Notes on Gap Theory - Traders World Magazine

Transcription

THE OFFICIAL MAGAZINE OF TECHNICAL ANALYSIS
TRADERSWORLD
www.tradersworld.com | Dec/Jan/Feb 2012
Issue #50
Keeping on Track
The Golden Rules of Trading
The Power and Accuracy of
Fibonacci Levels
Competitive Trading Tips from
World Cup Winners
Space-Time Forecasting
Economic Trends
Combining Gann and Andrews
Modern Investment Thinking
Stock Indices &
the 11-Week Cycle
4 Steps to Successful Trading
Powerful Candlestick Reversals
The Critical Nature of Volume
11
Ninja Trader
Murrey Math
1
www.tradersworld.com Dec/Jan/Feb 2012
Notes on Gap Theory
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Editor-in-Chief
Larry Jacobs - Winner of 2001 World Cup Championship of
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Dec/Jan/Feb 2012 Issue #50
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Contents
Dec/Jan/Feb 2012 Issue #50
Keeping on Track
by Adrienne Toghraie
The Golden Rules of Trading
by Bennett McDowell
The Power and Accuracy of
Fibonacci Levels
by Mme
Competitive Trading Tips
from World Cup Winners
edited by Chuck Frank
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8
Stock Indices & the
11-Week Cycle by Eric Hadik
66
4 Steps To Successful Trading
by Brett Marsh
71
Gilbert Steele’s Market Science
by Gilbert Steele
76
Review of ART®, Precision Trend Indicator,
& Optimum Wave Locator Trading Software
by Larry Jacobs
81
12
Trading with Notebooks
by Larry Jacobs
18
Indecision - Powerful Candlestick Reversal
Information
by Stephen W. Bigalow
91
Protection and Preference are Personal
by Ron Keiser
86
Space-Time Forecasting of
Economic Trends The Lost
Archives of Muriel & Louis
Hasbrouch
22
Part of a series by Ron Jaenisch
35
Review of XSitePro Do You Need to Design
and Market a Website for Your Trading
Software, Course or Book?
by Larry Jacobs
97
39
Superior Image Quality for Multiple Monitor
Setups
by Larry Jacobs
102
Notes on Gap Theory from Novy
Principles of Market Flow
by Leonard Novy
Modern Investment Thinking:
Technical, Fundamental, MPT, and
MCIM
by Steve Selengut
42
The Classroom (Selected Trading Lessons)
by Jeff Rickerson
50
Murrey Math:
All Panic Mode falling market (Lows)
Random (except) when youset them
to MM by T.H.Murrey
55
Ninja Trader
by John Hutchison
61
4
95
Building the Perfect
Quiet Trading Computer
by Larry Jacobs
103
Traders Book Library
105
Keeping
on Track
By Adrienne Toghraie, Trader’s Success Coach
I
t is easy for a trader to get off track and head for a crash in trading. The good news is that
it is also easy to stay on track and enjoy the benefits of a smooth ride towards consistent
profits.
What it takes to stay on track
• Pre-planning for what will bring you back to a top performance state when you are off
balance physically, emotionally and mentally
• Recognizing interruptions in your trading day that could throw you off balance
• Being aware of your state of mind before taking a trading opportunity and having
exercises that will bring you back on track when you are off
• Giving permission to someone to gently let you know when you are not at your best
• Continuously monitoring world news that could affect the markets and particularly your
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•
•
•
•
strategy
Knowing all changes in your life, whether good or bad, will have an effect on your
trading performance and knowing when to back off or take smaller risk
Realizing that you need four vacations a year of three to four days or more without
monitoring your trading on those breaks
Knowing to ease into trading after any absence
Keeping up with all of the duties, relationships, and maintenances in your life
Off track Tony
Tony has been an exceptional trader except for a year when his life was in chaos. He was
obsessed with trading and put in long hours. He felt that the way he would show love to his
family was to give them a grand lifestyle.
Tony did not recognize the warning signs that his family was drifting apart until it was too
late. His wife, Charlotte, found the company of Tony’s best friend too enticing and so did his
two children. After they left, Tony went on a drinking and womanizing binge that destroyed
him as a top performer in trading. From bad it became worse until he lost all of his trading
capital.
Tony had a trader friend by the name of Joe, who he accidentally ran into at a bar. Years
before he had helped Joe to get started in trading. Joe attributed his success to Tony. When
he saw and listened to Tony’s story, he decided to help him. It took a year until Tony came
back to being the successful trader he was before. This time, however, he learned the lesson
of keeping his life in balance.
On track Oliver
Oliver grew up in a loving and supportive family where he learned the importance of
balance for having a happy life. When Oliver started trading, he remembered his life lesson
and made sure that every part of his life was given the needed attention.
He stopped trading when he lost his parents in a car accident. When Oliver’s little girl broke
her tooth at the playground, he stopped his trading for the day. And so it was with all of life’s
interruptions and changes. Oliver knew how to flow with each hurdle.
Now Oliver is in his sixties and still enjoys a good income from trading only working two
hours a day.
Conclusion
Each part of a trader’s life will affect his performance. Once a trader understands this and
maintains a balanced, healthy life, he will stay on track to earning consistent profits.
Trader’s Success Coach
www.TradingOnTarget.com
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The “Golden Rules”
Of Trading
Essential Rules To Trade By; Setting Your Own
Trading Rules; Breaking The Rules
By Bennett McDowell, President & CEO TradersCoach.com
McDowell’s Six “Golden Rules”
The most important things that I’ve
learned in the years I’ve been trading are
what I call the “Golden Rules”. These lessons
were learned most dramatically from actual
live trading experiences, not from reading a
book or watching a video. Oh, I may have
read about these ideas many times in many
different books, but I only truly learned
about the importance of them by actually
trading.
What a wonderful teacher the market
can be, maybe the best teacher you will
find. Each person has their own individual
and personal experiences with the market
and I’m sure it will teach you many of the
lessons it has taught me and maybe some
others as well.
Let me share with you the six most
important lessons I’ve learned:
1. Paper Trade Until Consistently
Profitable
Paper Trading is the best way to practice your trading in a stress free environment. Only
when you are profitable consistently “paper trading” should you move into the real markets.
2. Use Only True Risk Money, Money You Can Afford To Lose
Trading the markets can be a tremendously emotional and psychological endeavor.
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When there is a feeling of financial urgency or desperation, a trader can easily hold
on too tight. If your next meal is riding on every trade, you’re likely to make irrational
judgments and will lack the patience needed to trade successfully.
In short, don’t
use money that is clothing, food or shelter money for your active trading account.
3. Work With A Proven System Or Methodology
Many inexperienced traders have been known to say, “…I’ve got a gut feeling about this
stock…” or “…so-and-so just gave me a hot tip on this other stock…”. The reality is that unless
you are working with a proven formula, your chances for having gut feelings and hot stock
tips be successful in the market are really hit-or-miss. It’s much more like luck or gambling
than anything else. Find a winning system and learn the skills needed to make it work for you.
4. Always Establish A Stop Loss Exit For Every Trade
Limit your liability, don’t leave yourself wide open. And, when you establish a stop – use it!
It’s so easy to doubt your system in the heat of the moment when a trade isn’t going the way you
want it to. Ultimately if you don’t follow your stops, or if you don’t even set stops, your liability
is enormous. You can’t control the market’s actions but you can control your own actions.
5. Use Proper Money Management And Adjust Each Trade’s Position Size To Limit
Overall Loss
Appropriate trade size (number of units or shares) is crucial in successful money management
for your active trading account. It’s important to achieve the correct risk-loss percentage per
trade. This is very much like setting stops, which is basically risk control.
When entering a trade, your dollar amount risk on the trade is the difference between your
entry price and stop-loss price.
ENTRY PRICE – STOPLOSS PRICE = $$$ AMOUNT TO RISK ON TRADE
Take that difference and calculate the percent of risk based on the number of dollars in your
total active trading account.
$ AMOUNT RISK ON TRADE_____
TOTAL $ IN TRADING ACCOUNT
=
RISK %
Most experienced traders try not to risk more than 2% of their total trading account per
trade. In other words, if they get stopped out of a trade their stop-loss will limit the trade to
a 2% total account loss. Trade size, the dollar amount of risk per trade and the size of your
active trading account control your risk percent.
For example: if your total active trading account size is $10,000 then the most you want
to risk on any one individual trade is $200. Note: Your active trading account should not
be more than 10% of your total net worth.
TradersCoach.com sells a proprietary software program called the “Trade Size Calculator
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Software” that automatically calculates your trade size for stocks and commodities instantly
and is very easy to use. You just type in your trading account size, risk percentage, entry
price, stop-loss price, value of a point in the market you are trading, and then the calculator
does the rest! This standalone software calculator installs on your PC and you can have it
running along with your charting and trading platforms.
At certain times, my trade risk allowance is a little more generous than the standard 2%,
sometimes in the region of 2% to 4%. It’s up to you to determine what risk is comfortable for
you and to stick to it. I recommend 2% for the majority of your trades!
If the risk of a possible trade is too great, move on to another one. There always are plenty
of opportunities in the market and plenty of fish in the sea!! Think in terms of the abundance
in the universe, it is unlimited.
I can always tell a novice from a professional trader because a professional trader
varies their trade size in relation to risk control, while the novice trader usually trades the
same position size on every trade which is usually too high and is to much risk per trade.
5. Use Only Your Proven System Not Your Ego To Make Trading Decisions
Use Sound Trading Psychology. There will be times when you second-guess your system
because you don’t want to be stopped out. The fear of getting stopped out comes up for a
variety of reasons. This is where your psychology comes into play and where you need to
clearly determine if you are following the system as opposed to surrendering to your emotions
which can cloud your judgment. Just keep a constant eye on your emotions and how they
affect your trading performance.
6. Maintain An Accurate And Up-to-date Record Keeping System
Crucial to your success in this business is keeping a comprehensive and accurate set of
books that you can refer to. This enables you to analyze progress and also prepare tax
returns. Chapter Seven is devoted to this subject alone.
The value of evaluating your progress, or lack thereof, is so that you can see if you’re off
track early in the game. It’s like getting an early diagnosis, your chances of recovering from
an illness are greater the earlier you catch the problem.
These six rules will go a long way in helping you stay focused with what is important in
achieving trading success. Read “The Survival Guide For Trader” if you want to read more
about our success strategies.
Bennett McDowell is president & CEO of TradersCoach.com
10
The must-have guide for
anyone entering the exciting world
of trading from home
Survival Guide for Traders is the essential handbook for
individuals looking to start their own trading business
from the comforts of home. Becoming-and succeeding as - a
trader is hard enough and can be even more difficult for
those who choose the stay-at-home route, but it certainly
doesn’t have to be. The biggest stumbling block for people
looking to launch their own trading business is their
failure to understand the complexities of the “back office”
operations that are essential for success. There is far more
to being a trader then meets the eye, but once you come to
understand how trading works for the biggest firms, you’ll be
ready to build a business that will last.
Praise for Survival Guide for Traders:
“Bennett McDowell is a leader in teaching traders a step-bystep approach to creating a trading business. Survival Guide for
Traders is a must for all traders serious about both part-time
and full-time trading. I will be adding this to my recommended
reading list.”
- Leslie Jouflas, founder of TradingLiveOnline.com
“Survival Guide for Traders is a must-read for anyone
who wants to launch a home trading business. Get great
insights into what is needed to achieve real trading success
by leveraging Bennett’s many years of trading wisdom as
condensed into this valuable resource.”
- John Gromaala, VP of Sales and Marketing, NinjaTrader
BENNETT A. McDowell, founder of TradersCoach.com© began his financial career on Wall
Street in 1984 with J.J. Kenny and later became a Registered Securities Broker and Financial
Advisor for Prudential Securities and Morgan Stanley. He developed his own proprietary
trading system, later known as the Applied Reality Trading ART© system, which was
released to the public in 2003 and today is used by traders in over fifty countries around the
world. Internationally recognized as a leader in trading education, Bennett teaches trading to
students around the world through is company TradersCoach.com©
Available wherever books and eBooks are sold.
978-0-470-43642-4 • Hardcover
US $49.95 • CAN $59.95
11
The Power and
Accuracy of
Fibonacci Levels
By Mme
As I reflect on 15 years ago; I blew my trading account and I just could not accept failure;
my desire to embrace failure and to be successful from failure was what motivated me to find
what I did wrong and learn from it. I devoted one year to studying the market behavior and
patterns; observing and understanding why the price stalls, ranges and reverse from specific
price points in the market.
Today, 15 years later, I am very passionate about trading, teaching and helping others who
aspire to become successful traders. Over the years, I have been enjoying success without the
use of indicators in my technical analysis until I was introduced to Fibonacci numbers years
ago and discovered how accurately the numbers aligned with support and resistance levels on
every time frame. Having taught myself the skill of applying these numbers and comparing
the end result with my analysis using the “naked” charts I realize how powerful and useful this
tool is no matter your trading style.
Fibonacci levels are horizontal lines indicating support and resistant levels. Most if not all
brokers have made the Fibonacci tool available for use in your charting software but never
explain how to use it properly. It is important to note that every time frame will illustrate
different Fibonacci levels / support and resistant levels and plotting these levels on your charts
accurately will provide you with timely entry values, stop loss protection values and profit
target values.
Fibonacci numbers provide retracement levels and extension levels.
The 3 most important retracement Levels are: 38.2%, 50% & 61.8%.
The 3 most important extension Levels are: 0.618, 1.000 & 1.618
HOW TO APPLY FIBONACCI TOOL ON CHARTS
• You must identify trend direction
• Find the top and bottom of the trend or the previous trend
• Use the Fib. Tool from top to bottom in a down trend and bottom to top in an uptrend (A &
B points)
There are also Fibonacci zones which consist of a number of price points in close proximity
or within a tight price range. These zones sometimes are clustered which are very strong price
levels of support and resistance and are most commonly seen on the larger time frames. To
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confirm the continuation of a trend on approaching these zones, I wait for confirmation from
the candle close on a daily or weekly chart above or below these zones.
From the chart illustrations in this article, you will see how effective the proper use of these
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levels and zones are no matter what type of
trader you are; whether you are a scalper, Day
trader or Position Trader. Position traders like
myself focus only on the larger time frame with
the targets being reached over days, weeks
and sometimes even months whereas, a Day
Trader use them on the smaller time frame
with profitable results within even hours. I
trade from the 4 hour chart for my position
trades and from the 1 hour chart for my day
trades.
Learning how to properly plot these levels
in your charts on any time frame you trade
and keeping in mind the bigger picture of the
market trend along with patience, discipline
and good money management will reward
you with consistent profitable trades.
