a day, from the comfort of your own home. All you need is a computer and an internet connection and you are all set to build some serious wealth.

To trade Gann’s methods you need to confidence in them. As with all trading methods you will have losses and it is essential to have the discipline to stick with the system even during periods of losses.

Trading for a living with success is based around the following equation:

Trading method + Applied with discipline = Financial success

This may sound obvious, but 90% of investors can’t get the second part of the equation right. They can’t trade with discipline. They let their emotions dictate their trading moves and end up losing.

Gann removed this emotional component by only doing what his charts told him.

When the majority thought share prices would go on forever in 1929, Gann got ready for the crash! And you guessed it he made a killing in the markets.

Stand Alone from the crowd:

Gann was an individual he didn’t care what people thought of his methods and he didn’t care what people thought of his trades. He simply concentrated on building wealth $50 million dollars of wealth.

Gann can give you the methods and the tools, but only it’s up to you to use them to build wealth. Gann traded in isolation and you must to.

If you can apply the methods he created with discipline the path is open to you to be able to trade for a living.

You Have An Advantage Gann Didn’t:

You have computers where even computers with low specs contain more power than the computers that put man on the moon! We also have the greatest technological innovation ever: The Internet.

These tools can help you build wealth in under an hour a day. Take a look at Gann’s methods and you will see a route that could lead you to financial success to.
http://www.gann.co.uk

Fibonacci Model's description 2

2011-05-05T22:37:00.000-07:00

Step 2

Afterwards, we move the following fields-data to a new table: minor rally number, start price, end price, duration (in hours), and the distance in basic points or pips.

Then, we move the major trend direction to the new table, came up from the application of the Zigzag Oscillator to the major period under study.

After the legs of the ZigZag were found (bullish and bearish rallies), we apply the Fibo’s ratios at any leg (“zig” or “zag”) that coincide with the major trend (In this case, Week), and so, we check if effectively the price retracements will go to the Fibo’s zones, or zones define by this special numbers.

Beginning with the graph example, where it explains the Zig Zag application, we continue the main analysis with the objective of verify graphically the behavior of the Fibo’s ratios in the retracements.

Inside the major trend we isolate in Graph 5, we proceed to apply the ratios of Fibonacci to the bullish rallies A1, A2, and A3.

In case of Rally A1, we take the complete distance from its minimum price at USD 1.0762, to the end at 1.1862 dollars per Eur. Then, we apply the Ratios of Fibonacci trying to see where the prices go after have reached the peak, and started the retracement.

In case of the bullish rally A1 with 110 basic points, and applying the Fibonacci Retracement ratios, we calculate the price for any ratio, trying to find the possible zones where the quotations could stop, so:

Looking at graph 6, and after the price retracement have begun, in opposite direction of the major trend, the price goes to the 23.6% zone. Firstly, the price couldn’t break this zone, and start to reduce the speed, and begun a change direction turning bull. This change is not considerer by the Zig Zag Oscillator, because the slope is lower than 12%.

After the price stops, it moves to the 38.2% zone, where its value is USD 1.1442. According to the results of Zig Zag Oscillator, the quotation stopped in an intermediate zone between 38.2% and 50%.

Secondly, we study the Rally A2. This rally begin after the B2 retracement has finished, at USD 1,1375 per Eur, and finishes on 01-12-2004, with a price value of 1,2900 dollars per Eur (Graph 7).

Besides, we apply again Fibonacci’s retracement ratios, to know the possible quotation behavior,

In this case, we can see a price retracement with a minimum value at 1.2334 dollars per Eur, near to the Fibo’s ratio, 38.2%. After that, the quotation rebound, and continues with the dominant trend.

Finally, and following with the bullish trend on Rally A5, the price goes to 1.2930 and change later the dominant trend, as we can see in graph 5. To confirm a change of the dominant trend, the retracement must be more than a 100% of the last rally, in the present example the price need to break 1,2317.

Continuing with the Statistic Analysis, we calculate the price values of any currency pair under study. In this example of EURUSD, you can see them in the next table:

As you can see in Table 13, the Bullish rally number 4 begins at 1.3836 dollars per Eur and ends at 1.4249. We apply the Fibo’s ratios, and we obtain the corresponding prices. For example, for ratio 23.6% the price is 1.4152 dollars per Eur. In others words, once the quotation rebounds at maximum USD 1.4249 per Eur, should go back to the first target of USD 1.4152.

Step 3

Once the prices targets for any rally were obtained, we proceed to probe the objective success of the system. Previously, we define 3 scenarios, or zones around the price, and test the truthfulness of the retracements go to these values or zones.

Each zone was defined with a percentage of the rally distance (zig or zag). For more information, we refer that we select the complete rally of the leg of the Zig Zag under study, for example: 100 pips, and if the price goes to the zone defined in more or less 7,5% (in this case in more or less 7,5 basic points) of the Fibonacci’s price, so the propose target is accomplished.

The scenarios are:

- 15% Zone: +/- 7.5% of the total rally, above the Fibo’s price.
- 20% Zone: +/- 10% of the total rally, above the Fibo’s price.
- 25% Zone: +/- 12.5% of the total rally, above the Fibo’s price.

Then, using the logical formula, we try to prove if the retracement of the price will go into the define zone.

In case that the final price of the next rally (mean the retracement), go into the Fibo’s define zone, the logical sequence is True, and so, successful. In the other hand, is False, and do not achieve the target.

Step 4

Finally, we proceed to calculate the number of retracements which go to the objective zone inside the dominant trend. In the present example, where we analyze the behavior of the currency pair EURUSD, Diary, we obtain the following results for the 15% zone:

As we see at table 14, we obtain a success of more than 70% of the propose objective. We refer that the retracements go to the Fibo’s price zone, when the minor trend correspond to the major. Meanwhile in case that the minor trends have different direction to the Major ones, the Fibo’s ratios have not got a significant success.

Thank you very much to all readers for continuing the interest till the end. We want to invite you to see the final part where we offer the investigation results, and the final conclusion. http://www.fxstreet.com/education/

Fibonacci Range Expansion Trading Zone

2011-04-29T18:05:00.000-07:00

The Fibonacci Range Expansion Trading technique is one that I developed back in the early 1990s when I was moving away from lagging indicators like RSI, MACD, moving averages etc. I had no success using those indicators and came to the conclusion that either I didn’t understand them, or that they simply didn’t work. The only thing that I had any success with was trendline breaks, Fibonacci points, and standard pivots with the reading of pure price action. I was taught that in order to be successful in this business of trading, you need a few components.

According to my mentor and senior treasurer, Aldo Pizzoferrato, trading required BMG, or Brains, Money, and Guts. You need the brains to anticipate market momentum and to be a step ahead of the herd. You need capital to advance, and finally, you need the guts to believe in yourself and your systems. Therein lies the problem for most traders. Most traders operate on the simplest level. They have no real trading plan and view charts and price action using gut feel or really just guesswork. Aldo stressed upon me that the most effective approach was acting like a quarterback of a football team. I need to send the signals, by reading the market and finding weakness in the markets’ defenses. He would always say, “Don’t just receive the signals, send the market some feedback.” I had learned that trading is not a spectator sport. In other words, the most effective approach is in the development of systems that generate buy and sell signals. I had to move from “chart artist” to a true technician.

This trading technique that I am about to share with you will help you pick clear and defined points to enter into low-risk and high-reward trades. No longer will you have the excuse of trading with the rear-view mirror. The market will unfold its weakness, and you as a quarterback, will be able to make the audible call.

The Fibonacci Range Expansion Trading Zone Technique

Overview:

Price movements, up and down, very rarely continue uninterrupted. There are always counter trends to the main trend and at some point in time the trend will no longer continue to be your friend. The trend one day has to end.

The Fibonacci range expansion trading zone system attempts to capitalize on counter trends within a trend or even catch trend reversals. With the FRETZ (Fibonacci Range Expansion Trading Zone) we will use three distinct formulas.
1.   The range of yesterday’s daily bar, which is the H-L= x
2.   Pivot point Calculation of the daily range from yesterday.
3.   Fibonacci retracement levels inside the Fibonacci Range Expansion that we will calculate.

Set up:

On the close of the previous daily bar we gather the following information: the high, low and close. Calculating the set up of USD/JPY on the close of June 3, 2010 will obviously be for the trading day of June 4, 2010.