I am a technical Trader, I follow the trend
and I can prove to you that Fundamentals
are built automatically into technical analysis.
Fundamentals only push the market to a
support or resistance level and to complete
the Fibonacci extensions.
A Forex Trader must consider Technical
Analysis as the KEY factor to becoming
successful. Success is a journey, Develop
good habits, and exercise patience, control
your emotions and the sky is the limit for your
reward.
Mme
www.wtforex.com
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Competitive
Trading Tips
from World Cup Winners
Edited by Chuck Frank, WorldCupAdvisor.com
What turns a good trader into a World Cup Champion? There’s no secret sauce. As seven champions
reveal, excellence in competitive trading is built on a variety of talents and traits.
We asked the former winners to paint the picture for us as the World Cup Trading Championships® head
into their 29th consecutive year. In 2012, the featured competition will be the World Cup Championship of
Futures and Forex Trading®, and a record turn-out is expected as commission rates have been lowered to a
discount-level $2.97 per-side all-in for electronic futures and $30 per $1 million for forex trades. Minimum
account size has also been lowered to $10,000.
Larry Williams (Oceanside, California)
Winner, 1987 World Cup Championship of Futures Trading: 11,376%
Williams ran $10,000 to $1,147,607 primarily trading T-bond and S&P futures. Which will fall first,
Williams’ ‘87 mark or Joe DiMaggio’s 56-game hitting streak in ‘41? Anyone’s guess.
LW: Part of winning a trading championship has to do with strategy. The history of the championships
show that many people get a good run going and then fall apart, so I think it is important, if one were to
get a good run, to then switch to a less-aggressive mode of trading, or money management, until pressed
by someone who comes up upon him or her.
Clearly, to rack up the big numbers that I did and other traders have done, one needs to have a form
of money management that is very aggressive… far too aggressive for trading in managed or personal
accounts.
This is a championship; you give it all you’ve got.
That means dedication, focus and an
aggressive form of money management.
There is a great advantage in the championships to trading low-margin markets, because you can get
more bang for your buck, as long as stops are not too far away. The other side of that coin is if you’re a
day-trader you then want the markets that have the most volatility. I would come down on the side of
volatility because, as mentioned above, one would be using an aggressive form of management.
Finally, don’t think about the other guy. Focus on your own trading and only get worried if someone
gets close to you. Don’t constantly look or think about what they’re doing. Think about what you are
doing.
Trading futures and forex involves significant risk of loss and is not suitable for everyone. Past performance is not
necessarily indicative of future results. Accounts trading in the World Cup Trading Championships (WCC) do not
necessarily represent all the WCC accounts controlled by the competitor and may produce results different than
the results achieved in other WCC accounts of the competitor.
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Andrea Unger (Maltignano, Italy)
Winner, 2008 World Cup Championship of Futures Trading: 672%
Unger is the only trader to win World Cup events three consecutive years.
AU: Trading in a competition is somewhat different from a standard approach to the markets, but the
basic principles remain the same. The low starting capital and the need to reach goals within a certain time
(12 months in the World Cup Championships) requires an aggressive approach in exposure and in choosing
the most volatile instruments. Yet it should never be an all-or-nothing game. Taking too much risk in the
hope of getting the big reward is not the way I approach these competitions.
It is important to stay within boundaries, defining your level of risk so that you can end the competition
in good shape. Anything can happen and even a conservative approach may lead to ruin. Have clearly in
mind what risk per trade is excessive for the strategies in use. Face the competition in the proper way. If
a normal risk may be 1.5% of capital, in a competition this level can be pushed up to 5-7%, but more than
that moves from trading to gambling. A well-defined plan needs to be prepared before the competition
starts and may well be adjusted during the competing period if things don’t go the way you hoped.
Every move has to be reasoned and carefully evaluated. A competition is not just a game to find out
who gained the most money at the end of the year. It should be used to hone one’s skills and to refine
one’s approach to the markets. Emotions grow compared to normal trading, and learning to control your
emotions is essential. To win is nice but to learn more about oneself is still the best result in competition.
Michael Cook (Anchorage, Alaska)
Cook is a former European institutional market-maker and senior trader.
MC: I am certainly not the first to use the analogy, but I think trading is very similar to dieting. Most
people have a rough idea what to do to achieve their goal; the problem is that they just don’t do it. A few
thoughts:
Trading plan – have one! This is the first example of “everyone has heard it, everyone knows it, but
people don’t do it.” It isn’t a bad idea to write it down. Let’s say your plan says, “For exits I will remain
in each trade until I get a counter signal, a stop loss is hit or three days since entry has elapsed. No
exceptions.” When it’s written down, it becomes a lot harder to justify doing something counter to your
plan. If nothing is written down, it is easier to let news flow and the like get in the way of effective decisionmaking.
Be disciplined in taking every trade. I would put money on the fact that if I take a day off, that is the
monster winner trade I miss. I have spent a lot of time structuring my trading such that trades are never
missed, and I am still working on that point even after many years trading.
Have a good system for tracking your trades, learning what went wrong and what went right. It is very
easy to not review your statements, especially when things aren’t going well.
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Similar to the point above, I think a lot of traders are unsuccessful simply because they do not persevere
with a good idea. They get into a drawdown and then move onto something that looks like it is doing well.
In other words, they exit a methodology at just the wrong time and then they enter a new one at an equally
wrong time! As well as having a system for tracking trades, it is important to have a system for tracking
ideas and methodologies so that you prevent this. There is nothing wrong with changing a methodology,
but do it in a sensible way. A great idea you have for trading that gets forgotten and not acted upon is
useless.
Tim Rea (Richmond-Nelson, New Zealand)
Winner, 2008 World Cup Championship of CME Group E-mini Index Trading (third quarter):
83%
Rea is at it again; he’s near the top in the 2011 World Cup Championship of Futures and Forex Trading
with an 81.5% return through Nov. 30.
TR: Trade for the long haul not the short term. Have a trading plan for the year and then stick to it. A
contest should really be very similar to your own normal trading, even if it is on steroids with a bit more risk
tolerance. Although in a contest you may expect to be reasonably aggressive in your risk management,
ensure that you don’t go too far, or over-leverage.
Avoid blowing most of your account when reasonable draw-downs, which are of course inevitable at
some stage, do occur. Anything can happen. Even very late in the contest someone can put on an incredible
run of trades and win, or someone at or near the top can have a deep drawdown and fall right off the board.
Kurt Sakaeda (Chicago, Illinois)
Winner, 2007 World Cup Championship of Forex Trading: 104%
Sakaeda is the only trader to win World Cup futures and forex events.
KS: Never add money to a failing account. If you have a winning system, make lots of small bets.
Slower systems have less expenses and bigger moves. Your trading system does not have to be perfect;
it just has to be better than the one that anyone else uses. It’s more important to know how to finish than
how to start. Ask any aircraft pilot.
Kevin Davey (Cleveland, Ohio)
Davey’s ’06 win came on the heels of a 148% second-place performance in ’05.
KD: Have a risk plan. Know in advance your plan for trading in a contest – when you’ll get in, when
you’ll get out, what to do if something goes wrong, etc. Most people make decisions in the heat of the
moment. That is a recipe for disaster.
Keep it Simple. You don’t need a trading setup that looks like the Space Shuttle Control Room. And
you do not need trading systems with computer code developed by PhDs. You can make money with one
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screen, with only one or two of the right indicators.
Watch Out For Gambling. In a contest, the urge is big to gamble and go for the home run. Gamblers
usually lose.
Don’t Look in the Rearview Mirror. If you are in the lead, it is tempting to see who is behind you, and
how close. Maybe you’ll change the way you trade because of that. In the long run, though, it is better just
to ignore the competition. The contest is really you against yourself. Most people don’t get that.
Rob Mitchell (Carlsbad, California)
Winner, 2008 World Cup Championship of CME Group E-mini Index Trading (first quarter): 57%
Index futures have long been Mitchell’s focus of attention.
RM: One thing that has always helped me to do better as a trader is simply making sure I buy low and
sell high. This is particularly true with automated trading systems. A simple rule like only buy if you are
below a moving average or only sell if you are above can make a large difference. You could also use other
things like oscillators or price-momentum-based computations. The reason this works, particularly in the
S&P, is that it spends most of its time cycling. Therefore, it can save you a bit here and there, and can add
to your bottom line.
Often trading with the bigger trend can really make a difference. I run fast-moving averages on multiple
timeframes: monthly, weekly, daily, half-day, quarter-day, all the way down to several minutes. If I see the
faster timeframes cycling against the prevailing trend on higher timeframes, I will look to buy or sell with
the prevailing trend. I think this works very well because when you do this, you are going with longer-term
players, who generally have more money than you do. It is good to have them on your side. If the cycles
are mixed, be more careful.
If you trade on a discretionary basis in a very short timeframe, learning to read order flow is important.
If you buy when the buyers are lifting the offer or sell when sellers are hitting the bid, it can help to keep
you out of poor trade placement. It is always best to know, whatever timeframe you trade on, what is going
on in timeframes higher than the one you are trading. If you cannot answer the question, “what does the
market want right now” when you are placing a trade, you probably should not be trading.
One of the most important indicators for me over the years has been breadth-based indications such
as advance/decline, volume, ticks, new highs/lows, etc. Often these lead the market as it returns to its
previous direction after a correction. It is very rare indeed to be able to find an indication that leads the
market.
Support and resistance is king. You really have to have a system of knowing where players who are
bigger than you (individually or collectively) are placing their orders. Many traders use Fib levels, floor
pivots, Market Profile™ levels, etc. If you know where these levels are when trading, it gives you an edge
if you do not trade into them. In other words, if going long, make sure you are not at a level where other
traders are placing trades against you. If I am buying and I am at a .618 retracement in a higher or similar
time-frame to the one I am trading, I won’t take the trade. Instead, I’ll find a trade where the support or
resistance gives me some breathing room to make a profit before the orders against me commence.
21
Space-Time Forecasting of
Economic Trends
The Lost Archives of
Muriel & Louis Hasbrouck
O
By William Bradstreet Stewart
nce in a rare while, a discovery of lost research is made that has the potential of
reorienting the history of financial market tradition. This article will present such
a discovery, that of the lost archives of two of the founding thinkers in the field of
financial astrology, Muriel and Louis Hasbrouck. Surprisingly, this utterly unknown
work of the Hasbroucks contains a depth, breadth, history, and legacy that would surely rival,
if not surpass Gann’s, if anyone knew it existed. When I first came across the Hasbrouck
22
A COMPENDIUM OF ASTRO-ECONOMIC
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simplified, and clearly explained so that any trader can begin tracking and trading planetary influences in the markets
in a matter of weeks rather than years.
It further teaches how to determine the ongoing energetic background environment that the market is traveling
through at all times. This environment is defined by the summation of the underlying planetary energies at any time.
Any projection you have from any system can now be cross-checked with the Planetary Energy Background, and you
can affirm whether a turn will likely be a top or a bottom, or a trend will go up or down. This is very simple to
understand and to apply to your future charts, giving you an ongoing read on the energetic forces behind the market!
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The Time Projection Technique presented in this course develops a new type of planetary time projection, through the projecting of pairs or groups of planetary relationships into the future. The result of these combinations is the projection of highly accurate future turning points with a false signal ratio of only 2 out of 10, or better. The time projections are highly accurate, generally occurring within a day of the actual signal, even from points 30 years in the past. Specics of the projections can dene major turns, vs. intermediate turns, vs. minor turns, and some combinations give very accurate projections of polarity, whether a turn will be a bottom or a top. Using overlapping projections of multiple planetary congurations serve as conrmations of important turning points, ltering out errors to less than even one false signal in ten. The course also presents a detailed introduction to astrology, two diﬀerent systems to project price, and a means to mathematically determine the SPEED of the market. There are numerous trading examples given for long, intermediate and intraday trading. See our website for more details! BLACK SUEDE HARDCOVER 264 PAGES WITH 200 CHARTS & DIAGRAMS & PROGRAMED TIME TOOL
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23
archives, I had never even heard the name, and after asking several of my friends who are
most knowledgeable about the subject, I could find no one else who knew anything about
them either. I assumed that the collection might be insignificant, just some researchers who
did a lot of work, but nothing substantial, until an Internet search turned up one sole reference
to them as key figures in astro-economic history, on the website of the well-respected financial
astrologer, Bill Meridian, in his article History of Stock Market Astrology:
“Muriel Hasbrouck began her research on earthquakes, but changed tracks when her
husband noticed that many of the dates that she generated coincided with stock market
moves. She established Space-Time Forecasting and developed a following on Wall Street.
The US government showed an interest in her work, offering to assist in further research. In
a series of letters to Ed Dewey, she laid out the course of her communications with the US.
She was shocked when the government shut her down. The reason was never made clear,
but it appears that the dates that she projected corresponded to the dates of secret missile
tests. Hasbrouck left her work to Harriett Higginson who added her techniques to her own.
With Harriett’s passing, the Hasbrouck secrets disappeared.” Bill Meridian – History of Stock
Market Astrology
Upon seeing this quote, and particularly the line, “the Hasbrouck secrets disappeared,”
I realized my first assumption had been wrong, and that I had mysteriously stumbled upon
an important archive of secret financial papers which had been completely lost to history and
posterity. The discovery of this lost collection was as strange and synchronistic as idea that
some of the greatest work on financial forecasting and celestial causation had been completely
lost to the modern world. In 2006, I took my first trip to the east coast in 10 years for Project
Hindsight’s 10 day conference on Hellenistic Astrology, Bob Schmidt’s first presentation of
the System of Hermes, the lost Greek system of astrology, which he had been laboriously
translating and deciphering for the last 15 years. I stopped in Maine on the way to visit with
old friends who ran the best esoteric bookstore in the country, and after spending a day pulling
a few boxes of books out of their massive stock, I headed down to the conference in Maryland.
On the way back, I received an email from them about an esoteric financial collection that
had been offered to them the day after I had been there, which they wanted to pass on to me,
since it didn’t contain the kind of material they could work with. It comprised over a dozen
boxes of books and papers, but the books were mostly mid-20th century and were marked up
with notes, which they couldn’t sell, and personal papers always require an expert to have any
idea if they are valuable and to know what to do with them. Since this field was my specialty,
they passed the connection on to me, and I began to do the above mentioned research to see
if they were something of interest.
After discovering Bill Meridian’s above quote, and receiving some 1970’s articles about the
Hasbroucks from Financial World and Business Week I realized that there was no question
that I should go examine the collection, so I rented a car and drove 7 hours from Maine to
Vermont where the papers had been sitting in the 4th story attic of an old Victorian house in
Burlington for the past 25 years. I had been invited to come spend as much time as I needed
to go through the collection, and even offered a room in the attic with the books for the
duration of my stay.