The high was – 92.80
The low was – 92.04
The close was 92.59

We first calculate the daily range which is the high minus the low.
92.80-92.04= .76

Once the true range is calculated we multiply by the Fibonacci Range Expansion ratio of 1.618. Thus .76 x 1 .618 = 1 .2300
We then add and subtract this factor from the close to get the upper and lower Fibonacci range expansion values. The close of the upper Fibonacci expansion value is 92.59 + 1.23 = 93.82. The close of the lower Fibonacci expansion value is 92.59 – 1.23 = 91.36. These levels are what I call a mini market trench. If price breaks above or below the levels the market is telling me there is a potential shift in supply or demand. So these points are like a fence around the price action of yesterday. It is important to note that 85% of the time the markets trade in a range, and these levels will be excellent buy or sell zones. We will now continue to build our FRETZ matrix. We will add pivot points from yesterday’s range onto our charts. This is a standard pivot point formula, and I will add a downloadable calculator in the near future. However, you should know what the formula is:

Base Pivot:

Pivot Formula = High+Low+Close/3= Base Pivot

Resistance 3 = High + 2*(Pivot – Low)
Resistance 2 = Pivot + (R1 – S1)
Resistance 1 = 2 * Pivot – Low

Support 1 = 2 * Pivot – High
Support 2 = Pivot – (R1 – S1)
Support 3 = Low – 2*(High – Pivot)
———————————————————————–

The third and final part of the Fibonacci expansion trading zone matrix is using your Fibonacci retracement tool. I would suggest changing the .786 level to .8200. I have found that the 82% works a bit better in foreign exchange trading. I know it’s not much of a difference, but I am always striving for perfection. Here is a rule when applying the retracement levels: If the close of yesterday (the bar we’re using) was a down close mark (less than the open), start from the lower level first and then retrace upwards to the upper Fibonacci expansion level. Conversely, if the close on yesterday’s bar was at an up close mark (close greater than the open), start from the upper expansion level first and then retrace down to the lower level. This idea keeps in line with my Fibonacci Strike System.

Now That we have all of these levels plotted, our matrix is set. We will use these levels as support and resistance. The closer the pivots and the Fibonacci Levels are to each other, the stronger the level will be. It’s important to note that if the market “zooms” through these levels, a shift has occurred in supply or demand. If you are on the wrong side, escape quickly (First Rule Of Trading is to preserve capital!) I use a simple trend line as a trigger to enter long or short and the Fibonacci and pivot levels as my resistance and support.
See Chart below for an explanation of trade that occurred in USD/JPY on June 4th 2010.

The chart above shows the full matrix constructed with the Upper Expansion level at 93.81 and the Lower Expansion Level at 91.36 (91.29 in this chart.) Also, note in trading the market that I pulled the lower expansion level down 7 pips as a warning. If USD/JPY broke all those tight levels that converged at 91.30-40 area, the move in my mind should be more violent.

I also just extended the trend line in this chart to extend out to infinity (it’s the red segment above).
Just to be clear, the light blue lines are the Pivot Support at Resistance Levels, and the purple lines are the Fibonacci Retracement levels calculated inside the range of the upper and lower expansion.
I added an advanced technique that I mentioned at one time or another: a Gann 45 degree angle of death from what was the closest Root Point low. A root point for me is the lowest low (or highest high). It’s the genesis of the up move (or down move.) I may confuse some here but study the chart. I picked the pivot low from where USD/JPY recovered and rallied up to 92.88 (this will now be the Root Point for the decline down to 91.42)

When I add this Gann line, I create what I call Nella Bocca di Lupo – the price has entered in the “mouth of the wolf.”

It’s in this area where the support line and the Gann line create the upper and lower resistance. A vortex that once the support is broken should trade lower to the internal Fibonacci levels. I will then gauge price action to determine how strong the move appears.

So how did I trade the USD/JPY?

The market price came up to the Fibonacci Retracement level at 92.88. There was a pivot R1 at 92.91 and the Gann line at approximately at 92.93. I sold the 92.83 level with a tight stop loss at 93.04 (markets tend to push one last time through a R1, so I need a little bit of cover) My first thought was that a 1:2 ratio was worth the risk, and I knew if the price could break the recent support at 92.66 Nella Bocca Di Lupo was in play! I should at least get a chance to scoop USD/JPY at 92.56 or better at 92.27 the lower Fibonacci levels. So the plan was to see if price could break the recent support and once it did how will it react? Will it get dull and stall or will it zoom through the Fibonacci Support of 92. 56? It zoomed through at that point I moved my stop Loss down to 10 pips above the entry price. I now need the Fibonacci level at 92.27 to break, and the S1 at 92.15 to go as well. I want you all to see how the market gave several opportunities to get involved in this short. Look how it retraced back up and slightly above the trigger line (old support line at 92.66) and failed. It then zoomed down through 92.27 and the S1 level at 92.15. It stopped dead cold at the 91.92 level. The market then rallied up to the S1 level at 92.15 (giving another opportunity for a short with a Stop Loss above the Fibonacci Level of 92.27) This is surgical accuracy, as a matter of fact its laser surgical Accuracy! Once the Market touched the 91.92 level, I moved my stop profit down to 92.37 just above the Fibonacci level, I was then planning on taking 1/3 my position off at the 91.72 S2 level. The market hit the S2 and 1/3 was taken off. I then moved my stop profit for 2/3 to the 92.15 level (the S1.)

The market came down within 7 pips of the S3 level (91.39ish) I scooped another 1/3 of the short at 91.51 and moved my stop profit down to S2 at 91.72 where the market decided to take me out. So, you see how important it is to send signals to the market, be that Quarter Back, and yes at times you will get sacked, but it’s all in the name of trading. After All…Profitable Trading Is Not A Spectator Sport!

http://theforexsignals.com

Gann System trading in many charts

2011-04-15T20:09:00.000-07:00

Percentage movements are the third piece of our jigsaw puzzle and it is a very large piece indeed.

'One of the greatest discoveries I ever made was how to figure the percentage of high and low prices on the averages and individual stocks. The percentages of extreme high and low levels indicate future resistance levels. W.D. Gann 1949.

This Gann principle is, without doubt, the most important of all technical analysis techniques. When the 'Percentage' technique is truly mastered the true reasons why highs and lows are formed whether short term, medium term or long term will be fully understood. Such knowledge will allow the determination of the natural laws that dictate all tops and bottom for all the world's price movements. You don't believe it? Then join the crowd.

With this amazing knowledge the practiced and experienced exponent of the technique will be able to anticipate areas where 'future' tops and bottoms will fall no matter which market your are assessing. These laws are universal!

Gann's predetermined percentages calculated from past significant tops and bottoms will assist in identifying all future tops and bottoms. Experience warns that these levels should not be considered as definite buying and selling levels. They should be determined as 'Decision Levels' only that are then subject to the market itself recommending whether to buy, sell or hold. This conforms to the market maxim 'Let the market tell you what to do…don't tell the market what it should do.

At this point you may have concerns due to these two conflicting statements. Firstly we claimed that a past study will prove that all future highs and lows have a mathematical relationship with past highs and lows. We then stress that the calculated levels are only 'Decision Levels' subject to confirmation by the market itself. The reason for this final market confirmation is two fold.

1 - We are all human with all the psychological problems and traits associated with speculative trading and investing. We are all, at some time of other, subject to the temptation to fit an analysis to suit our desires and aspirations. This strong desire to fit an analysis to suit traders hopes, fears and dreams can prove extremely dangerous especially for the emotional and inexperienced. Such emotional misjudgments can often be nullified by insisting that the market itself is the final arbitrator.

2 - When using charts it is easy to overlook the analytical problems that are present without the benefit of hindsight as conveyed by the chart. To explain, when the calculated percentages line up and determine a 'Decision Level' this is the next level at which there is an expectation of a market turn. However in very strong or weak markets such levels may only halt the main trend fleetingly. By allowing the market itself to determine the action to take at the 'decision' level this often avoids the embarrassment of making an erroneous market entry. And now for the practical application of percentage moves from past highs and lows. To commence this analysis it is necessary to establish the order of importance of the different 'Percentage' moves from past highs and lows.

No 1 - The 50% moves

A - The most important percentage of all is a 50% move up or down from past tops and bottoms. For example the 50% move down from the historic high is of course our G1 level which is the most important level of all.

A1 - 50% moves up from lows are significant and often provide a future selling level.

A2 - 50% from a high, as well as the historic high, can often provide future lows.

A3 - There again 50% from a previous low can accurately provide the low for a future low.

An outstanding example is the Dow Jones Index from the 1970's. This chart shows how extremely effective a 50% analysis can be.

(a) By adding 50% to the March 1980 low of 729 the projection is 1093. (The next major low in May 1984 was 1084…almost perfect.)

(b) By adding 50% to the May 1984 low at1084 the result is 1626. The next major low in October 1987 was 1616…almost perfect)

(c) By adding 50% to the October 1987 low at 1616 the result is 2424. The next major low in October 1990 was 2344…just a fraction out)

(d) By adding 50% to the October 1990 low at 2344 the projection is 4016. The next major low in April 1994 was 3520

No 2 - The 100%, 200%, 300% moves etc.
No 3 - The 33.33%, 66.66%, 133.33% etc
No 4 - The 16.66%, 8.33%, 4.165% etc.
No 5 - The 25%, 75%, 125% etc.
No 6 - The 12.5%, 37.5%, 62.5% etc
No 7 - The 6.25%, 18.75%

FORMATIONS AT PERCENTAGES

Once the 'Decision' levels have been calculated and the price rises or falls to the 'Decision' level there are then three basic possibilities.
1 - Prices fall from the 'Decision' level
2 - Prices travel sideways and consolidate under the 'Decision' level.
3 - Prices rise or fall straight through the 'Decision' level.

In his research, my son, Gary, made some remarkable discoveries regarding future price movements after determining which of the three actions noted above took place. The rules introduce an extraordinary degree of certainty for moves following the determination of the action after prices hit a 'Decision' level. Details of these rules will be fully explained in Lesson 4.

Depending upon the type of action at the 'Decision' level the trader can be confident of the direction and exactitude of future prices with an extraordinary degree of certainty. In most instances it is quite magical in the way the rules unerringly determine future price movements.

FINDING THE DECISION LEVELS

To continue note the following list of 'Percentages' making up what we term LEFT HAND and RIGHT HAND Percentage columns.


125%
100%
75%
50%	66.6%
25%	33.3%
12.5%	16.66%
6.25%	8.33%
3.125%	4.165%
1.562%	2.0825%
0.768%	1.0412%

Using 25% and 33.33% as the basic Gann percentages with each being added to each other to create the next higher percentage creates the table. Dividing 25% and 33.33% by 2 creates the lower percentages with each subsequent percentage being halved.

The percentages shown above will usually cover most market movements but the process can be taken to any extreme up or down.

NOTES

1 - The paramount percentage is 50%.
2 - The next in order are 100%, 200%, 300% etc.
3 - The right-hand percentages carry twice the weight of importance of the left-hand percentages.

Applying Percentages

Firstly identify significant past highs and lows and then apply percentages up from lows and down from highs. When making a long-term assessment use a monthly chart. A medium-term assessment would be made on a weekly chart and a short-term assessment on a daily chart.

The objective is to find a number of percentages calculated from highs and lows which cluster together to form a future decision area. This would be particularly attractive if it also fell on one of the major G1, G2, G3 or G4 levels and even better if it fell on other Gann checks. When the level is identified take off all the immaterial calculations to leave an uncluttered chart. The best way to illustrate is by examples. Several examples follow.

ILLUSTRATIONS OF PERCENTAGE CALCULATIONS

(HERE ARE SOME OUTSTANDING EXAMPLES)
A LONG TERM ANALYSIS

Way back in the early 1980's the writer anticipated the top of the Sterling rally in November 1980.This important top was isolated by using Percentage movements from important lows up from 1976 to 1980. This is a fine example illustrating how to establish a longer term decision level by the use of Gann pre-determined percentages from important lows.

(Chart 1)

CHART ONE - This chart contains the first percentage to be applied for a longer-term analysis. This is achieved by taking the initial low as soon as it becomes apparent and adding 50% to the value of the low. This is the first stab at a possible, but at this time an unlikely, future top.

(Chart 2)

CHART TWO - The second bottom has formed on this chart. The next percentage lower than 50% is then applied to the new lows, this being 33.33%. The result is disappointing, as the two calculations do not fall within the same area. We would really expect a much closer result than this. This first check therefore tells us nothing.

(Chart 3)

CHART THREE - Now we apply the next percentage lower then 33.33% i.e. 25% and have our first indication of a future top area. The 33.33% and the 25% land exactly together. Now take off the 50% and concentrate upon the other two calculations. Where levels are established early on they should only be considered as an 'area' rather than an exact decision level for the future. As we draw closer to our level the smaller percentages will eventually provide a more precise action level.

(Chart 4)

CHART FOUR - The 16.66% level is now applied to the next low, which falls exactly in line with the previous two calculations. Things are now getting more than interesting.

(Chart 5)

(Chart 6)

CHART SIX - Voila! Gann Magic.

(Chart 7)

CHART SEVEN - In our seminars the skeptics are unimpressed by this demonstration. The skeptic, as always, takes the easy way out by assuming that we have picked out an isolated example in an attempt to prove a point. There is a great degree of solace in taking such a view, as by dismissing a truth, the inconvenience of future effort and research is avoided. Naturally as we are looking at 'Natural Law' and not just another technical analysis technique it is an easy exercise to counteract such skepticism.

To explain, in a future 'Timing' lesson you will learn that Gann has a timing cycle of between 10 to 10 ½ years where as Gann puts it 'Things repeat'! Our Seminar demonstration continues by applying the identical percentages applied in the late 1970's to the lows from 1989 to 1992.

The chart above illustrates how the percentages once again signal an important top. In fact a 'very' important top. This is the Soros Top of 1992 when George Soros took on the British Government as they tried to shadow that monstrosity of all monstrosities the political manoeuverings of the European Union.

(As an after thought It is interesting to note that the 1998 high was a top created by 25%, 16.66% and 8.33% - Just another instance of Gann's magical 'Natural Law'.

IBM

This major US stock nose-dived in the late 1980's. Here is another example of a fall under the G1 level, which then fell to the obligatory G3 level. Tell anyone that this share would drop by a further 50% after it had already fallen 50% from its historic highs would have been met by a huge amount of incredulity. The following chart shows how Gann's percentage calculation isolates the important low in 1993. The main feature is the G3 level that is 75% down from the historic high. This level is supported by the 66.66% calculation down from the important high in 1991 and finally the same percentage down from the 1992 high. The final calculation suggests that the final low would be slightly lower than the G3 level.

NOTE: This chart is not adjusted for the recent script issue.

AMERICA ONLINE

This share has been one of the major successes over the last few years. The chart shows that the low of August 1998 formed on the 50% (G1) level down from the July highs and exactly 37.5% down from the August 1998 highs. The 400% rise was eventually arrested by the following percentages: 166.66% 125% 37.5% 25% After 3 months there was a breakthrough that meant that the rise must reach at least to 155, but more of this in the next lesson. The last high was formed at 100%, 50% and 16.66% and they say trading this share is highly speculative. We call it highly lucrative as it obeys every Gann percentage calculation.

Tellabs

To get in on this 300% move all that was necessary was to apply the following percentages:

1 -66.66& down from the July 1998 high
2 -50% down from the August 1998 high.
3 -37.5% down from the September 1998 high.
4 -16.66% down from the 06/10/98 high.

The S & P 500 Index is a good example of the necessity to adjust a pre-determined 'decision level' as more information became available

Chart one shows 16.66% and 12.5% taken from the July 1998 highs. This is not a guess but applied as the highs of 1997 are to be found here. The question is will this level be confirmed by percentage calculations down from the short-term tops as they are created. The first assessment suggests that the lows might be formed in the 990 area.

(Chart 1)

Chart two shows the index having fallen heavily (always the best time to look for a buy when the 'decision level' is close by). Is this at the 'decision level' ? There are three calculations but they are landing some way apart, not very reassuring. This is not confirmation. More work has to be done.

(Chart 2)

Chart Three - By scrapping the 16.66% from the first top and applying 16.66% from the second top we are given a 'decision level' at 957 where the 12.5% coincides with the 16.66% (Nt. - second tops are often the place to apply percentages). A speculative trader could take this as a possible bottom but perhaps the more reticent trader might not …… I wouldn't for instance. (CHART 3)

(Chart 3)

Chart four - Profits could have been taken at 1060 being 8.33% and 4.154% from the previous lows. An 8.33% fall followed which lands at the original dubious buy 'decision level'.

(Chart 4)

(Chart 5)

Regards,

Fred Stafford

http://www.gann.co.uk

Fibonacci Model's description

2011-04-05T22:36:00.000-07:00

Firstly, I whish to remark that the different Technical tools named in this work, were used to make diagnostics about the probable price behavior, find the triggers (sell price and buy price), and to calculate the stop loss, and the price target, every day since more than a year.

Well now, to develop this work as objective as possible, and get rid of all subjective coming from trader criteria, in order to apply the concepts developed above, we use a simple Microsoft Excel model, where we try to find, in historical data the accomplish of this system objectives.

The population defined for each currency pair under study, could be seen in the following tables:

EURUSD:

CHFUSD:

GBPUSD:

YENUSD:

Step 1

Using Metatrader trading platform, V 4.00, we are able to see the currencies prices in real time. This system allows us to see the different quotation charts of all majors currencies in Forex and besides, the quotation of NYSE most important stocks, and gold.

This application not only let us see real time quotation, but also keeps historical record of each pair in it’s different time frames.