24
THE LAW OF CAUSE & EFFECT
CREATING A PLANETARY PRICE-TIME MAP OF MARKET
ACTION THROUGH SYMPATHETIC RESONANACE
BREAKTHROUGHS
IN
GANN’S PRICE/TIME RELATIONSHIPS
BY DANIELE PRANDELLI
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Notice how the market just bounces along
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how it often turns exactly upon these lines.
Planetary price lines are Magnetic Attractor
Fields which draw the market to them, then
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of the geometric, electro-magnetic lattice that
the market is influenced by. In the same way
that electrons jump between orbital levels, the
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BLACK SUEDE HARDCOVER 240 PAGES
25
The next four days were to be some of the most interesting of my life, as I slowly dug
through approximately 16 boxes of books and papers, one page at a time, discovering an
intellectual treasure the like of which I had never seen before. My hesitancy about the collection
turned to exhilaration as I pulled personal notes and correspondences out of boxes written
by famous figures in both esoteric and financial history, many of whose books I had studied
as a private student of Dr. Jerome Baumring 20 years earlier. Private letters and papers from
Edward Dewey, Edson Gould, Hamilton Bolton, John Nelson, Walter Russell, Paul Foster Case,
Israel Regardie, NASA, the Department of Defense, and more, quickly demonstrated to me the
importance of this find, and the levels of connection that the Hasbroucks maintained within
the financial, scientific and esoteric communities. Indeed, many of the authors I had studied
looked humbly to the Hasbroucks as the top experts in their field, and yet none of us today
even know their name! How was this possible?
The history of the Hasbrouck’s research and contribution, and the story of its disappearance
only became clear after many months of digging through thousands of pages of letters, notes
and writings. It is, without question, one of the most interesting stories in the history of
the financial markets, as well as in the development of alternative cosmological and esoteric
science. I will share here a brief overview of their fascinating career.
Louis Hasbrouck was born on May 19, 1890 and died on June 8, 1979. He was a graduate
of Yale, served in both world wars, and was a Captain in the U. S. Army Air Force. He worked
in Wall Street during the span of the Great Crash, and found that conventional sources of
wisdom neither predicted nor answered the trying questions of the time. By seeking new data
and a method of forecasting that would be more true to life, he gave the economic input to
the Space-Time Dynamics and geophysics of Muriel Bruce.
Muriel Bruce was born in Canada on July 20, 1890 and died November 27, 1981 at the age
of 91. She was a Music and English major in college, a classical pianist, and a reporter for a
Toronto newspaper. She published several books, novels and sonnets, chief among them her
1941 work on the tarot and astrology, Pursuit of Destiny, still in print today under the title
Tarot & Astrology. She and Louis were married on December 19, 1931, and together their
research developed into Space-Time Forecasting.
It is Muriel’s story that is most intriguing, and in fact, it was Muriel’s genius and insight
that led to the important discoveries and applications that became Space-Time Forecasting.
It seems that early in Muriel’s life, she developed close connections with some key figures
in the Theosophical movement and the Golden Dawn magical order, which would influence
and redirect her focus in life. These figures extended to like of Dr. Israel Regardie, famous
biographer of the Golden Dawn and Aleister Crowley, with whom she maintained a friendship
and correspondence until the 1970’s. It also seems that early in her career, she worked as a
ghost writer for Evangeline Adams, the famous astrologer of J. P. Morgan, who is rumored to
have said “Millionaires don’t use astrology, Billionaires do!”
Sometime in the 1920’s she developed close friendships with two of the greatest figures of
20th century esoterics, Walter Russell and Paul Foster Case. Walter Russell is well known for his
cosmological masterpiece, The Universal One, a key work in the study of the cosmological
theory behind Gann, and said by some to be one of the figures referred to in Gann’s mysterious
26
BEHIND THE VEIL
A NEW APPLIED TRADING COURSE USING
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27
work, The Tunnel Through The Air. Walter Russell was a visionary mystic/scientist who
developed an energetic vortex lattice theory and discovered some of the atomic elements,
years before the scientific community found them, through his 10 octave wave theory. Muriel
was one of the first to read Russell’s draft of his magnum opus, which is shown by her
possession of the original onion skin carbon copy of the introduction and first chapter of the
treatise, complete with Russell’s hand drawn images, while it was still titled The Eternal One.
Years later, in 1931, she wrote the introductory article to his exhibition of paintings called,
“The Invisible Universe” at the Museum of Science & Industry in New York. She studied with
Russel for seven years, and is the only known market researcher to have worked with him
personally.
Around 1929, she met and became a student and research partner of Paul Foster Case,
author of The True & Invisible Rosicrucian Order, numerous books on the Tarot, and
founder of the highly respected mystery school, The Builders of the Adytum, still in existence
to this day. Paul Case is most famous for his penetrating study of the Tarot and its use a
developmental and practical system of esoterics, with a strong Kabbalistic, mathematical,
astrological orientation, leading some Gann students to pursue this course of training to better
understand Gann. Collections of his BOTA course series, which take a decade to obtain and
work through, have been known to sell for as much as $5000 for a complete set. It was Case
who directed Muriel’s study towards the Tarot as a universal system in which can be found coded
secrets to universal knowledge. While Case directed his Tarot work towards the development
of his mystery school, Muriel decided she would see if there was a way to integrate tarot and
astrology to discover a scientific methodology which would bring astrology out of the realm
of esoterics, and onto an equal footing with modern science. With her discovery of a secret
medieval book on the Tarot, called Book T, she cracked a veiled code which led her to the
discovery of Space-Time Field Forces, the KEY missing element in most astrological research.
The nature of this Key element is something that has been long sought by all astrologers,
and is even today the missing piece leading numerous researchers to attempt to reconstruct
the ancient systems of astrology. It is an over-riding element creating a kind of background
or intermediary energy which determines when lesser influences become active or not. Many
astrologers discover some planetary relationship in the markets, only to see that after a
sequence of occurrences, the influence disappears or changes. This is one of the biggest
problems leading to the inconsistency of much astrological analysis.
Muriel Hasbrouck’s discovery of Space-Time Field Forces or Space-Time Dynamics solves
this over-riding background energy problem, by providing a different methodology to interpret
astronomical mechanics through a type of Einsteinian field theory. More importantly, by the
addition of these field forces, it is able to produce a system of celestial mechanics which is fully
predictable and mechanical to such a degree that it takes these calculations out of the esoteric
realm of astrological interpretation, into the scientific field of electromagnetic and solar force
mechanics. From the time Muriel made this discovery, she abhorred the term astrology, and
did everything to distance her theories from those of the esoteric tradition. To her, Space-Time
Field Forces provided a clear demonstration of the energetic dynamics of force interaction
within the Solar System, and provided a scientifically verifiable mechanics of the propagation
28
of celestial influence through the medium of the Sun. Her theory perfectly aligned with the
newly accepted relativistic physics of Albert Einstein, and she felt her discovery would provide
a valued scientific contribution to humanity.
The first application of her system was to the prediction of earthquakes, volcanic activity
and space weather. It was Louis’ input, after having watched his and his client’s investments
disappear in the Great Crash of 1929, that inspired the investigation of financial market
influence as well, though that was not to be the initial focus of their endeavors. By the mid50’s, Muriel had developed and tested her system for many years with the result that she
was able to forecast earthquakes and space weather with an approximate 90% accuracy rate.
This era being the dawn of the Space Age, Muriel’s desire was to contribute to the emerging
solar and space science, by providing practical solutions to unresolved difficulties faced by the
scientific community. The prediction of earthquakes was an obvious contribution which would
benefit humanity, and indeed, to this day the scientific community has not developed the
predictive ability that the Hasbroucks possessed in the 1950’s, so Muriel wrote some articles
trying to develop interest in that field.
However, it was the forecasting of space weather that became the primary direction the
Hasbroucks took in order to attempt to bring their theories to the use of the modern world.
Muriel had her theory evaluated and found accurate by a scientist at Bell Laboratories, and
monitored by H.T. Stetson of MIT, author of two books on sunspots used by Baumring in
his curriculum. They were also well acquainted with John Nelson, who had developed a
similar theory of planetary radio disturbance for RCA, though their system was far more
reaching and advanced than his. They formed a company called Geomagnetic Research,
Inc., and began to contact government agencies dealing with space launches, as well as the
High Altitude Observatory, which produced the ongoing space weather reports for the US
government, which Muriel had used for years to track her solar disturbance forecast results.
She realized that with the incredible cost of rockets and missiles that were being developed
by the government, and the losses they regularly incurred as a result of bad space weather,
that her predictive technique would be invaluable in saving the tax payers 100’s of millions of
dollars lost each year to crashes and failures. For six years they contacted various branches
of government, always receiving some initial interest, with the High Altitude Observatory even
closely evaluating their work for a period of time.
But in the end, the scientists and physicists just could not swallow that there was a way,
using just astronomical data, not empirical measuring tools like satellites and solar emissions,
for some tabular calculation to predict space weather, even though they followed and confirmed
the predictions themselves. Their minds were shut, and seemingly impenetrable to alternative
input. So, with frustration, and a farewell sonnet, the Hasbroucks shut down Geomagnetic
Research and decided instead to focus their attention on forecasting economic trends, knowing
that such proven accuracy would be of great interest in practical world of Wall Street and the
financial community.
On October 15, 1964 the Hasbroucks officially kicked off their new financial forecasting
report, Space-Time Forecasting of Economic Trends. In 1957 they had published a 7 year
forecast in the magazine American Mercury, which had been quite accurate, and with this
29
30
forecast record under their belt, and their interest in a government partnership finished, they
felt confident that financial market forecasting was the direction they were intended to go.
Muriel and Louis wrote these reports for the next 15 years, until they were too old to continue,
and then passed the work on to their longtime associate Harriett Higginson and publisher
James Fraser, who also became trustees of the Hasbrouck Trust, now passed on to us. Harriett
Higginson was also referred to in Bill Meridian’s history:
“Hasbrouck left her work to Harriett Higginson who added her techniques to her own.
With Harriett’s passing, the Hasbrouck secrets disappeared. … In 1974, I met Arch Crawford,
Bob Farrell’s first technical assistant at Merrill Lynch, at a NYC astrology conference at which
Harriett Higginson spoke. She forecasted a top in gold prices using a Jupiter-Neptune aspect.
We were both impressed…” Bill Meridian – History of Stock Market Astrology
Harriett Higginson continued writing the Space-Time reports for the next 16 years until
her death in 1996. Together the Hasbrouck & Higginson Space-Time reports total over 1200
pages. These forecasts, reports and letters are filled with deep analysis of the markets, and an
ongoing discussion of the principles of Space-Time Forecasting as applied to mass psychology
and finance. It is the primary record of the Hasbrouck’s work, and history of their thought,
along with the record of the accuracy of their forecasts.
The primary type of clientele Space-Time Forecasting seemed to draw were Wall Street
insiders, CEOs, authors of other advisory letters, institutional managers, and some well-known
figures in stock market history, including Edson Gould and Hamilton Bolton, founder of the
Bank Credit Analyst (still around today, 50 years later!), and author of a few works on Elliot
Wave theory. They generated most of their subscriptions, which cost $300 annually (over
$2000 in today’s dollars!), through recommendations from other subscribers, Edson Gould
being one of their greatest promoters.
Edson Gould was an interesting character in the Wall Street world, and wrote a top market
forecasting letter, Findings & Forecasts, which was subscribed to by some 2,500 subscribers in
the 1960’s. Louis Rukeyser of the TV show Wall Street Week said of him in 1976, “If there’s a
technical market analyst in Wall Street with a better track record than Edson Gould, we haven’t
found him yet in seven seasons of looking….his forecasts…have an immediate market impact
that no other technician can match.” What is less known of Gould however, is that he wrote
two brilliant articles in Barron’s in 1941, under the pen name “Edson Beers,” which were first
rediscovered by Dr. Baumring and included in his Law of Vibration Gann Course Manuals. In
these articles, Gould describes the markets as a network of swinging pendulums operating
according to dynamic symmetry, an exact parallel to Baumring’s interpretation of Gann. These
articles are the only evidence of Gould’s more esoteric, mechanical approach to the markets,
and throughout the rest of his career, these ideas were never again to be presented publicly.
What most people do not know, however, is that one of Gould’s primary resources for his letter
was the Hasbrouck forecasts, which he subscribed to, and recommended to almost everyone
he knew. In his private correspondence with Muriel, who was a close and dear friend, we
discover a fascinating discussion of their personal market research which they intimately
shared with each other. Gould would mention the Hasbrouck’s research and discoveries in
lectures he gave, and promoted their service to many of his Wall Street clients and collegues,
31
sending them a large number of their subscribers.
However, it is the Hamilton Bolton correspondence that proves the most interesting of all
Muriel’s market interactions, for she and Hammy, as he was fondly called by friends, developed
the closest trust of all of her associates, and she shared more of her ideas and techniques
with him than she did with anyone else. Interestingly, their relationship began in 1960 with
Louis sending a criticism of Elliot Wave Theory to Bolton, who responded leading to a close
friendship until his untimely death at the early age of 58.
Their friendship led Bolton away from more statistical technical analysis and Elliot wave he
had practiced, into the deeper and more esoteric field of mass psychology as influenced by
cycle theory and celestial mechanics. Hamilton revered the Hasbroucks and held the secrecy
of their research so dear, that upon Ham’s death, when the Hasbroucks asked his long-time
partner Jules Tremblay for the return of any of their papers, Tremblay responded, “it so
happens that Hammy kept his association with you shrouded with such secrecy that nobody at
Bolton-Tremblay’s, including his personal secretary, somehow knew much about it.” Tremblay’s
assistant further wrote, “In the past seven years that he (Hammy) and I came to know each
other, he often spoke of you to me and whenever he did, his deep affection for both of you
did not escape me. In fact, he became very humble when he’d relate to me the attention he
enjoyed from you. His inquisitive mind, keen perception and sensitivity – qualities added to
his brilliant mind – made him a worthy disciple of yours.”
The seven year correspondence between Muriel and Hamilton Bolton lays out more details
about the depth of her work than much of her other writings. They explored new ideas
together, and we also have an original manuscript on Time Cycles in Bolton’s own handwriting
that has never been known or previously published.