We proceed to isolate a significant number of records (sessions) in a continuous time serie: date (and hour, in the case of 4 hours sessions) maximum price of the session (HIGH), minimum price (LOW), opening price (OPEN) and close price (CLOSE or LAST PRICE).
o LAST PRICE).

Ex.: EUR/USD, Dialy

Then we proceed to apply the Zigzag oscillator in the chart, in order to identify the bullish or bearish rallies, their end and duration for each studied session. In the case of bullish rallies, we take the minimum price of the session (low) as start, and the maximum (high) as the end. This last one, becomes the next bearish rally beginning.

To explain the graph analysis, we choose a random set of time for EURUSD quotation, and applied the ZigZag oscillator.

In the following chart of a week session (Chart 4) you can see a bullish rally that starts on 09/03/2003 with a minimum price at 1.0762, that ends on 12/30/2004 at 1.3665 USD dollars against Euro.

Chart 4

To this bullish rally of 2903 basic points, we apply the ZIGZAG oscillator (red line) showing 3 trend lines:
The first one bullish till 1.2930 day 02/19/2004, second bearish until 1.1759 day 04/26/04 to finally return the bullish trend with it’s third leg.

After isolating the major trend, in this particular case for week sessions, we start analyzing the currency behavior inside it. That’s why we apply the ZigZag oscillator to a 1 day chart (next inferior time frame) in order to find out through charts the minor trends or sub trends, and it’s corrections.

Then we proceed to isolate the first week dominant trend (Chart 5) starting at 1.0762 ending day 02/18/2004 at 1.2930 in the maximum of the session. When we apply the ZigZag oscillator, we found out 5 sub trend lines: 3 bullish (A1, A3 and A5), and 2 bearish (B2 and B4).

Chart 5

According to what we say before, we can see that A1, A3, and A5 are minor bullish trends that correspond with the major one, while B2 and B4 are just price corrections.

Continuing with the model development, we put together the tables for each currency under study, where we list every price rally, showing it trend: Bullish or Bearish and the start and end price. In the particular case of EURUSD, daily session we came out with the following results.

Table 8

As you can see on table 8 the Number 2 rally, starts on day 05/18/1995 at 1.3380 dollars per Euro, and ends the day 05/26/1995, with a maximum price of 1.4235. This rally last 7 days, or 168 hours and represents 855 basic points.http://www.fxstreet.com/education/

Time Periods

2011-03-29T18:03:00.000-07:00

It’s often said that “timing is everything,” and apparently the financial and commodity markets must be listening; otherwise, why would market movements tend to last as long as in previous campaigns?
WD Gann certainly noticed; he assiduously tracked the time intervals separating every conceivable combination of market tops and market bottoms.

If you know that no bull market in the 140-year history of cotton trading exceeded 3 years and 8 months, you’ll understand that after 3 years or more of a sustained advance it’s about time to consider the prospect of a final “blow-off” rally or start researching bear markets to prepare for a pending 1st leg down.

DNA of Financial & Commodity Markets
Each market manifests its own unique personality (it’s “DNA”), and a careful study of Time Periods through the history of any market will teach you when to choose an entry point and how long to hold profitable positions.

Even subsections of bull and bear markets consistently exhibit uniform Time Periods.
The bull market in soybeans, which topped in March 2004, ranks as the 3rd longest since 1936, and its 95% final-leg gain ranks 3rd among final up legs as well, closely mimicking the 1973 and 1977 markets, which set up respective sharp plunges of 58% and 54%.

Not surprisingly, soybeans plummeted 54% to its low in October 2004 – the same calendar month as the 1973 and 1977 bottoms.
Conversely, by the time of its 2002 nadir, the near-33-month decline in the Dow Jones Industrial Average almost equaled the length of the infamous 1929-1932 Great Depression slide, and a reversal promptly ensued.
In its 1982-’87 bull markets 3 “measured corrections” shaved a roughly identical number of points from the S&P 500.

Once a given market surpasses the amount (or especially duration) of its greatest correction (”overbalancing” of price or time), it loudly signals a change in trend. Look to aggressively fade any move in the formerly prevailing direction as a probable secondary reaction destined to fail.

Market Runaways
“Runaways” form a special but highly profitable subset of Time Periods. By definition, these stages ignite the most explosive price thrusts, usually in meteoric fashion.
By the time the fireworks end, typically within 2 or 3 months, you can mint a truckload of money by taking advantage of the characteristically modest, short-lived and often uniform corrections to systematically pyramid your profits with the protection of tight trailing stops.
http://www.gannglobal.com

2009 Hot Stock Picks and gt and gt Stock Market Tips Strategies for Making Money Day Trading Stocks Online wd gann

2011-03-20T21:08:00.001-07:00

2009 Hot Stock Picks >> Stock Market Tips .. Strategies for Making
Money Day Trading Stocks Online
By.- http://www.StressFreeTraders.com

A beginner usually feels very attracted to the stock market while for
example discovering a stock that's being reported in CNBC or the news
program and watching it rise steady fast and make new highs from $10
to $70 in just 2 months.
While learning about this successful news story he's saying to himself
"Oh boy if I was one of those lucky guys who bought that stock back
when it was priced at $10 I easily would have tripled my money by now
That means my 10 grand would transformed in to a whooping 70 K hassle
free I would have been able to grab one of those big HUMMERs on the
spot and probably pick up a nice Rolex by the way"
The stock market news constantly reports of hot stocks that are
breaking out and making tremendous gains on the same day or doubling
in price in just a few hours. Back in the bull market of the late 90's
you could easily see a good number of hot stocks sprouting out every
week.
Those years surely made it look like every body could easily take LONG
SHOTS and make a shiny pile of gold every day in the stock market. But
today's market is a different story. A totally different animal.
Some say that the stock market has gotten more realistic. Fantasy land
is over and GAMBLING YOUR WAY TO RICHES is not an option anymore. You
might get lucky a few times, but your constant loses can wipe you out
sooner or later.

The fact that the bull market period has ended for now doesn't mean
that you can't make a great deal of money in today's market. A lot
folks from many walks of life keep making excellent profits on a daily
basis, pocketing hundreds & thousands of dollars by trading stocks
online.
Success in stock trading starts by applying a wiser and REALISTIC
methodology for choosing hot stocks as well as for getting in and out
of them with profits in mind.
You need to look at the stock market more realistically. You got to
learn that you can benefit when stocks go up and also when they FALL
down.
You got to WORK SMARTER and get more selective about the hot stock
trading opportunities that you choose. You need to embrace the nature
of day trading and be fully prepared to take advantage of stocks that
are poised for a BIG RISE on the same day.

The bottom line is you have to PREPARE YOUR SELF to be successful,
just like you would do it in other areas of your life in order to
achieve success.

Learn to choose among the hottest stocks and dramatically improve your
trading results today at http://www.StressFreeTraders.com

Source: wd-gann.com

An Ephemeris Review from Olga Morales at AstrologyforGannTraders.com.au

2011-03-20T14:49:00.001-07:00

!! _Our Friend And Fellow W.D. Gann Researcher, Olga Morales, Just
Received Her Copy Of W.D. Gann's Private Ephemeris. Here Is What She
Has To Say:_ !!

!! *A Dream Come True* !!

"If only I had a copy of W.D. Gann's Ephemeris" – those words
I have spoken so many times and now after 6 years of intense study, my
wish has been granted. The timing is perfect, as Nikki Jones mentions
in the preface of the book, something told her it was time to release
Gann's private ephemeris.

W.D. Gann published his coded novel _"The Tunnel Thru the Air"_ in
1927, now in 2011 some 84 years later and a complete Uranus
revolution- we have access to his private notes and comments. If you
look very carefully, you'll even unearth why Gann also called his
novel – Looking Back from 1940.

You will also discover some Biblical cycles and counts he was using to
study the War cycles. There are numerous recorded dates of his Lottery
wins, but many cluster in a specific period obviously in tune with a
lucky astrological period.

Significant celestial phenomena is underlined and highlighted, often
with specific comments. There is a clear indication of the planets
Gann was tracking and also a very special calculation in the side
panels for nearly all the months. His notes reveal his application of
planetary midpoints, declinations, Heliocentric transits and the Lunar
Nodes.

I was pleasantly surprised when I reached the final page of the book
to find a pouch with some extra inserts uncovered in certain parts of
the Gann's private ephemeris: a projection for 1949, two passages
from the Bible and some detailed instructions on using planetary
cycles and aspects.

There are also many personal entries like when he bought his cars,
when he was elected on the Chicago Board of Trade, when his family
members were born or died, days he opened and closed certain contracts
and even one day when he fell and hurt himself.

I want to sincerely thank Nikki Jones for releasing Gann's private
Ephemeris so that serious Gann students can follow the steps of his
Esoteric Mastery and find links to those puzzles we've had to
speculate upon in the past. It is also time for those in denial to
accept that W.D. Gann was a Master Astrologer and open their minds to
another dimension in cycle analysis. Uranus is the planet of awakening
and astrology soon to ingress into Aries, starting the seeding time
again in the Spring phase of its cycle.

Such an apt biblical passage found inside the book.

"Be ye transformed by the renewing of your mind". Rom 12:2

Olga Morales

March 2011

!! You Can Check Out Olga's Website Here: !!

!! Www.astrologyforganntraders.com.au !!

Thanks, Olga!

Source: Wdgann.com

Gann System trading

2011-03-15T20:05:00.000-07:00

Before commencing upon our journey it should be emphasized that the object of this series of lessons is to make money. It is not to examine the reasons why the rules work.

This is not a conversation of ‘Why's’ but an illustration of 'How's'. It is not meant to be a sophisticated dialogue with immense truths being exploded. There has been a great deal of conjecture of a magic method, which Gann discovered. We doubt whether such a magic truth exists but our methods can account for the way the markets work in all conditions and at all times.

The sole aim, early on, is to present a method which will be understandable to all, in order to make profits and reduce risks in a calm and sound environment. A selected number of Gann mathematical tools will be fused together to create a strict discipline which if followed will avoid market surprises and take advantage of market opportunities.

This is not a 'mystical' narration but a route to becoming an 'unemotional' trading machine. It is not meant to console or condemn the academic. It is anticipated that those who believe in the randomness of markets will have cause to reassess how, by some miracle rationalization, they came to the conclusion that markets are random. I find such a claim most bewildering. It is the intention of this course to prove beyond any shadow of doubt that markets are 'systematic' being strictly controlled by 'Natural Law' over the short, medium and longer term.

It will be demonstrated that certain mathematical formulae control the harmony of the markets just as they control harmony in music, physics, chemistry and indeed the universe. I am reminded of Charles Van Doren's claim that when mankind has been able to measure things, which means transform or reduce to numbers, it has indeed made great progress both in understanding and in controlling them. This course will follow such a maxim throughout each lesson. He ascribes the failure of Psychology, Economics, and Literary Criticism to acquire the status of science being due to their inability to reduce their opinions to simple numbers. You are about to embark on a path that will allow you to transform and reduce 'all' market movements to numbers.

It is important to untangle trading from being a hit and miss affair. Most analysis is based upon a series of marketing fairy tales. It will be self evident that the market analysis as described in these lessons can be elevated to a pure science excluding any emotional or judgmental input. Is this possible? Provided the student drops all other forms of analysis it certainly is. By dealing with each constituent of the method in a logical and unemotional manner it is not beyond any investor to completely transform his performance from bad to good or from good to brilliant!

Our story starts in the 1st Century when an autocratic mathematician, called Pythagoras, hit the world with a mathematical wisdom which has excited the world ever since. He is bestowed with the invention of the mathematical idea known in music as 'the music of spheres'. Being a great lover of music Pythagoras is said to have been playing with a musical instrument when he noted that harmonies were created by simple relationships between pairs of numbers. They were 1 to 2, 2 to 3 and 3 to 4. In today's terms they are 1/2, 2/3 and 3/4. We will be observing this relationship to market moves to great effect later. The division of eighths and thirds in music i.e. 'do-ray-me-far-so-la-tee-do' and 'dominant thirds' will also later determine our strategies and subsequent actions. Similar discoveries have been ascribed to Pythagoras determining the truth of the natural world around us by mathematical calculation and precision. Centuries later the great Medieval Astronomer, Copernicus, attributed the 'Copernicus System' to Pythagoras thus bringing the Solar System within the compass of Pythagoras mathematical relationships. Newton and Einstein expanded such ideas to extend understanding to show that all forms of nature are interminably intertwined with mathematical formulae.

However investors, economists, academics and professionals find it extraordinarily difficult to come to terms with the fact that Man himself when acting en masse is also controlled by these same Natural Laws. They argue that Man’s rationality cannot be so controlled? I say Bah! My own observations suggest that men act in markets in a most irrational way and it is this irrationality which can be measured. My experience suggests that the commencement and ending of Mass Hysteria is calculable to an extraordinary degree of exactitude.

If you find this difficult to swallow then join the masses. After all, successful traders need a large number of losers in order that they can make their extraordinary profits.

At this juncture I would ask you to approach these lessons with an open mind. Like myself, when first confronted by the truth of the markets you will probably be highly sceptical. If you are new to W.D. Gann's genius then you are certainly going to be surprised and probably amazed how the great man’s discoveries determine turning points for all the worlds investment vehicles. There are no exceptions for this is a study of 'Natural Law.' Furthermore, you don't have to be a rocket scientist to understand and profit from them.

THE PROOF

I use a simple method to prove the universal nature of Gann. I am the only lecturer I know who is prepared to apply theories, explained during the seminar, to any chart from the 19,000 we have on the Gann Management database. This challenge is undertaken without any prior notice, the selections being chosen by the delegates, at random, during the session. Over twenty years and many thousands of challenges I have only once failed to explain the movements by applying Gann's rules. That one time was due to a personal failure and not one that was attributable to W.D. Gann. My excuse is that I was just exhausted at the time! This record has been true whether it be analysis of Shares, both large and small, from countries as diverse as Thailand and the USA, Commodities, Currencies, Unit Trusts, Interest Rates or whatever.

The method is designed to ban the emotional aspects of trading and investment. It is the intention to convert trading into a science rather than an art. Whilst science generally deals with ‘things’ we will be dealing with price and time. At times it will be necessary to deal with the inner state of mind and learn techniques to ultimately exclude emotion from trading in order to dispel destructive traits of opinion and prejudice.

To continue this train of thought it is necessary to include Gann's Money Management rules. Following these rules religiously will clear away many of the emotional problems of determining how much to invest, how many investments to hold and when to get rid of them should things go wrong. Oh Yes! Things will go wrong but you will know the precise day that they do. You will then be able to take action to correct the situation and perhaps reverse a small loss into a profitable reverse trade.

In many instances the first move is the most difficult of all. This will involve a temporary elimination of previous and current beliefs. For the time being at least, empty your head of any preconceived ideas and opinions. This will enable both the experienced and novice trader to follow a logical path, without interruption from other forms of analysis, which may fog the road upon which we are travelling. When the journey is over other ideas can be incorporated although we have found the comprehensive techniques we follow should be independent of any other input.

THE PUZZLE

The course will incorporate a series of tests which can be likened to a puzzle. Any individual test will be of little value although it may be an important part of the puzzle. Any single analysis, when isolated, could prove to be a weak part of a particular investment. The test should be, what sort of picture do 'all' the pieces create. The question is then do the pictures created result in a profitable performance after a reasonable period of time?

All the knowledge we can impart is valueless unless it is used to an advantage. Such a profound knowledge of 'Natural Law' requires belief, patience and dedication. Self-belief which is born out of self-study and self-investigation is critical. A practical knowledge, requiring action mostly in extreme circumstances, cannot be borrowed but has to be earned. In other words we can only help those who wish to help themselves. Failure to follow proven rules is the major weakness of most investors whether experienced or unskilled. You must be your own man and realize that generally speaking the 'experts' are usually self proclaimed with very few having accumulated fortunes by trading their own capital.

Consequently there will be time spent referring to emotional considerations where they could deflect the trader from following a particular rule efficiently and effectively without temperamental deflections.

The importance of such reference is rarely appreciated by the novice but will be recognized by all experienced traders.

WHERE TO START?

The chart under is a copy of an original Gann drawn chart that even to this day I find difficult to interpret. To be an effective Gann trader there is no need to be so complicated. There is a far easier and direct method by using simpler techniques to obtain buying and selling levels. Perhaps they are not as superbly effective as the great man's more sophisticated techniques but they allow mere ordinary mortals to become profitable trading machines.

Actual Gann Chart

After all would you start mathematical studies by taking on Calculus before learning your Multiplication Tables? I think not.

So where do we start?

This is a simple Gann Management chart of IBM as prepared by the writer, which shows two horizontal levels. We will be referring to these levels or bands as 'Decision' levels or 'Decision' bands. As the name implies these levels are future prices where decisions will be made. When the levels are hit the movement of the market itself, on hitting the level, will determine what action to take i.e. Buy, Short, Sell or perhaps do nothing! The decision time is not the time to have opinions but to let the market itself dictate what action you should take. Bear in mind that when Markets, Shares etc make important changes in trend it is always a time of high stress. The majority opinion will be for the trend to continue either up, up and away or down, down and under. Despite such contradictions this will be the time to act decisively and without fear and buck the general view. To do this why not let the market decide for you? When fully Gann trained you will know, days, weeks or even months in advance, the levels where the Market, Share, Currency, Commodity etc will probably bottom or top out. Only the Market really knows and in the vast majority of instances it will be obliging enough to let you know! By the application of that most important of human traits, patience, and observation of short-term moves at decision levels you will be invited to take the correct market position without any judgmental effort on your part. The rules will highlight the time and day to take action and make it a simple affair to pull the trigger. The same applications apply when profits are to be taken.