The answer to the question posed above about how their market research became lost to
posterity is more a matter of circumstance than intention. During the 20 years that Muriel
& Louis published their forecasts, Muriel was engaged in ongoing research to deepen the
scientific principles behind her work and to extend her theories to a large scale analysis of
history in terms of Space-Time Dynamics, with its predictive sequencing of human experience.
She had applied for a Bollingen grant to develop and publish a book called the Harmonics of
History, which was carefully considered, and was also in correspondence for many years with
editors at McGraw Hill, who were interested in publishing this potentially groundbreaking work
about the influence of solar phenomena and cycles on the phases of history showing the direct
effects on humanity. The archives contain many outlines, drafts, notes and references that
she had collected for this work, but it seems she just never completed it. She was always
extremely hesitant to explain the details of her work to anyone, and it is likely that her own
inner resistance to releasing her secrets held her back from completing this book. She was
also aging in years, having only begun producing the STF Forecasts & Letters when she was
already 74 years old. Time passed and she and Louis aged, and the work simply remained
incomplete.
When Muriel and Louis reached 90 and began to become more fragile and ill, the work
was passed on to their associate Harriett Higginson, who also for years intended to compile
Muriel’s work into a more general book to introduce their theories to the world, and at one
32
point Harriett even engaged a contract with an astrological author to write a book about the
Hasbroucks for public consumption. However, that relationship became strained when the
author continued to insert her own ideas and interpretations in place of Muriel’s, and Harriett
discontinued and the project, leaving another book only partially written. Eventually Harriett
herself reached an advanced age, and with her death, and no one else around to carry on the
tradition, all the archives were left where they had been stored in their publisher’s attic, until
I stumbled across them 30 years later, covered in dust and all but forgotten.
The Hasbrouck archives present an entire education in market forecasting, celestial
mechanics, Einsteinian field theory, and astrological/astronomical causation, which goes well
beyond all current theories of modern science and astrology, producing forecasting results
that are, as yet, beyond scientific or economic understanding. Even though this work is 3050 years old, it is still ahead of scientific theory by at least 50 years, and of economics and
finance by 100 years or more. Our intention, as the new executors of the Hasbrouck Trust,
is to help to make better known the important contributions of the Hasbroucks, and to revive
their memory and research so that it may take its proper place in the history of economic
theory. On our website (https://www.sacredscience.com/Hasbrouck/Hasbrouck-Space-TimeForecasting.htm), interested readers will find almost 100 pages of scanned original writings,
letters and materials from the Hasbrouck Archive, the first publicly available pieces of this
lost collection of foundational research in astro-economics, including explanations by them of
their theories and ideas, articles about them from various financial magazines, and some of
their more fascinating correspondences with Case, Bolton, Gould, Regardie and more. This
is the first step in re-introducing the Hasbrouck’s brilliant insights to the world, so that they
may take their well-deserved place in esoteric and financial history.
William Bradstreet Stewart, Institute of CosmoEconomics, Sacred Science Institute, US 800756-6141, INTL 951-659-8181, www.SacredScience.com , [email protected]
33
34
Part of a series by Ron Jaenisch
By Ron Jaenisch
B
oth WD Gann and Alan Andrews were able to see things
in chart patterns that others did not. Effectively they
used hidden geometry and pattern recognition.
Even though some of the techniques of Andrews and Gann
are well known and highly acclaimed there has been little
discussion of combining the techniques. The advantages are
significant because Advanced Andrews techniques gives one
the ability to enter the market with lower risk and significantly
better risk reward ratios, when combined with Gann methods.
Alan Andrews stressed the importance of being a good steward of ones funds. To make the
funds grow was doing Gods work, according to his writings. To accomplish this he developed
techniques that were easy to use, had high probability and had superior risk reward ratios.
WD Gann was a successful trader and wrote many books and courses.
Gann, today is widely known for his head and shoulders technique. The pattern that is seen
35
in Chart #1 is very straightforward and instantly recognized by traders.
As can be seen in chart #1 the pattern is visible to the naked eye as prices are making the
second shoulder. It is when prices break below the neck line that an entry signal is triggered,
according to Gann rules.
In chart #2, one can see that by using the neckline as a centerline and the tip of the head
as the action Point, the equidistant reaction line becomes the target under Gann concepts.
(For a further explanation of Babson Action/Reaction techniques see Jan 2010 issue of Traders
World) The Gann entry point is the break of the neckline and the target line is the trade exit
point. For many traders it is the right shoulder that becomes the risk or stop loss area.
This results in many of the trades having a reward/risk ratio of less than 2:1. However since
the probability is so high, this is not a concern to many.
For Advanced Andrews traders the static target line is not effective enough. In addition the
entry point of prices going through the neckline, is responsible for the trade having a much
lower risk reward ratio, than is possible by using Advanced Andrews concepts and lines.
With the Advanced Andrews Course techniques one can enter the market with the golden
pivot rule or a Babson reaction line and then initially as a protective stop utilize the down
sloping blue line in the Modified Schiff ML as seen in Chart #3.
But what about the target for the trade? By utilizing an effective understanding of the
proper use of the Andrews Pitchfork the trade would last longer, thereby enabling the trader to
exit beyond the target line with a greater profit. As you will see in a later example this is not
the case in all situations.
36
Andrews held that most moves had five or more pivots. The pivots in the down move are
labeled in Chart #4. As you can also see, the normal Andrews pitchfork is drawn. If prices
show divergence in their relationship to the Andrews lines, the move is often over.
Note that in chart #4 prices went past the red Median line as they made pivot 3 but could
not reach the same line at pivot #5. This divergence, signals an exit of the trade.
Since many traders look for long signals in longer time frames, below are examples with
weekly charts in SPY. The same trading logic was applied here as in the initial chart.
As you can notice in chart #6 the Andrews Exit was prior to the Gann Exit. This was using
the same concept of 5 or more pivots and showing divergence, using the Andrews lines as an
indicator. While it appears that in chart #6 prices eventually reached the Gann Target, one
should note that an additional trade was triggered prior to this, as seen in Chart #5.
The end result of the extra work of including the Andrews lines and Advanced Andrews
Course concepts is that one can achieve a more favorable risk reward ratio.
Andrews hidden geometry techniques can be used even more effectively with this and
other Gann methods. This and other secret Andrews techniques will be covered in the coming
articles.
The author Ron Jaenisch studied with Professor Alan Andrews and video taped his live seminars.
He can be contacted at [email protected] or 858 487 5151. He offers an Advanced
Andrews – Babson course that includes a private email support group, a new color manual
and over 15 highly acclaimed videos that cover the many aspects of the techniques in much
greater detail.
37
38
NOTES ON GAP THEORY
from “Novy Principles of
Market Flow
by Leonard Novy
www.TrainingForTraders.com
...Gap Trading
In this article, I am going to talk about
How gaps are created.
How to recognize each of the 4 classical types of gaps.
Why gaps are important to day traders
and long term position traders alike.
How Gaps Are Created
A gap is a vertical space on a chart
between two adjacent trading bars where
no trades were conducted (excluding
overnight trading). The gap is created by a
news event or a report that almost always
takes place prior to the opening of the
“pit session only” (regular trading hours
excluding overnight trading). Therefore if
one uses only “all sessions” 24 hour trading
charts, they will not see gaps and that in
my opinion is a fatal mistake.
I use “all sessions” charts when trading
overnight markets but I switch to “pit
session only” charts for trading throughout
the day.
Generally speaking, in up markets, a
gap is the distance measured from the high
of the last bar, to the low of the following
bar. In down markets, it is the distance
39
measured from the low of the last bar to the high of the following bar. You will find that gap
filling traders use these measurements more often than not as natural straight line support
and resistance targets.
A cautionary note: Gap Theory is part of a larger body of work called Classical Bar Charting
which is one of the great treatises on Market Flow. Yet you will find analysts and so called
chartists who use the loosest interpretations on just about everything having to do with
technical analysis as if structure can be bent to favor a personal opinion on where a market
might go. Therefore you will run into all kinds of interpretations on how to measure a gap that
you may want to ignore.
Gaps, are price areas on charts that are skipped over by the traders, because of a news
event or a technical breach. Traders responding urgently, move the market quickly, and miss
entire areas of pricing.
The Gap usually exists between the previous bar’s low and the current bar’s high, or the
previous bar’s high and the current bar’s low.
How to Recognize Each of the 4 Classical Types of Gaps
The below drawing below shows the outline of the 4 kinds of gaps.
The explanation below is for
the chart to the left.
Area number 1 shows a
common gap, sometimes called
a pattern gap because it takes
place within a pattern. In this
type of gap, the market is
usually gapping into something
such as into a support or a
resistance area.
This gap is
normally covered within a short
period of time. Covered means
that the market will trade back
into the gap. The market does
not need to cover the entire gap
but mostly does with common
gaps. Gaps are natural magnets
for the market.
Gaps above
the current market are often
selling areas and Gaps below the
current market are often buying
areas.
40
Area Number 2 shows a Break Away Gap. This is a gap created as a market moves
abruptly out of a classical bar charting pattern or thru a formidable trend line. It breaks away.
Area Number 3 shows a Measurement Gap or Run Away Gap. This is a Gap created
midway thru a trend. Therefore as a measurement one can project a further move about the
same distance as that measured from the break out of a pattern.
Area Number 4 shows us an Exhaustion Gap. This is the last emotional Gap created at
the end of a trend. Lower volume after this Gap, is a sign that traders have exhausted their
selling. The market may be ready to turn.
Gaps create opportunities to measure the strength of the market. For example, an overhead
Gap is a natural area of resistance. If the market only partially covers the Gap before moving
down again then traders were anxious to sell. Sometimes the selling is so urgent that the
market gets close to but does not move into the gap at all before moving back down.
Why Gaps are Important to Day Traders and Long Term Position Traders
Alike?
Gaps are targets. When a news item hits the wires, markets can react violently. World
events move markets overnight with Globalization. Economic reports can also move the
markets. Most all of this movement takes place before the opening bell of the “pit session
only” day markets and shows up as a gap on the charts.
Day traders traditionally fade the gap.....that is they sell into a higher gap and buy into a
lower gap. It is presumed that when a market gaps far away from the previous days closing
price that it’s movement is extreme and needs to come back home. This forces a test of the
strength of the market that created the gap.
Traders may see a gap created 4 or 5 days ago, higher up or lower down on the chart, and
that becomes a self fulfilling price target. Gaps act as magnets. The curious traders want to
test the gap area to see if the fundamentals that helped create the gap are still in tact. If they
are then the testy traders will be rejected. If they are not then the testy traders will move the
market passed the gap to conquer that resistance or support area.
There are other nuances that come with experience with the Gap game.
For more on Novy Principles of Market Flow please contact me at [email protected]
or 760 841 1522 and go to www.trainingfortraders.com
41
Modern Investment Thinking:
Technical, Fundamental, MPT,
and MCIM
by Steve Selengut
Part I: Technical Analysis --- Blinded By The Math
W
ithout too much of a stretch, it could be documented that the Investment Grade
Value Stock (not just “value stocks”) bubble of 1987 was caused by investor focus on
company fundamentals. It would be a piece-of-cake to prove beyond any doubt at all
that blind faith in technical analysis created the dot-com bubble at the turn of the 21st century.
More recently, blame for the late 2007 through early 2009 “financial crisis” could easily be
nestled down at the feet of big government, misguided regulators, and maniacally creative
Modern Portfolio Theory (MPT) practitioners, not to mention their ROTF-LOL institutional
mentors. What’s next?
Pick a day, any day, where the DJIA is up or down by more than 100 points. Take a look at
the “most advanced” or “most declined’ listings and note the shortage of plain vanilla common
stocks. What you see is a pari-mutuel spreadsheet listing of the most popular derivative
betting mechanisms, adjusted day-to-day, depending on the direction of their wagers.
With index ETFs significantly outnumbering the companies whose prices they are attempting
42
to keep track of, isn’t it even less likely than in the past that technical analytics can be useful?
Aren’t these numbers simply the result of demand for casino-esque sector funds and their
seemingly limitless varietals?
So as you sit at your desktop, studying the charted presentations of your favorite technical
indicator software, keep in mind how the “fundamental quality” of the numbers they report
upon has changed. How much of the volume is the second or third level derivative result of
derivative trading by speculators who couldn’t care less about which candlesticks are on top
of whose heads and shoulders.
Should an up-tick in a “triple-short-the-S & P 500” index be considered a positive or a
negative? Can NYSE new high and new low numbers be trusted? How much of the daily
volume is the backing and filling within indexed portfolios? Are support levels reality or fiction
anymore, either on an overall market or an individual stock basis?
Yet, the problems that I have with technical analysis have nothing to do with the numbers
themselves, most of which are fascinating and useful in lessening the need for head scratching
about the past. It’s the “quid pro quo” projection into the future that I think is total foolishness.
The technical analysis employed in the Market Cycle Investment Management (MCIM)
methodology is essential in determining where we are within the various cycles, right now.
However, absolutely nothing (either technical or fundamental), can tell us what may or may
not happen in either the immediate or more distant future.
Any claim to precision; any attempt to time the market; any hope of being at the right
place at the right time, most of the time, is just not a reality of investing. And there’s the rub
for both forms of analysis, and for “the emperor’s new clothes” risk assessment techniques
and “active asset allocation” processes so popular in MPT.
So long as we live in a world where there are tsunamis and Madoffs; politicians and terrorists;
big corporate egos and far more dangerous big government; and imperfect intelligence (both
human and artificial) --- there will be no hope of certainty. Get over it, reality is pretty cool
anyway once you’ve accepted it.
The future is uncertain, for certain. No numbers of any variety, in any combination or
with any correlation or probability, will ever achieve the alchemy needed to reliably, even
consistently, change leaden reality to golden certainty.
The only certainties you really need to know about concerning financial instruments and
financial markets are that their long-term cyclical price movements (and short-term volatility)
are neither certain nor predictable. The trick is to plan better for the upcoming gyration with
a clear and consistent set of decision-making disciplines that make sense in either direction.
But, at the same time, technical trends, levels, totals, averages, etc., can give you
significant expectation creation nourishment. For my purposes, IGVSI (Investment Grade
Value Stock Index)Issue Breadth numbers, a Bargain Stock Monitor, and New 52-Week Highs
vs. Lows relationships provide enough information to chart the current cyclical location pretty
accurately.
But these numbers are unique in one very important element --- they have already been
screened for fundamental quality.
43
Part II: Fundamental Analysis --- Blinded by the Financial Facts, Jack
Back in the day when relatively few non-professionals even thought about investing in
corporate stocks and bonds, a focus on company financial statements was the gospel of
conservative (meaning safer) investment theology.