The calculated levels are not meant to predict but are purely future levels, which, if reached, will provide a level and time of decision. The process of prediction making will be the subject of later courses.

The chart for IBM now incorporates 'Gann Angles', which are based upon the passage of time as it is related to the passage of price. Gann called this 'SQUARING TIME & PRICE'. Such angles deal with the second consideration.... 'Time'. These angles will allow an assessment whether the 'Time' to buy or sell has been reached. The position of both the 'Time' and 'Price' decision levels will vary in accordance with your trading stance i.e. short-term trading, medium or long term investment.

There are three basic concepts that will be studied in this course. They are: -

1 - THE TREND
2 - THE PRICE
3 - TIME

1 - SAFETY IN THE TREND

Gann formulated a number of ways of determining the trend. Charts using these formulae are known as Swing Charts or as we shall call them 1, 2 or 3 day/week or monthly charts.

All the charts are constructed in the same way. The only difference in the construction of each is whether you are using a daily, weekly or monthly chart and whether you use a 1,2 or 3 count etc.

Gann in his teachings to the less experienced always emphasized the importance of trading with the trend and this was his first consideration.

There are two ways to use these trend charts. Firstly, they can provide an indication of risk and secondly can also be used as a tool in the decision process. We will discuss these matters in further detail once we have ascertained how to generate Gann's Trend or Swing Charts

1(a) RULES OF CONSTRUCTION

For illustration purposes we will now generate a 'Two Week Chart'.

Generating a Two Week Chart

(Use a bar chart of weekly highs and lows)

Rule 1 - When the chart makes 2 consecutive weeks of higher tops and higher bottoms the chart moves up to the top of the two week moves and continues to rise until rule 2 is triggered.

('Higher Price' definition - When the highest price of the last week exceeds the highest price of the previous week AND the lowest price of the last week is higher than the lowest price of the previous week)

Rule 2 - When the chart makes 2 consecutive weeks of lower bottoms, but not necessarily lower tops, the chart moves to the lowest price.

('Lower Price' definition) - When the lowest price of one week is lower than the lowest price of the previous week)

Note 1 - Lower tops are not required to trigger rule 2. This takes into account the fact that markets generally fall faster from tops than they rise from bottoms.

Note 2 - The horizontal section of the tops and bottoms of the charts are of equal value and do not take into account time. They are purely there to indicate the top and bottoms of the two-week movements.

Note 3 - As time is not monitored the two-week chart usually lags the day by day chart.

Generating other charts

There are various swing charts that provide different types of signals. All the charts are constructed the same way, the only differences being the time periods involved and the type of chart used.

For example

A 'Two Day' requires a two-day period before the trend changes and is constructed on a chart based upon daily highs and lows. A 'Two month' chart requires a two-month period before the trend changes constructed on a long-term chart etc.

TREND INDICATOR LINES (ONE DAY REVERSAL CHARTS)

We will be using these Trend Indicator Lines (abbreviated to 'Til' in future lessons) a great deal throughout these courses. They will be used to confirm breaks of support and resistance levels by establishing the first immediate change of trend below or above decision areas.

The short-term trend is established by reference to the trend indicator line (Til).

The construction of the Til is to simply take the line to the top of the 'spread of the day' on any day where a higher top and higher bottom is formed higher than the previous day’s high and low. On any day where a lower top and bottom or just a lower bottom is formed the trend line is taken down to the low of the day.

A 'Within' day - Where the spread for the day is within the spread of the previous day then the line remains where it was on the previous day. That is, if was at the top of the previous day it remains at the top of the 'Within' day. If it was at the bottom of the previous day then it remains at the bottom of the 'Within' day.

An 'Outside’ Day - Where the spread for the day is higher AND lower than the previous day then the line is drawn as follows.

(a) - If the price on the day falls and rises during the day then the line is drawn down to the bottom of the day and then drawn vertically up to the high of the day.

(b) - If the price on the day rises and then falls during the day then the line is drawn to the top of the day and then is drawn vertically down to the bottom of the day. (Our computer charts do not strictly follow rule (b) but compromise by following rule (a) only)

2 - USING THE TREND CHARTS.

The Rules are simple.

The trend is UP when the last top on the chart is broken on the upside and continues to be positive until the last low on the chart is broken on the downside.

The trend is DOWN when the last bottom on the chart is broken on the downside. The trend continues down until the last top on the chart is broken on the upside.

One of the least explained of all investment techniques is what exactly is meant by a 'break'. We define a 'break' as the Trend Indicator Line confirming the break as shown under. We do not consider the price falling under the level as necessarily a break, A break is only confirmed when the Trend Indicator Line confirms that the 'trend' is established above or below the last high or low.

We have seen some Gann services that are based purely on these charts. Whilst this is a simplistic way of approaching and understanding Gann it is a highly dangerous way of trading or investing. Using this Gann technique alone fails to anticipate future problems and fails to assist in highly volatile markets or tight trading ranges. Dire results are unavoidable in the event of unexpected moves in volatile trading conditions. In such circumstances large losses are inevitably accompanied by the collapse in the trader’s confidence, possibly resulting in severe personal trauma.

It should be understood that these charts are just one piece of a jigsaw puzzle providing only a small part of the whole picture. It is often the most unimportant of Gann's techniques. We find the charts are useful for establishing the trend and a final confirmation of a signal, after all other issues fall into place. They are also effective as exit points (stop losses) in certain circumstances.

Afterthought - If a profitable short-term trade taken out against the trend is followed by a trend reversal on the two-week chart then the short-term trade could be converted into a longer-term investment.

A practical application

OUR APPROACH TO USING TREND CHARTS

THE TWO MONTH TREND CHART (AMERICAN EXPRESS)

Our recommended approach is to first construct and study the Two Monthly chart. This will establish the long-term trend. The American Express Two Month chart discloses that this share has an established long-term Bull trend dating back to 1993. This has been confirmed throughout the 6 year period by the continual formation of higher tops and bottoms on the chart with no breaks under the previous low on the chart.

THE TWO WEEK TREND CHART (AMERICAN EXPRESS)

This chart allows the investor to protect himself from changes in the intermediate trend. For instance the trend turned down in October 1993 until being reversed in April 1994. This would have allowed the medium term trader to direct his attention to a more worthy cause over this 6-month period. Positions could have been re-established in April 1994 with the two-week chart confirming the 'Hold' until August 1998.

It could be argued that a break of the Two Week chart occurred in October 1997 when it fell under 76.5. We previously mentioned that a simple fall under a level was not a break of that level. A lower 'Til' top has to form under the previous low of the Two Week chart.

The chart under shows that this was not the case. The drawn dotted line would have had to be formed to change the trend downwards.

At the time of writing (Feb 1999) the Weekly chart is decidedly Bearish with lower tops and low bottoms. This is not a share, as at February 1999, in which to invest. It should, for the time being, be looked upon as a short term trading vehicle, which leads us into the Daily chart.

THE TWO DAY TREND CHART (AMERICAN EXPRESS)

This chart establishes the short-term trend. This chart warns of a change in trend in August 1998 when the low at 104.56 was broken with the downtrend continuing until it was reversed October 1998. The limited use of these Swing Charts, on their own, for trading purposes can clearly be observed on this chart. The 'Short' possibility was useful as the downtrend was signalled early but the upward trend signal was far too late for any practical application.

ASSESSING THE CHARTS TOGETHER (AMERICAN EXPRESS)

A good practical example of an overall assessment of each chart simultaneously would have been in October 1998 when the short-term trend moved up but was countered by the bearish nature of the Two-Week chart thus negating the Bullish Daily chart.

Similarly the Two Week chart downturn in October 1998 would have been negated by the Bullish Two Month chart for the longer-term investor who would still hold the share today. Again it could be argued that the Two Month chart broke to the downside in September and October of 1998 having fallen under the lows of October 1997 suggesting that the longer-term investor should have sold. The chart under shows that the Trend Indicator Line (Til) did not confirm the break.

THE ONE DAY TREND CHART (TREND INDICATOR LINE)

The Trend Indicator Line (Til) is the first indicator for a change in trend and is used to trigger Buy and Sell signals.

Our recent 'Buy' recommendation of Chase Manhattan Bank on this Web Site is a good example of the Til in action.

We had isolated an important decision level at 40. When the share collapsed to the 40 level all we then needed was the final confirmation of the opportunity. This signal would be confirmed by the formation of a higher Til bottom as follows :-

1 - As can be seen on the chart under, this share bottomed out at 35.56 on the 8th October 1998.

2 - It then rallied to 45.25 on the 12th October 1998.

3 - This was followed by a correction down to 40.68 on the 14th October 1998.

4 - The share then rose on the 15th October 1998 to 48.62 signalling the Buy as the Til had formed a higher Til bottom.

This then is how we use the various Trend Indictors.
http://www.gann.co.uk

Euro Rejected by Fibonacci Extension

2011-03-08T10:51:00.001-08:00

480 Minute Bars

Prepared by Jamie Saettele

As focused on in recent days, a drop below 13743 or an intraday
decline in impulsive fashion is needed in order to suggest that top is
in place. The decline from yesterday's high is a excellent start and
tiny 4th and 5th waves would give scope to a tiny corrective rally
before accelerated weakness.

DailyFX provides forex news on the economic reports and political
events that influence the currency market.

Learn currency trading with a free practice account and charts from
FXCM.

Source: Dailyfx.com

Timing The Stock Market Should You Try? wd gann

2011-03-07T17:12:00.001-08:00

*Is it possible to time the market?*
Can you buy or sell the market at the appropriate time? Can you choose
the right time to get bullish or the time to go bearish with your
trades? Financial advisers have been warning investors that you should
NOT try to time the market. They say it isn't possible. They recommend
instead that you diversify your holdings into different categories:
stocks, bonds, cash, real estate, precious metals, commodities, for
example.

*Why you should diversify?*
If you diversify your holdings, you will limit your losses - if you
pick the right investments. Sorry to say, you will also reduce your
gains. You will also reduce the volatility and variability of your
returns. You need to include enough risk or you won't earn enough to
reach your goal.

A diversified portfolio should be diversified at two levels: between
asset categories and within asset categories. For example, you are not
diversified if you own five different stocks in the technology
industry. (That is diversification within an asset category.) Since
all five stocks are in the same industry, you would be better buying
perhaps ten stocks in the technology industry, and another ten stocks
in a completely unrelated industry, such as the food industry. When
you buy stocks further than the technology industry, in this example,
you are diversifying between asset categories. You need to do both.

*Diversifying your portfolio can be hard*
It is hard to adequately diversify, so many financial advisers have
been employing the use of ETFs (Exchange Traded Funds). ETFs such as
IWM, which represents the Russell 2000, enables an investor to buy a
broad slice of the stock market - that is diversifying over 2000
stocks over a tiny-cap market. In addition, you trade IWM like a
stock. Because of its high liquidity, it is simple, and relatively
inexpensive to trade into and out of IWM. This is a much simpler way
to diversify, but it isn't the whole resolution.

*How many ETFs are there?*
Ron Rowland is a widely-read contributor to SeekingAlpha.com. He wrote
an condition titled "How many ETFs are there anyway?" In that
condition, which he wrote near the end of 2008, he estimates that
there are approximately 845 ETFs. By choosing among those various
ETFs, it should be less hard to diversify your portfolio adequately. A
conundrum with many of those ETFs is that they are not highly liquid,
and therefore, are expensive to trade.

*Buy low, sell high*
Of course we want to buy low and sell high. That is timing the market.
Financial advisers suggest that you should re-weigh your portfolio
every six-months or year. You should look to sell any of the holdings
that show profits, and buy sectors of the market that are beaten down.
This is a simple, somewhat effective way of timing the market.

*You take profits on your winners.*
This is simpler said than done. People tend to want to hold on to
their winners, but many times, the winners get out of favor, and turn
into losers. People tend to want to hold on to their losers, too. They
despise to take a loss. This re-balancing is essentially a way to time
the market, but many people cannot do it.

*Take on more risk*
You need to take on some risk, or your portfolio will not grow.
Depending on your investment horizon, the younger you are, the more
risk you can take on. An investor looming retirement should be more
cautious. For example, if you look at the buy and hold results over
the past 10 years, you will see that you would have lost about 27% of
your money. For a young investor, this is not devastating, but for an
older investor it is. The buy and hold strategy is not an effective
way of timing the market. There have been many articles give reasons
for why this is an ineffective way to invest.

*Another solution to consider*
As we discussed above, it is advisable that you diversify your
holdings. It is simpler to do if you use the use of ETFs. We also
discussed that you must take on some risk, or you won't grow your
portfolio. Most people approaching retirement, don't have enough
income to retire on. This is right primarily because the older
investors don't take on enough risk.

It makes sense to follow one or more of the many market timers offered
on the internet with a part of your money. Segregate a part of your
portfolio and further diversify by following a market timing system
with that part. Talk with your financial adviser and give reasons for
that you want to try to take control of a reasonable part of your
equity and trade broad-based ETFs.. Description shows you can, indeed,
time the market. Some stock market timers do work well and provide
brilliant returns over time.

Source: wd-gann.com

Babylonian Astrology wd gann

2011-03-06T18:11:00.001-08:00

Babylonian astrology was introduced to the Greeks ahead of schedule in
the 4th century BCE and, through the studies of Plato, Aristotle, and
others, astrology came to be highly regarded as a science. It was soon
embraced by the Romans (the Roman names for the zodiacal signs are
still used today) and the Arabs and later spread throughout the entire
world.

While original astrology was used to bring a sense of order out of
apparent chaos, it was soon employed to predict weather patterns,
primarily for agricultural purposes. It was eventually widened to
include forecasts of natural disasters, war and other events in the
affecting the human condition. Once success in these fields was
established, it was a natural evolution for astrology to be used as a
means for advising for kings and emperors and, in time, the population
at large.

The zodiac (which is derived from the Greek word meaning circle of
animals) is believed to have developed in ancient Egypt and later
adopted by the Babylonians. Ahead of schedule astrologers knew it took
twelve lunar cycles (i.e., months) for the sun to return to its
original spot. They then identified twelve constellations that they
observed were linked to the progression of the seasons and assigned
them names of certain animals and persons (in Babylonia, for example,
the drizzling season was found to occur when the sun was in a
particular constellation which was then named Aquarius, or water
bearer).

Around the year 2000 BCE, Babylonian astrologers believed that the
sun, moon, and the five planets known at that time (Jupiter, Mars,
Mercury, Saturn, and Venus) possessed distinct powers. Mars, for
example, appeared to be red and was associated with aggression and
war.

Source: wd-gann.com

Gann Analysis Through Excel – GATE– Example 1

2011-03-06T00:21:00.001-08:00

_Our newest blog post is by Ron Schellings, creator of GATE Software.
He has agreed to show us examples of Gann Analysis through Excel. We
are excited to share this with you and encourage you to learn more
about this powerful toolkit. Find out more at_ _www.gatesystem.com.au_
_or through us_ _here__. Thanks Ron!_

The Price Range (and sub divisions) from the First Range is often very
excellent to watch.

Watching the Time Cycle from the first range out can be equally
profitable. Here is an example of how GATE can help in the analysis of
determining when the next Swing may occur.

A excellent example of this is the first range out on the SPI after
the 1st Nov 2007 All Time High.

The Current first range out comes from the 13 March 2009 Low (3111 on
the SPI) which was 94 Calendar Days and 973 points using a monthly
swing chart. An alternative range to use is the first range out formed
from the weekly swing chart which was 38 days and 745 points.

The following is an analysis using these ranges and to test how the
market has reacted to them.

This chart shows the two time cycles referred to.

The next wring is a test to identify the frequency with which these 94
day cycles (with a tolerance of 3 points) has occurred using the
monthly swings made in the market. This shows how both the 94 Day
Cycle and the 973 Price Range were active before and after the first
range out was formed.

The First Range Out using the alternate (Weekly Swings) also shows
some excellent opportunities of repeating.

Once these cycles have been identified and confirmed to your
satisfaction they can be plotted on a chart for further verification
and also into a GATE Calendar which is a convenient way for to dredge
up of when the next cycle is due.

(I have included the 137 day count from the first range out after the
6880 high).

These time cycles are easily place into the GATE Day Count Calendar
(or Monthly Calendar) where it becomes very simple to see when a
Cluster of Future Dates occurs. The example below shows a Cluster
around the 21st/23rd September. There is another excellent clusters
occurs at the end of December (not shown here).

-Ron Schellings

Source: Wdgann.com

Fibonacci application in the Objective Market

2011-03-05T22:34:00.000-08:00

Definition of the sample

Once chosen the objective market, the study was focused in 4 (four) currency pairs, in the Forex International Market.