Investment gurus studied Profit and Loss Statements, Balance Sheets, and endless footnotes
to determine which businesses were most likely to continue to grow, prosper, increase their
dividends, etc. Then, they assessed the quality of “management” before forming conclusions
about the economic viability of the enterprise.
The quality of the numbers being analyzed was audited by well respected financial analysts
while scores of research MBAs from throughout academia studied business and economic trends
within company relevant markets. Sectors of businesses were also put under a fundamental
microscope to further fine tune future stock market trends and performance expectations.
“Top-down” or “bottom(s)-up”, fundamentally sound companies were identified, classified,
categorized, and fantasized over in much the same way as was being done by the very
technicians that the fundamentalists laugh about at cocktail parties.
Certainly, it was presumed, the most financially sound companies would be the most
resilient in the face of whatever surprises the economy, global politics, and the weather had
to offer. Companies that had “grown up” profitably would have what it takes to continue in the
right direction.
Clearly, both schools of financial thought have generated libraries full of useful (and
questionable) information that marauding bands of Wall Street product advertising agencies
can use against one another in their glossies.
Neither approach should be totally ignored; neither approach should be totally accepted;
and neither approach has what it takes to do what its advocates want you to believe it can do
--- predict what’s going to happen next.
More recently, the analytical elite have reinvented themselves with fundamental analytics
sub-divided by capitalization levels, sectors, countries, hemispheres, and more. The supply of
data is endless --- so much so we are expected to believe, that only very special Wall Street
affiliated super computers can make enough sense of it all to really “know” which stocks are
worthy of investment.
Frankly, I think they have all traveled way off course in their pursuit of some fundamental
nirvana, pretty much to the same extent as their friends in the technical arena. No matter how
long the train of growing profits, or how strong the balance sheet, every business has to adjust
its model to outside influences to survive long term --- and so does every investment plan.
There are a few fundamental fundamentals that demand as much serious attention as the
fundamental technicals mentioned above, starting with long term profitability and current
financial ratios. (If you haven’t looked at both, you are a speculator, not an investor --- no
buts, end of discussion.)
Dividend payout history provides information (indirectly) about the quality of a company’s
management, products, business model, financial acumen, profitability, and respect for its
shareholders. Don’t believe the growth company baloney; if they are not paying you a dividend,
44
they are absolutely overpaying your senior employees.
If you are thinking: “what about start-ups, IPOs, emerging markets, commodities, etc.”,
don’t. Those are speculations, not investments. This is not a judgment that all speculations
are bad --- it’s simply a warning that you must sift through the euphemistic descriptions and
figure out what kind of bets you are being asked to place.
Profitability, current assets vs. current liabilities, market share, product mix, and regulatory
environment are other key fundamentals that are fairly easy to get your head around --- and
pay particular attention to the latter.
Very few politicians act as if they know anything about business, capitalism, markets,
etc. Very few theoreticians (particularly research economists) seem to know anything about
actually running anything for real: business, government, investment portfolio, whatever.
And this brings us to MPT --- the fancy new scourge of the financial markets.
Part III: Modern Portfolio Theory --- A Plague O’ Both Your Houses
In his April 20, 2010 post in Jotwell: Trusts & Estates: “Time to Rethink Prudent Investor
Laws?”, Jeffrey Cooper paraphrases a similarly titled article by Stewart E. Sterk.
Sterk, in my opinion, supports my assessment that Modern Portfolio Theory and it’s
super-computer creation “The Efficient Capital Market Hypothesis” were directly, without any
reasonable doubt, guilty of causing the recent global financial crisis.
By removing all “prudence” from the Prudent Man Rules that had governed trusteed
investments for centuries, hypothesis and theory replaced profits and interest guarantees
--- probabilities, standard deviations, and correlations replaced real numbers, facts, and
standards of real value.
Trustees were expected and encouraged to focus on the growth of portfolio market values
instead of on the income the portfolios were expected to guarantee to the trust beneficiaries.
Under the UPIA (Uniform Prudent Investor Act), absolutely anything was a viable investment
medium for Trust Accounts --- the result is history, a falling house of cards built on theory
without substance.
About six years ago, I had the opportunity to analyze the endowment portfolio of a local
college. I literally could not recognize anything that was inside this eight figure portfolio. No
“stand alone” identifiable stocks, bonds, government securities, Guaranteed Income Contacts
--- nadda!
Payments to scholarship beneficiaries and other recipients were routinely paid from new
donations --- similar to Social Security and other Ponzi Schemes.
MPT doesn’t just ignore all fundamental analytics while playing Frankenstein with technical
analysis, it also pays no attention to the reality of market, interest rate, and economic cycles.
It goes beyond real numbers and rational thinking by creating new and refined numbers
--- supercharged to impress the intellectual elite while doing nothing to create dependable
income streams for retirees.
Simply put (whoa, scientists have no interest in making this stuff simple --- it just wouldn’t
45
be sexy enough for awards and accolades by their peers in academia and the media that
follow such things.) So, simply put, we take a computer full of past market price numbers for
a security or group of securities and calculate forays of additional numbers.
Then we measure how these manufactured numbers relate to one another during different
time frames. The next step is to measure the dispersion of these results as they relate to the
average and latest iterations of the actual numbers. We then measure the probability of each
possible result, assign a “standard deviation” risk measurement to each result, and correlate/
compare the various risk assessments.
Add a cup of single malt, and a pinch of Old Bay, bring to a boil, shake a stick over it and
shazaam ---- we “know” the risk associated with everything investment!
Portfolios are constructed so that everything owned (none of which are individual securities)
is negatively directionally correlated to nearly everything else, producing, eh, producing --well I haven’t quite figured that out.
Simple enough? Well it sure is sexy, and painless when administered passively with Modern
Portfolio Non-Management. Isn’t “passive management” an oxymoron?
Part IV - Modern Portfolio Non-Management (MPNM) --- Houston, We
Have A Problem
Even the “dinosaurous preposterous” Buym’ ‘n Holdm’ passive strategy of the 1900’s had
a better chance of success (with some minor disciplinary and managerial tinkering) than the
MPNM cop-out of the new millennium.
Here we are asked to accept non-management as a solution to a problem that exists only
in the minds of product creators and financial institutions weary of regulators and lawsuits.
It’s appropriate because it’s cheap and inexorably controlled by the immortal teeter-totter
principle --- very scientific indeed.
The unquestioning professional acceptance of Modern Portfolio Management just cries out
for conspiracy theory analysis. Investors (and not just small investors) can go from Great
Granddad’s first contribution to a UGMA account to their retirement program without ever
owning a common stock or any form of individual income security.
Clearly, we’ve moved way too far away from the classic principles of investing. But how can
we criticize a government that shows no respect for a capitalistic system that has produced
the highest standard of living on the planet, when we, as investors, shun the basic building
blocks of capitalism ourselves?
Modern investment thought clouds the distinction between the purpose of stocks and
bonds as investment media just as cleverly as it tries to erase the critical difference between
an investment and a speculation. It supports the calendar performance evaluation idiocy, and
panders to both a misguided tax code and a regulatory environment that paints all financial
professionals as charlatans and thieves.
But the mortal wound to most investment programs is a heightened misunderstanding of
both the purpose and the operation of Asset Allocation.
The simple process of taking a person’s risk tolerance input and creating a goal directed
46
The Market Cycle Investment Management Methodology (MCIM)
Steven R. Selengut
Most investors, and many investment
professionals, choose their securities, run their
portfolios, and base their decisions on the
emotional energy they pick up on the Internet,
in media sound bytes, and through the product
offerings of Wall Street institutional boiler rooms.
They move cyclically from fear to greed and back
again, most often gyrating in precisely the wrong
direction, at or near precisely the wrong time.
The MCIM methodology combines risk
minimization, asset allocation, equity trading,
investment grade value stock investing, and
base income generation in an environment
whose time frame recognizes and embraces the
reality of cycles. It attempts to take advantage
of widespread "fear and greed" decision-making
by others, by using a disciplined, patient, and
common sense methodology.
This methodology embraces the cyclical
nature of markets, interest rates, and economies
--- and the political, social, and natural events
that can trigger changes in cyclical direction.
Little weight is given either to the short-term
movement of indices and averages, or to the
idea that the calendar year is the playing field for
the investment "game".
Interestingly, the cycles themselves seem
to concur with the irrelevance of calendar year
analysis, and it makes little sense at all to think
of investing as a competitive event. What index
or average comes even close in content to your
unique portfolio of securities?
The MCIM methodology is not a market timing
device in any sense of the word, but its disciplines
will force managers to add equities to portfolios
more during corrections and to take profits
enthusiastically during rallies. As a natural (and
planned) effect, portfolio "smart cash" levels will
increase during upward cycles, and decrease as
buying opportunities increase during downward
cycles. (See the "Process" Chart)
Absolutely no attempt is made to pick
bottoms or tops, and strict rules apply to
both buying and selling
disciplines. NOTE: these
rules are covered in minute
detail in “The Brainwashing
of the American Investor”
(click on the book on the
left to order the book from
Amazon.
Take the opportunity to
come to the Kiawah Golf
Investment
Seminars
for more information click
here.
60 WWW.TRADERSWORLD.COM January/February 2011
47 www.tradersworld.com Dec/Jan/Feb 2012
division between equity and income securities has been replaced by too many cross-purposed
modifications than can be presented here.
But the very idea that the object percentages are to be either: (a) re-balanced annually based
upon changes in market value, (b) changed randomly based on the managers’ assessment
of the future, or (c) ignored entirely --- well, it just boggles the experienced investment
managerial mind.
The purpose of an Asset Allocation formula is to direct the long-term investment plan --the equity to income ratio is maintained decision by decision, trade by trade, throughout time.
Using the Working Capital Model, there is no need for rebalancing ever, and Tactical AA (the
“let’s guess the future of one sector or emerging market approach)is pure speculation.
Market Cycle Investment Management is a 35 year old body of investment management
thought that employs: cost based asset allocation and diversification; cyclical performance
evaluation using meaningful benchmarks; standardized quality assessment, income production
requirements, and manageable buy and sell disciplines.
It’s Asset Allocation principle’s distinguish only between equity-purpose and incomepurpose investments. It has succeeded for decades by embracing the market cycle, preparing
for it, and by growing the income that will be needed at a distinctly discernible time in the
future. No special mathematical skills or fancy footwork required.
Conclusion: The Full Circle of Investment Thought
From the unmanaged Buy and Hold strategy of generations past, it’s interesting to observe
the full circle we’ve traveled to the unmanaged multi-product portfolio of the 21st century.
Somewhere in the process, both technical and fundamental analytical techniques have been
steamrolled under the pavement of the new highway to --- just what, actually.
We have gone from a process that valued ownership of financial assets and a discipline that
encouraged personal responsibility for creating financial security to a product shopping mall
environment of products based on probabilities and computer model projections of possible
realities.
But in spite of the tremendous shift in financial focus (be it based on a fear of regulators
or the greed of institutional fat cats), somehow, someway, the basic rules of the investment
game have remained the same. A consistent approach to the mystery (technical, fundamental,
or numerical voodoo) is a requirement.
And, as it always has been, if you can’t see and/or understand what’s inside, you’re probably
better off looking elsewhere.
Steve Selengut
http://www.kiawahgolfinvestmentseminars.net
Professional Portfolio Management since 1979
Author of: “The Brainwashing of the American Investor
48
49
WWW.TRADERSWORLD.COM January/February 2011
63
THE CLASSROOM
(Selected Trading Lessons)
by Jeff Rickerson.
he major problem with Forex, stock and/or commodity traders is that they are not psychologically
prepared to accept losing trades. Market traders have an attitude that they must have winning
trades every time they trade whether it be stocks and/or commodities. For most traders it is all or
nothing. Win and it’s euphoria. Lose and it is depression. In actuality win or lose you should be
psychologically neutral.
Name the last time a major league baseball player averaged four hits for every ten trips to the plate?
Major league baseball players fail, on average, 70% of the time when they step up to the plate.
That’s a success rate of 30%. Yet, any player hitting for .300 average can make MILLIONS on
that batting average!
No one wins all the time but you have to step up to the plate (the market’s) and swing (take the trade)
a few times and take the risk.
Champion baseball players understand the game their playing and so do market trading champions.
95% of market traders are clueless on how to play the trading game successfully.
T
“In this game, the market has to keep pitching, but you don’t have to swing. You can stand there
with the bat on your shoulder for six months until you get a fat pitch.”
----- Warren Buffett
Warren Buffett once talked about his “punch card” approach to investing in business. He
advised that you make a punch card with twenty(20) numbered places on it and keep it in
your pocket. Then each time you make an investment pull the punch card out of your pocket
and punch a hole in that number on the card. Once all twenty places had been punched, you
wouldn’t be allowed to invest any more.
50
His idea reinforces the notion that there are not very many excellent businesses to invest in
and it pays to be very selective. And the same goes for trading; you can and should exercise
patience and discipline for a limited number of perfect trades.
The Japanese were once asked during the Olympics how they overcame all of their weakness
and to beat the odds and all of the negatives against them to become the best ping pong
players in the world. They simply responded by saying they totally ignore the negative things
(ie; losing trades) and FOCUS 100% on what makes them so good (ie; winning trades). They
said that if they focus 100% on each positive that any negative just falls away and becomes
nothing. If they focused on something that went wrong they would just magnify those things
instead of the positives. So, instead they focus 100% on what they are doing right (ie; each
winning trade) and they became the best in the world.
Lesson: stop focusing on each losing trade or that there might have been two or more
losing trades in a row. Focus on each winning trade (and doing the right thing each time)
and the one winning trade that paid back all the losing trades. I learn something from each
losing trade. HOWEVER, I learn more from each winning trade. Focus on what you did right
and soon you will be a market trading champion like the Japanese Olympic ping pong
champions. Become a ‘Market Trading Champion’ by Punching out one-trade-at-a-time.
Stay Focused with discipline and patience by keeping your eye on the goal of maximizing
profits and limiting losses’s.
TREND OR NOT TO TREND THAT IS THE QUESTION:
In 1897, Italian economist Vilfredo Pareto discovered what is commonly called the 80/20 rule. This rule
is an empirical law that has been verified in many areas of business, economics, trading and science. The
80/20 principle/law simply states that 80% of results flow from 20% of causes.
It’s been said that 80% of the time markets ARE NOT trending and 20% of the
time markets ARE trending. 80% of your profits will normally come from 20% of
your best trades.
It is also a statistical truth that the OPEN is near the HIGH/LOW 80% of the time. In a bear market the
open should be near the high 80% of the time; in a bull market the open should be near the low 80% of the
time.
AN EXAMPLE OF USING THE 80/20 PRINCIPLE IN TRADING:
Suppose you have $1,000.00 to trade with.
Trade #1: $800.00 profit / $200.00 investment = 400% return
Trade #2: $200.00 profit / $800.00 investment = 25% return
The 80/20 rule as applied to trading is very profound. For every dollar invested in Trade
#1 would yield 16 times more profit than the same dollar invested in Trade #2! (400 / 25
51
= 16). Trade #1 was highly leveraged. Trade #2 was low leveraged. Putting risk aside for a
moment you would rather have your money invested in Trade #1. Focusing on the critical
20% leverages your time and money 16 times faster. If you are trading in the 80% of markets
that are not trending you are trading in the wrong market at the wrong time and at the wrong
price!
Give me the Middle 60%!
If you could stay in some of your winning trades longer you could have made 50% or 100% more profit
on some of those trades. However, that is not “the” point. That is only “a” point. A billionaire (I believe it was
one of the Rockefellers) stated that you can have the first 20% and the last 20%; just give me the middle
60%. Now, that is “THE” point! When you understand this then the first 20% or the last 20% just doesn’t
matter.
In the military (sniper school) they have a saying: ‘one shot one kill’. I have a saying:
ONE MILLION DOLLAR PROFIT: one trade one profit; one-trade-at-a-time.
Shoot for the middle 60% of the trend
In real sniper combat scenario a sniper may have to lay in the middle of a live combat field
night and day for days or weeks, doing nothing but waiting, calculating, and staying focused
just to get the right shot! In ‘sniper’ trading we have to wait patiently for the right trade/shot!
I have said it before: Sometimes the best trade is no trade; and no trading is the
time it takes for the best trade to setup.
QUESTION: how do you MONETIZE PRICE into PROFIT?
ANSWER: Proper alignment of price and time with symmetry in conjunction with
Velocity.
VELOCITY: is the time rate of linear motion in a given direction; quickness of motion.
Velocity of trend increases when PRICE is accelerating faster than time (large range price
movements). Velocity is decreasing when TIME is increasing faster than price (low range price
movements). Also see page 33 in my book “The Art of The Trade II (The Art & Science
of Trading Profit$).
The most important thing about MARKET’S is PRICE.
The most important thing about TRADING is PROFIT.
THE TEN(10) LAWS/PRINCIPLES OF PRICE TREND
Law/Principle of Price Trend #1: “The future price trend is a reflection of the immediate
past price trend.” Corollary: Action/Reaction. Einstein stated “Nothing happens unless something moves.”
52
Law/Principle of Price Trend #2: “The higher the VELOCITY of price movement within
a given trend the higher the probability of the current trend continuing.” Corollary: Buying
Pressure (BP) remains above average; trend continues up. Selling Pressure (SP) remains above
average; trend continues down.
Law/Principle of Price Trend #3: “Today’s closing along with Volume, Open Interest,
CONFIRM tomorrow’s price action.” Corollary: Price is everything.
Law/Principle of Price Trend #4: “tomorrow’s price action is a direct result of TODAY’S
price action.” Corollary: Cause and Effect.
Law/Principle of Price Trend #5: “For every price trend there is a point where the
probability of a one tick additional move is exactly equal to the probability of another one tick
decrease. Corollary: The Tipping Point or more commonly called the point of diminishing returns.
Law/Principle of Price Trend #6: “Time affects price movement”
Corollary: a trend is a directional price action confirmed over a given time period. Price changes
as a square root of time. This was originally discovered by Albert Einstein. See page 24 and page
67 of my book The Art of The Trade I (Cracking the Code & Unlocking the Secrets of Trend/Profit).
Law/Principle of Price Trend #7: “Trends that run opposite to the next larger time period tend to be
reactionary and will be short-term temporary moves.” Corollary: There are different price/time cycles within
a given market. Remember that in BEAR markets TOPS form early in the week such as on Monday/Tuesday and
LOWS on Thursday/Friday and in BULL markets BOTTOMS form early in the week near Monday/Tuesday and
HIGHS on Thursday/Friday.
Law/Principle of Price Trend #8: “Mass psychology dictates how high or low prices will go; not reason,
fundamental or economic.” Corollary: Human psychology goes to extremes motivated by greed and fear.
Law/Principle of Price Trend #9: “Trading ranges usually terminate and reverse with a test of their
previous support/resistance levels. Corollary: Law/Principle of Price Trend #10
Law/Principle of Price Trend #10: “Support areas (buying pressure) when broken become new
resistance (selling pressure) when the breakout is confirmed. Corollary: Law/Principle of Price Trend #9
The Laws/Principles of Market’s are to be trusted but we must come to understand them before we
can profit from them. Once understood, any market law is available and is impersonally responsive to each
and all alike to profit from those same laws.
Principles are infinite but we shall demonstrate them only at the level of our concept of
them. Principles (market laws) never have problems (market losses). Problems (market losses)
are solved by bringing them under the control of principles (market laws). There are Principles
53
of markets. There is a Science of markets. The Science of markets is the technique,method,
or strategy (system) for using the Principle(s) of markets.
TRADING TIP$
(1) How the market reacts to news is more important than the news itself.
(2) Why trade a market that hasn’t turned around when there are so many markets that have already turned
around?
(3) Markets are never wrong; but traders opinions are often wrong.
(4) Markets are in a trading range 80% of the time. The big money is made from the other 20% breaking out
into big price moves. This is just another aspect of the 80/20 principle that is reflected in all of nature.
(5) Remember price IS everything. Everything that is known about a market is contained within the price.
Fundamentals are one thing; price is everything. All truth will show up in price.
(6) Instead of trying to predict a market – REACT to the market.
About the author:
Mr. Rickerson has been researching and trading the markets since 1982. He made his first trading system
(Market Optimizer now called Streamlined Market Optimizer III; commonly called SMOIII) available to the
general public for the first time in 1986. SMOIII has been available approx. 4 or 5 times since 1986 to the general
public. SMOIII is made available approx. every 3 to 4 years. In 1987 Mr. Rickerson published is first book: Real
Estate Investors Master Guide to Real Estate Wealth & Success. In 1992 Mr. Rickerson published Success
Theories 101 (Truisms for Achievement) In 1998 Mr.Rickerson came out with a revolutionary market timing
oscillator called The Bull Bear Oscillator with Bull Bear Index (a short term top/bottom timing system). This
oscillator (as with all of Mr. Rickerson’s trading systems) are developed around revolutionary NEW ideas (that
have always been forward tested as well as back tested) and not based on old and outdated ideas. In April
1998 Mr. Rickerson began researching what he calls The Million Dollar Trading Protocols and the Market
Syntax Code. After 12.5 years of research and over 60,000 hours and tens of thousands of dollars in research
Mr. Rickerson has perfected that trading system strategy which is now used by his most valued customers. In
1999 Mr. Rickerson came out with a system called The Trend Analyzer with Expert Wizard (a medium to long
term trend change indicator with “daily” market commentary provided by the software automatically). In late
1999 Mr. Rickerson began researching a unique options trading strategy. After five years of research, software
development, programming and forward testing Mr.Rickerson came out with his revolutionary options trading
system in January 2004 releasing his Options Optimizer trading system to his private customers first and then
releasing it to the public in 2006. In 2006 Mr. Rickerson published The Art of The Trade I (Cracking the Code
& Unlocking the Secrets to Trend/Profit) and in 2008 The Art of The Trade II (The Art & Science of Trading
Profits) For information on ordering Mr. Rickerson’s two trading books please see the back of
this issue. Mr. Rickerson can be contacted by email at [email protected]
54
Murrey Math:
All Panic Mode falling market (lows) random
(except) when you set them to MM
by T.H. Murrey
98.4375% (of) all normal humans go into Shut down: Denial Mode in Extreme Conditions
98.4375% (of) all retirement funds are never “touched” as markets hit AT Highs / AT
Lows
98.4375% (of) all software programs can’t anticipate future highs or lows, right?
11.11.11 11 x 11 = 121 x 11 = 1331 = 13 Mirror 31
55
09.10.11 Murrey’s Harmonic Birthday
Every 823 Yr Cycle (on) 9.10.11 we have 5
Saturdays: 5 Sundays: 5 Mondays
5 + 5 = 10 + 5 = 15 = Universal Truth
5 x 5 x 5 = 125 = 12.50%
Our Universe is set to 1st Binary Growth
Progression: 12.50%
Our Universe Expands from 12.50% +
1.125% = 14.0625% Then Binary 1.125% =
15.625
You can’t find one “live” human who doesn’t
think in terms of 12.50% minimum moves
Find one sane adult who has a job who
doesn’t work harder to make $125.00 per
week: 1,250: 12,500 or 125,000 per week by
selling “cheap” items which wear out fast to
“poor.”
$125,000 x 50 = $6,250,000 per year
salary for increasing ambition
Pro Football Players: Pro Baseball Players:
Pro Basketball Players earn $6,250,000 per
year
Salt of the Earth Poor love all Pro athletes
who go from “poverty” to $6,250,000 per year
Average Pro Athlete has spent 14.0625
years practicing their job not sitting the stands
Medic Hype: You can be whatever you
Dream: Wrong*
Vanderbilt University: Baseball Player
David Price “failed” ambition produced
$6,250,000
Vanderbilt University: Football Player Jay
Cutler “failed” ambition produced $6,250,000
Vanderbilt University: PGA Golfer Brandt
Snedeker
“failed”
ambition
produced
56
$3,125,000
*All three athletes wanted to be SEC
Basketball Players as youth sports participants
Human Math Concepts are “housed” in the
Birth Chase (of) 312,500,000 Sperm to one
Egg
312,500,000:
3,125,000:
312,500:
31,250: 3,125: 312.50: 31.25: 3.125 =
M’$pie = 3.125
17 Sperm are reduced to (only) 1 to enter
the Egg for 3,125,000,000,000 Doubles
will show you every future price (of) all
markets if you divide it down 17, 18, or 19
times
Murrey’s Squaring of the Fives: 5’s will
show you 312,500,000
5 x 5 = 25 x 5 = 125 x 5 = 625 x 5 =
3,125: (out to) 312,500,000
Murrey’s Squaring of the Fives: 5’s (out)
17, 18, 19 times will display 1929 AT Highs
381
Egypt: 3125 BC: School of Toth with Horus
Universal Truth = Male 3 and Female 2 = 5 =
Harmony = Universal Truth = Math
09.10 2001 Murrey Math Classes:
Location: Brentwood, TN: Old Hickory
Blvd: Holiday Inn Conference Room: Andrew
Jackson
T. Henning Murrey “forced” 26 (paying)
students to “see and remember”
1) Dow 30 Index at 9,687.50 to 9,375: MM
1/8th = 312.50 x 100 = M’$pie = 3.125
2) S&P 500 Index: 1,093.75: MM 1/8th =
31.25 x 10 = M’$pie = 3.125
57
3) S&P 100 Index: 546.875: MM 1/8th = 15.625 x 5 = M’$pie = 3.125
4) Nasdaq Index: 1,375: MM 1/8th = 125.00 x 40 = M’$pie = 3.125
5) Nikkei 225 Index: 12,343.75 up to 10,312.50: MM 1/8th = 312.50 x 100 = 3.125
T. Henning Murrey asked the 26 (paying) students, if they had a normal IQ 5th grade
child, who would get all their money at their death, would they force their children (through)
their will to limit their (future) ambition by giving them a Trust Fund where their monies are
invested long term off Fun Duh Mentals or “force” their 5th grade child to “see and remember”
M’$pie = 3.125
T. Henning Murrey 1992 – ’93 back to 1959 Oct 09 to 17th “rediscovered” Music String
3.125
Music City Money Maker: Murrey Math Makes Multi Millionaires More Money
1939 July 04th to Oct 09th Music String Cycle: 437.50 Cycles moved up to 440.625
Human DNA Double Helix 64 Codons winds set to Math String
Murrey’s Institute of Technical Analysis: MITA University: 1992 – ‘93
Established so “traders” could enter and exit any market off the same (one) number,
without having to read “anything,” listen to economic experts, who failed to tell if and when the
1.40625 Trillion debt would get us our employment below 9.375%, when the US Congress had
allowed large cap USA corporations to “ship” unskilled “workers” and high school “dropouts”
jobs to China, leaving them with only TV ads about how we need more Engineers with high
math skills to make plastic toys, tub socks and cotton jeans.
M.I.T.A. University: Nashville, Tennessee
President: T. Henning Murrey “saw” and “remembered” all markets are growing and
contracting inside one or up to 17 Internal Harmonic Trading Octaves, set to Murrey’s
Binary Algorithm: .00152587890625.*
MITA University President: T. Henning Murrey won the 1993 Algorithm Award:
With MBA: .00152587890625 when he “discovered” and “remembered” from Oct 09 to 17th
1959 all “things” are traveling inside its largest most “current” octave set to its “mean Joe
Green” moving average: Random Fourier Wave Transform Repeated Pattern.
Murrey “remembered” the works of: Peter Guthrie Tate and his Rings “Knots” Theory of
repeated special rational interlocking perpetual “windings:” dating back to the Celtic: Druids
math 1200 AD: Book of Kells.
Tate’s Theory:
was to rationalize what he thought he saw to a math formula:
58
Math Theories must be rationalized with (other) formulas:
Fourier Wave Transform: = random moving average (repteated):*
Mellin Transform:
Riemann’s proof:
Fubini’s Theorm:
Dominated Convergence Association:
Poisson Summation Formula:
Theory of Normal (rational) Distribution:
Theory of Haar:
Classical Ostrowski asserts the Archimedes Absolute Value:
Consider and Adele Ring Integers:
Hausdorff Structure:
Gamma and beat Repeats:
Schwartz – Bruhat Class Structure:
Murrey Nashville: 1992 – ’93 “saw” MM 4/8th Fractals: (17): with 12.50% on either side,
called the “pipe” or MM Trading Frame: MM 3/8th to MM 5/8th and closes (staying) above or
below the “pipe” so many days,* it continues in its direction up or down.
T. Henning Murrey: Nashville: “discarded” the Fourier Wave Transform Pattern: random
moving averages: and all supporting Theories backing up almost rational repeats, with
Murrey’s Binary Algorithm: .00152587890625 moving up or down (out) a total (of) 17,
18, or 19 Binary Internal Harmonic Trading Octaves with (slower) trading inside its 17 Major
MM trading Frames: 17 x 17 = 289.