In order to make it as objective as possible, the study was based in those pairs with higher volume trade in the Forex market, because they accumulate the 85% of the daily transactions.

Pair EUR (Euro)/USD (United States Dollars)
Since it’s apparition in December 1999, the Eur, soon replace the German Mark, and becomes the second currency in the world, getting day by day more importance. The strength of EUR is based on the power of the European Economic Community, no matter how many political factors may affect it.
Pair GBP (Great Britain Pound)/USD
It was the reference currency till Second War, and most of the transaction involving it. Took place in London, the biggest international market regardless his small volume during American market sessions.
Pair USD/JPY (Japanese Yen)
This is the third currency trade in the world, making market liquid 24 hours a day. Notice that oriental economy moves according to Japan, and so, Yen is very sensitive to oriental agricultural production, technological factors, salaries and NIKKEI.
Pair USD/CHF (Helvetic Confederation Franc)
This is the other European currency not included in Eur or G-7, but at the same time, it seems favour related to politic uncertainly of the European Community. Practically, we can say that Swiss Franc moves almost the same way that EUR in relation with the USD.

Sample: scope

This work was developed based in the following time frames, because they represent a prominent quantity of subjacent quotation time, and allows reducing “noise”, in short time:

Daily sessions: 24 hours of transactions or quotations. We use it to deeply analyze the trend in Medium Term (weeks) and Long Term (months).
4 (four) hours sessions, that gives us more detail of temporality, due to in a 24 hours day trading there are moments with higher transaction volume, like the opening or close of the biggest world financial centers (Tokyo, London, Frankfurt and New York).

Anyway, we invite the readers to extend this analysis to sessions with more or less duration, where you can find similar results.

Field work

Once introduced Leonardo Pisano and his invaluable contribution to science, we will stop at his more important ratios, specifically in the target zones created because of them.

Based on what we can see in financial markets, there are retracements or backward movements in a certain percentage. According to Fibonacci, in a strong tendency, a minimum retracement generally address in its first impulse to the zone of 23.6% of the rally; and in case this zone is broken, the quotation usually goes to the zone near the 38.2%, then to the 50 % zone, and in a weaker tendency, the maximum retracement could reach the 61.8%; but if this point is broken, the quotation will continue to a point not consider by Leonardo Pisano, but very important to remark, because of the results given in our diary work, the 76,4 % to finally reach the 100 %.

Once the quotation runs over the 100 % retracement, and confirms that point, we can suppose that the dominant tendency has changed, and price will look for other objectives, that according to Fibonacci, will be at first place the 161.8%, then the 261.8% and finally the 423.6%.

In Table 2, you can see Fibonacci ratios, coming from the division of each number of the numerical sequence he developed by the one before it.

Now we propose combine the price Fibonacci retracements with the Zigzag Oscillator, in a major defined trend, to corroborate the accomplishing of the target quotations.

The popularity and use of Zigzag oscillator are based in three main characteristics: is a good “noise” filtering; it represents the main trend clearly, and is a simple indicator for the market price final interpretation.

However, this oscillator has as main disadvantage his natural dynamic: the last line of its draw marking trend could be tricky and needs confirmation.

It works simply presenting the major movement by connecting picks (high prices) and depressions (low prices) with straight lines.

The inclination parameter of the slope in the specific quotation specifies the percentage that this price has to move to draw a new line or Zigzag line.

Its formula is:

ZZO= 100 * (CL-BASE)/BASE
Where base is the initial price (maximum or minimum) or the Zigzag leg
CL or Last Closing of the before session

This oscillator filters the changes in the subjacent chart, smaller than the quantity specified in the inclination parameter of the scope. It only shows significant changes. The minimum price movements are fixed as percentages, and could be based in close price, or in maximum/minimum ranges.

For example, the Zigzag established in a 10% respect to the OHCL (Open-High-Close-Last) candles, will draw a line that will only change direction if the changes between maximum and minimum exceed the 10%. This means any smaller variation will be ignored.

Then, after we defined the system used to calculate the bullish or bearish rallies objectives, through Zigzag Oscillator, we start the empiric confirmation of the information for each pair under study, main subject of the next session.http://www.fxstreet.com/education/

W D Gann How to Use His Unique Methods to Make Big Trading Profits wd gann

2011-03-05T04:23:00.001-08:00

In the entrance to the New York Stock Exchange, stands a life-sized
picture of W D. Gann (1878 - 1955) and this is a testament to his
standing among traders worldwide. Today he remains one of the most
influential traders of all time. W D Gann Methods and Trading
PerformanceW D Gann employed a staff of 25 draughtsmen to draw charts
of all the stocks on the New York Stock Exchange, as well as a
diversity of commodities. He would then use the charts to look for
trading opportunities.Gann in fact made huge trading profits from his
technical analysis of the markets. There are reports, which indicate
that his trading techniques amassed him a fortune of over $50 million
dollars, and many of his trades are on confirmation. W D Gann Trading
PhilosophyW D Gann was a prolific writer, and wrote extensively
outlining his thoughts and trading methods in a series of books and
courses. Some of his thoughts were empirical studies, while others
were more mystical in nature.Gann's major contention was that certain
laws governed not only the markets, but nature as well, and were
universal in scope. The Influence of Price and TimeOne of Gann's most
vital contributions was the concept of combining price and time. Gann
believed that crucial price movements happened when price and time
converged. These points usually indicated an vital trend change was
imminent.But, if price and time were not coordinated, or did not join,
then time permanently held priority over price.Therefore time, was
considered by Gann as the ultimate indicator, because all of nature
was governed by time.In "Wall Street Stock Selector" Gann said."Just
dredge up one thing, whatever has happened in the past in the stock
market and Wall Street will happen again.Advances in bull markets will
come in the future, and panics will come in the future, just as they
have in the past. This is the working out of a natural law " "It is
action in one direction, and result in the opposite direction. In
order to make profits, you must learn to follow the trend, and change
when the trend changes." Gann and the Importance of Trader
PsychologyMany commentators focus on W D Gann's thoughts on price and
time, Swing trading methods, Gann angles, and his work with the
Fibonacci number sequence.But, you should not underestimate Gann's
analysis of trader psychology and his insights into the emotions of
hope, greed, and dread.Gann was well aware that emotions caused the
bulk of traders to lose money:"We cannot escape it (emotion). In the
future, it will cause another panic in stocks. When it comes, both
traders and investors will sell stocks, as usual, after it is too
late, or in the latter stages of a bear market"He was aware that human
nature was constant and influenced the majority of traders:"Therefore,
in order to make a success, the trader must act in a way to overcome
the weak points that have caused the ruin of others"This is what W D
Gann set out to do. It is a fitting tribute that successful traders
around the world are still using his techniques and methods today.
Without a doubt, many consider W.D. Gann to be one of the most
influential traders of all time.

Source: wd-gann.com

Canadian Dollar Reaches Trendline / February 2008 Level

2011-03-04T05:58:00.001-08:00

Weekly Bars

Prepared by Jamie Saettele

After testing trendline resistance that extends off of the August and
October highs (and the 50 day SMA), the USDCAD has slipped to
multiyear lows to test the downward sloping trendline that extends off
of the August and October lows. 9710, which was vital support in
February 2008, has also been met. The pivot is 9959 and only a go
above there would suggest a change in trend.

DailyFX provides forex news on the economic reports and political
events that influence the currency market.

Learn currency trading with a free practice account and charts from
FXCM.

Source: Dailyfx.com

Price Formations

2011-02-28T17:08:00.000-08:00

If a picture really is “worth a thousand words,” and Price Formations graphically capture the trading public’s manic-depressive emotional swings, then every chart says a mouthful about mass psychology.
Each market evinces its own distinctive habits and “personality,” leading to unique market bottoming and market topping patterns.

Commonly, repetitions in historic Price Formations occur only once every generation or so in any given market. Other formations recur approximately every 60 years.

Spot a relevant market Price Formation and you’ve uncovered a possibly potent confirming indicator to supplement time-based criteria.

WD Gann’s View on Price Formations
In the financial and commodity markets, WD Gann was the one revered for his wisdom, but he still liked to quote Solomon from the Bible: “That which has been is that which will be. And that which had been done is that which will be done. So there is nothing new under the sun.”

One important precept derived from reviewing Price Formations tells us to buy (or continue holding long positions) when a market advances above old levels that have not been exceeded for a long time, or, especially at new all-time high prices.

As WD Gann said, “A market is never too high to buy or too low to sell.”
Ironically, the most knowledgeable observers — like the veteran crude oil trader who “knows” to always sell at $40 — were caught on the wrong side after witnessing a crude oil proceeding with its conquest of overhead resistance in 2004.

Perceptive use of market Price Formations can help you forecast the timing of a move and its probable extent and velocity.
http://www.gannglobal.com