World Famous Mensa Math Genius Vaughn Jones: Vanderbilt University: Math Department
Vaughn Jones “sees and remembers” association of “string” math linked to DNA.*
09 11 2001 Twin Towers Attack: Fast Market Conditions to 7,812.50 on MM 1/8th Key C
03 14 2011 Japanese Tsunami Quake: Fast Market Conditions to 7,812.50 on MM 1/8th
Key C
Master of the Fives: 5’s 1959 Oct 09th to 17th = T. Henning Murrey: Nashville at 17
years old
5 x 5 = 25: 250: 2,500 = Murrey’s 1st Binary Double = Harmonic 2/8th
M’$pie = 3.125 x 2,500 = 7,812.50
Murrey Math Chart: MM Spread 312.50: set to 1992 ’93: MM M’$pie = 3.125
Nikkei 225 Index: March 14 2011
Dow 30 Index: Sept 11 2001
59
Formal Education Required 5th Grade Murrey Math Skills to read and write and listen
quietly
Sign Up Today
$312.50 Starter Program: 90 days (use) end of Day Murrey Math Software Program: Murrey
Math Learning CD: Murrey Math Trading Manuals: 90 Days (of) Murrey’s Major Markets Weekly
Price Reversal Price Points: 45 minute weekly online class
$156.25 MM Student: 90 days (of) Murrey’s Major Markets Weekly Price Reversal Price
Points: 45 minute weekly online class
$90.00: 90 days (of) Murrey’s Major Markets Weekly Price Reversal Price Points:
Free: Murrey Math Trading techniques on YouTube: Murrey Math Trading
Wednesday Morning: Women’s MM Trading Class: 10: 00 am at Edge Hill Coffee Shop
Rent The M M Real Time Software Program for S&P 500 Futures: $60.00 per month
Murrey Math Classes: 3 Days Nashville, TN
World Record Lows (Set) by the Murrey Math Trading System: created 1992 – ‘93
Dow 30 Index and Japanese Nikkei 225 Index lows at 7,812.50 after Massive Destruction
T. Henning Murrey Predicted both lows with (only) MM Trading Chart 4/8th at 8,750 Key B.
Article continued at http://www.tradersworld.com/archives/murrey50.pdf
60
NinjaTrader
By John Hutchison
Free end-to-end trading platform for advanced charting, market analytics, system
development, and trade simulation.
NinjaTrader – Architects of Electronic Trading Innovation
61
With NinjaTrader you can trade futures, forex, and equities through any of the hundreds of
supported brokerages worldwide. The recently released NinjaTrader 7 is a feature-rich flagship
trading platform including powerful tools for traders of all types. For the discretionary trader,
revolutionary trading tools within NinjaTrader such as Chart Trader and SuperDOM allow you to
trade with superior speed and precision. For the systems trader, NinjaTrader provides a state-
of-the-art system development environment based in Microsoft C#, allowing programmers to
create practically anything they want.
These features are readily available to new and experienced traders alike. You can download
NinjaTrader completely free and use it for as long as you desire at www.ninjatrader.com.
NinjaTrader provides a unique opportunity for beginning traders because it allows you to vastly
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you to spend as long as you need familiarizing yourself with the platform before purchasing.
With all of NinjaTrader’s powerful features, users are offered unlimited free reign and play over
the platform with no risk and at their own pace. When you are ready to trade live, you can
either purchase a lifetime NinjaTrader software license outright for a one-time fee of $995 or
you lease the software on a quarterly basis with rates starting as low as $50/month. Purchasing
or leasing a live NinjaTrader license allows placement of live trades to your brokerage account,
whereas the fully-featured free license enables simulated trading only.
62
Advanced Charting
Once connected to a data provider, users can begin populating charts with data to analyze
the markets they are interested in. NinjaTrader offers extreme flexibility and customization
for charting, giving users the ultimate freedom when researching their desired instruments.
From simple functions, such as changing the overall look of your charts to adding in advanced
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When opened, charts are free-floating and resizable allowing for ease of placement. There
is also no limitation for how many charts can be opened, providing traders the option to have
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When using Multi-Series charting, multiple panels will be displayed to view the different data
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63
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NinjaTrader charting provides a multitude of drawing tools to assist traders in marking
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of these popular tools include the Fibonacci drawing suite. Included in this suite are tools for
Fibonacci Retracements, Extensions, Time Extensions and Circles.
Each of these can be drawn simply and efficiently using only two or three mouse clicks.
These will then display the different Fibonacci levels so that you can visualize these with your
desired instrument data. This allows you to use this displayed levels with your price data in
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The Fibonacci levels are also fully customizable in several different ways. First, traders
can fine tune these levels to reflect any percentage they wish. It is also possible to add in
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NinjaTrader also recognizes the value of trader’s time by allowing them to save these userdefined settings within templates. This allows users to spend their time analyzing today’s fast
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Free To Download: www.ninjatrader.com
64
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65
Stock Indices & the
11-Week Cycle
11
By Eric Hadik
October/November 2011 = Convergence of Multiple Multiples
“This one goes to 11.”
That’s the answer to the astute question:
“Why is the stock index cycle convergence on October 3--7th, 2011 so important?”
I’m glad you asked…
“Because, this one goes to 11.”
“Why not focus on the 14-15 Week Cycle that you have discussed so extensively in the past?”
“Because, this one goes to 11.”
“Isn’t the geometric nature of a potential October low more important?”
“Uhhh… This one goes to 11.”
“Aren’t the 22-Week, 44-Week & 66-Week Cycles - that also align on October 3--7th just as
important?”
“This one goes to 11.”
66
Inane or Insightful?
Anyone that has not seen the movie (excuse me, the rockumentary) Spinal Tap might think
this dialogue just sounds inane. Anyone that has seen the rockumentary Spinal Tap knows
this dialogue is inane. But, there is an underlying point to my feeble attempt at humor. It is
to highlight a cycle that has been at work in stock indices - particularly the Nasdaq 100 - for
over a decade.
In recent months, it has proven itself just as accurate and as prescient as it did in the early2000’s. This can be seen in the following June 30, 2011 quote, from the July 2011 issue of
INSIIDE Track, and the ensuing action in stock indices:
“Looking out a few weeks, there is another important cycle - that has governed the action
of the Nasdaq 100 for over a decade - coming back into play. One of the most consistent
weekly cycles - that was discussed in 1999--2002 and multiple times since then - is a 22-23
Week & 44-45 Week Cycle.
The 44-45 Week Cycle incorporates the 14-15 Week Cycle (3 xs 14-15 weeks = 42-45
weeks) but the breakdown - into a 22-23 Week and even into an 11-12 Week Cycle - is where
this cycle differs. Consider the following moves since early-2010:
-- 11-week rally from Feb. ‘10 into April ‘10.
-- 11-week decline from April into July ‘10.
-- 22-week low-low cycle from July-Nov. ’10.
-- 11-week rally from Nov. ‘10 into Feb. ‘11.
-- 11-week high-high cycle from Feb. ‘11 into May ‘11.
-- 22-week rally from Nov. ‘10 into May ‘11.
-- 11 weeks from May ‘11 high is July 18--22, 2011.
-- 22 weeks from May ‘11 high (a 22-week low-high-high Cycle Progression) is October
3--7, 2011.
The week of July 18--22nd is also exactly 4 years from when several of the Indices peaked
in 2007.” [End of excerpt from June 30, 2011.]
This analysis explained why equities, with the Nasdaq 100 leading the way, were expected
to advance - from their cycle lows in mid-June (when the 14-15 week cycle pinpointed another
bottom) - into July 18--22nd and then suffer a steep decline into October 3--7, 2011. The
downside target in the DJIA - for the subsequent drop - was 10,545--10,590 - a level of
critical, intra-year & monthly support.
Other analysis & indicators corroborated this and the indices followed suit, rallying into
July 18--22nd with the Nasdaq 100 futures setting their highest daily close on July 22nd. This
ushered in an 11-week period that was forecast to see some serious selling in stocks.
Why?
“Because this one goes to 11!”
Synergy: The Ultimate Qualifier
Of course, it was not just the 11-Week Cycle that led to this conclusion. There were many
67
other cycles projecting a peak in July 2011… and even more projecting a drop into October
3--7th. There were also price indicators (weekly trend pattern, weekly LHR, etc.) that were
discussed in the weeks leading into July 18--22nd. [The July 2011, Stock Indices & 11-Week
Cycle: 2-3 Month Drop Imminent compiled this analysis and is available free for the asking.]
The reason for recounting this late-June/early-July analysis is to establish some credibility
for this cycle. Hopefully, that will enable readers to place some faith in the next - and far more
synergistic - occurrences of this cycle. This applied not only to the great synergy of cycles
pointing to October 2011 for an important bottom in stock indices, but also to decisive periods
developing for 2012.
Before moving on to the factors projecting an October 3--7th low, there is some additional
analysis that came into play in July… and which reinforces the potential for a multi-month
bottom in early-October 2011. The August 2011 INSIIDE Track (7/29/11) reiterated this and
is reviewed in order to highlight the link to the 14-15 Week Cycle:
“A 14-15 week low-low-low-(low) Cycle Progression recurred on June 20--24th & June 27-July 1st. The DJIA set is lowest weekly close on June 24th and was expected to advance into
July 18--22nd. (The next phase of this 14-15 week cycle is September 26--October 7, 2011…
when another low is likely.)
This possibility - for a rally to new highs in at least one Index - was further corroborated by
a unique cycle that has governed the action of the Nasdaq 100 for over a decade…This created
an 11-week low-high-(high) Cycle Progression targeted for July 18--22nd - precisely when the
Nasdaq 100 did set new highs. This was validated by the weekly trends, which turned neutral
but could not turn up in the DJIA & SPU.
Looking forward, the next phase of this 11-week cycle comes into play on October 3--7,
2011…there are a few related points that are already hinting this time frame should be a low.
The first is the 14-15 week cycle.
The second is that a 50% retracement in time - for the DJIA & SPU, which peaked in earlyMay after a precise 44-week advance - would involve a 22-week decline and would bottom on
October 3--7, 2011.
A related 15.5 month (approximately 66-week) cycle divided the last two multi-year lows
- in March 2009 and June/July 2010 - and next comes into play in October 2011. (An exact
66-week cycle from the mid-2010 low comes into play on Oct. 3--7, 2011.)
And, then there is the preponderance of the Stock Indices to set important lows during the
month of October (1987, 1989, 1990, 2002)…
IF Oct. 3--7, 2011 is going to pinpoint an important bottom, Stock Indices should drop
below their June 2011 lows AND turn their intra-year trends down before then.” [End of
excerpt from July 29, 2011.]
In order to validate this analysis - and set the stage for a critical low on October 3--7, 2011,
stock indices needed to drop below their mid-June lows as soon as possible (after this July
29th analysis). Sure enough, on August 3/4th the indices obliged.
Landmarks: The Validating Factor
The projections for a sharp decline into - and an important low in - early-October are based
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on multiple factors. Some of the more simple ones involve a 50% retracement in time (44
weeks up/22 weeks down… reinforcing the 11-Week Cycle as well) and the geometric links
to previous lows in the month of October… a repeating, 360-degree cycle. There are several
others.
One of the most important indicators - which would provide a precise upside price target if/
when an early-October low is confirmed - is the monthly trend pattern (a separate discussion).
However, it is important for a forecast like this to be continually validated. A perfect example
of this came on September 1/2nd when the indices set secondary highs and reversed lower.
This fulfilled the following analysis that had been published on August 31st, in the September
2011 INSIIDE Track:
“Stock Indices - which had already reached their 6-12 month upside price objectives while
peaking in early-May - were projected to set another peak on July 18--22, 2011 (with at least
the Nasdaq 100 setting new highs) and then enter a 2-3 month decline into October 3--7,
2011...
As described last month, Stock Indices needed to quickly drop below their mid-June lows
AND turn their intra-month trends down to validate the scenario for a sharp drop into earlyOctober.
Well, the final days of July and first 9 days of August powerfully fulfilled this analysis. If the
Indices can peak and turn lower in the first 3-4 days of September, it would further corroborate
the scenario for a drop into October 3--7, 2011.
…A sharp drop - into October 3--7, 2011 - would fulfill all of these cycles.” [End of excerpt
from August 31, 2011.]
By fulfilling this expectation - for a peak in the opening days of September - the stock
indices reinforced projections for an overall decline into October 3--7th. This was not the
only landmark that helped maintain confidence in this analysis and is why this conclusion was
repeated dozens of times in July, August & September. [The August 2011, Stock Indices &
11-Week Cycle II: 2-3 Month Drop Unfolding compiled additional analysis and is also available
free for the asking.]
Fulfillment: The Confidence Builder
The indices sold off throughout the month of September, bringing this latest phase (of the
cycle path for 2011) to fruition. The September 30th analysis - in the October 2011 INSIIDE
Track - summarized it this way, while setting the stage for the October/November period:
“…The Indices set highs on September 1st and then sold off for much of the month…there
is still the expectation for an important low in October 2011...
A low during the month of October 2011 would fulfill the previously-discussed 15.5 month
cycle that separated the last two multi-year lows - in March 2009 and June/July 2010 - and
next comes into play in October 2011.
It would also perpetuate the pattern of Stock Indices setting important lows during the
month of October (1987, 1989, 1990, 2002).” [End of excerpt from September 30, 2011.]
Even before this 9/30/11 analysis was written, short-term cycles were corroborating it and
projecting this low to take hold on October 3rd or 4th. [The September 24th & 28th Weekly
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Re-Lay publications included this analysis and are part of the October 2011, Stock Indices &
11-Week Cycle III: 2-3 Month Drop Complete …that is also available free for the asking.]
Bottom Line: For three months, a myriad of factors, cycles & indicators has forecast a sharp
decline into - and an important low during - October 3--7, 2011. But, the most intriguing
factor - for October/November 2011 and beyond - is the 11-Week Cycle. It could provide a
roadmap for equity traders from October 2011 into April 2012… and potentially longer.
Learning to Fish
There are times when a simple principle or a simple cycle can be expressed in a few
words. This is one of them. However, without adequate explanation and a review of historic
reliability, I could simply & concisely state: “The 11-Week Cycle projects a major bottom for
stock indices on October 3--7, 2011” … and you might think: ‘Sure, sure. What’s so important
about that cycle?’
Well, for one thing, it goes to 11.
However, there is so much more. In instances like this, it is more important - and hopefully
more valuable - to review what has formed this conclusion, so that a reader can have a more
comprehensive understanding… and a little more confidence in what is expected to unfold
between early-October and late-November… and then in 2012.
By seeing that this scenario unfolded in real-time - with expectations repeatedly published
before the fact - it lends infinitely more credibility to this cycle… than had it been mentioned
for the first time now. If an October 3--7th low holds for 2-3 months, it will reinforce the
influence of this 11-Week Cycle.
So, how long is an October 2011 low - if confirmed - expect to hold? Several months.
If/when a low is signaled, what are the upside targets? These are elaborated in ongoing
publications but it would take too long to expound on them here. Their attainment should
help to pinpoint when the next multi-month peak is most likely… which could be before yearend.
What does a potential, early-October low mean for equities in 2012? … and when should
this cycle low come back into play??
This scenario is already developing intriguing possibilities for the next 12--14 months, but
could also reveal what to expect in late-November and mid-December… when some surprises
are likely to hit the markets.
Ironically, there are many eerie parallels developing - between late-2011 and late-2007 that should be closely monitored. These will be powerfully validated IF the Nasdaq 100 makes
it to a specific, upside target. And, there are more crucial phases of this 11-Week Cycle
anticipated for the first half of 2012.
So, evidently, this one actually goes to ’12. Stay tuned…
IT
Eric S. Hadik is President of INSIIDE Track Trading and can be e-mailed at [email protected].
Their website is at www.insiidetrack.com.
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4 Steps To Successful Trading
H
By Brett Marsh
aving coached thousands of traders, from complete beginners to professional
portfolio managers, it is amazing that we see the same mistakes being made time
and time again. With all of the data, opinions, and other excess noise floating
around out there it is easy for even a veteran trader with a solid trading strategy to
let their emotions creep back into their trading plan. In this article we are going to simplify the
process and give you 4 things to look at which will help you keep your emotions out of your
trading and move you towards being a much more consistent trader.
In this article we are going to give you 4 things to focus on which may seem basic at first,
but when put together they create an easy but powerful road map to follow.
#1 Trend What side of the trend are you on? You have heard it over and over again how
important being on the right side of the trend is but shockingly most traders stray away from
this simple rule.
A simple trend filter such as the 50 day moving average can help you get off the wrong side
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of the market and get you in synch with your stock. This is a very simple rule to follow but will
get you trading on the path of least resistance. We call this our Buy/Sell line. When using this
rule we are only interested in buying stocks above the buy/sell line and selling stocks below
the buy/sell line.
Action Step Prior to taking a trade ask yourself if you are on the right side of the buy/sell
line. Where is price in relation to this line and should you be buying or selling. If you are
buying stocks when they are below the buy/sell line and shorting stocks above the buy/sell
line, you are going against the flow of the market and are setting yourself up for failure over
the long run. To see a video on go here http://www.protraderstrategies.com/?page_id=499
Here is a basic chart with the buy/sell line in place. See Chart 1.
Of course simply buying or selling blindly above or below this line isn’t refined enough to
minimize draw downs so let’s move on to the next step. See Chart 2.
#2 Trade Setup The second thing to look for if you want to be a successful trader is identify
a high quality setup. For the most part we prefer buying on pullbacks. When we apply a
simple technique that only buys when there is dip above the 50 day MA and sell after a rip
below the buy/sell line you can start to see how things start to fall in place.
We have many different rule based pullback strategies that we use but for arguments sake
we have added our momentum pullback strategy #4 to the chart.
You now have your list of stocks that are trading above the 50 day MA buy/sell line. You
have also further weeded down your stocks into stocks that have pulled back (let’s say 3 or
more days near support at the 50 day MA) and now you want to know which ones are ready
to resume their up trends.
This is where are third point comes in to play, the confirmation method.
#3 Confirmation In the last issue of the TradersWorld magazine Steve Primo wrote about
using confirmation. We suggest you re-read that article but here is a brief summary. When
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we use the confirmation technique we are only buying from our list of stocks the names that
have been able to trade above the prior bars high (for longs). To see a video go here http://
www.protraderstrategies.com/?page_id=499
If you are able to add these 3 concepts into your trading plan you will now have the odds
well in your favor. There is however one more important concept we would like to talk about
which can really help you get more bang for your buck. That is finding the stocks that will
make the biggest moves.
#4 Stock Selection Now that you are on the right side of the trend, you have learned to
identify a basic pullback setup and are weeding out the weaker trade setups by using the
confirmation method, it is time to focus on getting the most bang for your buck. One way you
can do this is by focusing on stocks selection.
All trade setups are not created equal.
Many traders and investors cringe when they hear the word “volatility” when it comes to
their stocks, but when you understand basic market behavior you can turn this volatility into
your best friend. When you have identified a stock that is trading with the trend, has pulled
back to the point it should now resume its uptrend and have an even further fine tuned timing
tool called confirmation, why not play the names that will move the furthest the fastest for
that particular type of trade setup? There are several ways to do this, here is one of them we
like to use.
One way to find these types of stocks is to look at their price volatility or historical volatility
rating. Since we already know that we are looking at a list of high probability trade setups,
why not get as big of a percentage move as we can by ranking our stocks in order from the
highest historical volatility to the lowest.
Why do we do this? Let’s compare 2 trades and see why. You will see below on the chart
3 we have a trade setup for the stock PG, which has a very low historical volatility rating. It
73
resumed its uptrend where our strategy said it would and even ran for 8 days. When we take
a closer look however we notice that the 8 day run only gave us a 4.9% return. Not bad for
8 days in these markets but we can do much better.
Now let’s take a look at a stock with a much higher historical volatility rating, AKAM. An 8
day run in AKAM gave us a 14% return and thanks to the trend filter we use, it ran as much
as 29% in 14 days. See chart 4.
You now have 4 simple steps you can use before you take your next trade which should
dramatically improve your performance. We hope you have as much success as we have and
we enjoyed helping you on your path to being a more consistent trader.
Feel free to contact us with any questions or comments. Brett Marsh and Steve Primo
[email protected] Brett Marsh is veteran trader and former Nasdaq market
maker with over 17 years of trading experience in the Stock, Futures and Forex Markets. He is vice President of research at www.specialisttrading.com and chief editor of the www.
BetterStockEntries.com stock newsletter which provides traders with explosive stock setups
for the next day. Brett has worked and studied under 2 of the most well known and influential
trading gurus of the past 25 years, William O’Neil and Larry Connors and has helped train
thousands of traders both beginning and professional. Steven Primo SpecialistTrading.com
[email protected] Steven Primo is the founder of Specialist Trading, www.
specialisttrading.com. Mr. Primo is a former nine-year Stock Exchange specialist and has been
actively involved in trading the markets for more than 34 years. As a specialist, he traded
through the crash of ‘87 and was responsible for making markets in over 50 stocks. Since
leaving the Exchange Floor, Mr. Primo has focused on managing money and teaching his own
unique approach of trading the stock, forex, and futures markets to scores of students, from
beginner to advanced levels.
74
75
Gilbert Steele’s Market Science
Gilbert & Harold Call the Down Market!
Proofs see Fig 1 & Fig 2.
By Gilbert Steele & Harold Carl [email protected]
Fig 1 is showing the updated chart from issue June/July #49. Note the
date sent was 5/20/2011 at the top of the chart of Texas Instrument
(TXN).
Now showing, hitting the target. Remember this is not a trading chart it
is a demo chart.
“At this point I am trying to help the novice get into the stock market.”
Try this link for stock tickers. http://www.freestockcharts.com
Track n’ Trade software is an investment.
A tool which allows you to see
a chart in a 20 minute delay, one minute, daily, or your choice of Charts.
I think you will need real time when investing. But, you can practice trading and that brings you
to a place of reality. Try it for free.
76
I have called and made some suggestions for the program and they told me they are in
the process of redoing the program. I am very satisfied with the software. I hope to trade and
demo the product in the financial package that would be showing the buying and selling. for
more information go to Gecko Software, Inc
Fig 2 is showing Track n’ Trade with TXN. I am also including 30 some stock tickers that I
personally use that you can put in the program to get you started.
APA
AIG
ABX
AA
AMD
BZH
CSX
CRK
CQB
COG
AXP
CAT
C
CVX
EOG
EPL
APC
AMD
BP
BAC
BA
F
FST
GM
DIS
DD
HAL
HD
HON
HPQ
HW
IVN
INTC
IBM
JNJ
JPM
KGC
KUB
KO
LVS
MO
MCD
MUR
MRO
MRK
MOS
Mon
NBL
NFX
NXY
NYC
OIS
OXY
PAL
PBT
PFE
PXD
POT
PG
SWN
SU
GE
STO
SQM
TOT
TXN
VZ
T
USO
UTX
VZ
WFC
WLP
XOM
I can see 2 to 3 years mathematically into the future and for me this is a wonderful time to
trade. I can show 31 years of a repeatable history on (TXN).
Investors only please. And you must be in my presence for the showing.
To know me better read my stories.
77
Addressing the people out side the Financial Buildings.
By being their you must think they can do something to change things.
How can they help you when they can’t help themselves. Look at their past performance.
I think it would be a bad thing for these people if they had to show a trading account in their
personal name.
Here are some of my questions. It is understood that the Market will go back up and go
down. Now looking at the future what will happen?
Are the brokerage houses still holding the stocks they bought with cheap money from the
government?
Are the brokerage houses selling their stock driving the prices down?
Are some of the brokerage houses going short in the stock market?
When the brokerage houses sell their stocks and when short, are they going to call their
customers and say we better sell your stock.
Are the brokerage houses paying back the money they borrowed from the government?
When is the note due on the money that was borrowed from the government?
If the brokerage houses are still holding the stocks what’s next? Does the government lose
the money? Did the general public lose money?
Suggestions ask your broker, who is buying and selling your money in and out of the
market? And you went to talk to him. What is his proof or ideas of a winning system? Did they
make money in this falling market ask him? I think his answer will be a good story and you
will gain nothing with your big money.
From 5/20/2011 where I called the top, ask your Broker for the commission charged
against your account. (See Fig. 1). Yes, while you were losing money did they make money
on you! In my opinion that would be insulting. “Let’s call this Steam Rolling the Market”. I told
my friends never let the trading account be traded without your permission.
Think, you could have also gone with any two Groups in the Traders World Magazine as a
checks and balance in my opinion. The gained information could have at least got you out of
the Market. But you still are losing your shirt, right? Did you ever sell out at the top and buy
in at the bottom?
The Victim by Gilbert
At breakfast, I met a fascinating gentleman, and we became friends. He offered me his
thoughts on my ministry and life. He soon told me of his problems, too. An ex-girlfriend and
how she accused him of stalking her. They had dissolved their relationship, abruptly. She was
saying untrue things, about him. She had hired a lawyer, and was pursuing “stalking” charges.
“I know not who this lawyer is. Why would I be stalking somebody that I have said goodbye
to?” He was feeling very bad over this. How was he to prove where he was three days ago? A
witness had said: “I thought I saw him in my rear-view mirror about 11:30pm, following her
in a car.” “I did not know these charges could lead to a possible two year prison sentence.” I
advised: “you are in a lot more trouble than you could ever imagine.” Talking to him, I told
him he would have been better off prosecuted by the toughest attorney in town. Then I told
him to find out who this attorney is and anything else you can find out about her. I will seek
the mind of the Lord, for you on this matter.
78
About two weeks later, while working with-in my home, the Lord spoke to me. With regards
to this man: “Buy a note book, with non-removable pages and record his every event and
movement.” I contacted him, immediately. The man said ”The instructions are simple enough
and I will think things over and call you back in about an hour”. When he called back he
said,” My attorney thought it was a good idea, and told me to start using this documentation
procedure now. “
I also told my friend how the plaintiff’s lawyer might try to enter evidence, not reviewed,
(THRU DISCOVERY) in closing arguments.
Much later: After the prayer meeting was over, we went to breakfast. With a lot of expression
in his face, he said, “I took a friend of my “ex” to lunch. Asked her about my old girlfriend and
she said a lot of things I didn’t know. She said “The girlfriend’s lawyer receives government
grants for litigation, and representation of women that have been wronged by a man”.
Several days later, he said, they had the case dismissed, and thrown out of court.
I wonder how many people have been put in prison because of this.
Ref: the prosecution of women that have been wronged by a man.
Ref: “THRU DISCOVERY”.
THIS TERMINOLOGY IS ABOUT REVEALING TO THE “OPPOSITION”, ALL THE EVIDENCE
YOU WILL BE PRESENTING IN COURT. LEGALLY, IF YOU DO NOT PRESENT YOUR EVIDENCE
IN THE DISCOVERY PORTION OF YOUR CASE, IT CAN NOT BE BROUGHT “IN” ONCE THE
TRIAL BEGINS. SNEAKY LAWYERS HAVE BEEN KNOWN TO “MAKE A SLIP OF THE TONGUE”,
AND TRY TO OVER WHELM THEIR OPPOSITION BY BRINGING IN NEW EVIDENCE OR
INFORMATION THEY HAVE NOT SHARED...
THRU: DISCOVERY
There should be no doubt in your mind from the (Traders World June / July # 49 issue) that
we know the Market Timing.
I will be showing you showing 31 years of Modeling on one stock that will explain where you
were, and where you are and where you are going.
The Basic Contract.
When to Buy and Sell with the Market Modeling for the next 3 years. From Gilbert Steele’s
Market Science. This will be for a limited few to serve our new partners better. This being
a Commercial Account will be adjusted to your needs. $40 million for exclusive account
managing. [email protected]
79
80
Review of ART®, Precision
Trend Indicator, & Optimum
Wave Locator Trading Software
By Larry Jacobs
This is a review of ART® trading software and its new add-ons the Optimum Wave Locator
and the Precision Trend Filter. This trading software is not one of the new hot trading packages
heavly promoted on the internet. Traders looking for such software usually try them generally
for 2-6 weeks before they give up and try the next highly promoted trading software package.
This is an ongoing trading marketing craze on the internet. ART® software has been around for
several years and I don’t consider it to be one of these promoted trading software packages.
If you understand how it works and when it fails and fully test it with back data, you should
be able to make it work for you.
One needs to have consistency in trading. That means doing the exact same thing every
time. It is very important to have the right psychology of trading and that takes time. It
does not happen overnight. When you get better and more experienced your psychology will
improve. This is a developmental process of several months and even years to fully develop.
Not 2-3 weeks. So take your time with this process. It requires serious study, experimentation
and back testing of data to perfect your trading. Your confidence will gradually increase over
time. I believe that the ART® trading software and its new add-ons might help you to develop
your trading success with practice and time.
Chart 1
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Chart 2
ART® trading software can be used in all time frames (short term, intermediate term and
long term trading) as well as day trading. Investors use higher time frames (daily, weekly and
monthly charts) and day-traders use lower time frames (1, 5, 15, 30 and 60 minute charts).
ART software uses both volume and price to determine its entries and exits. Oscillators that
most traders use are simple derivatives of the market. Derivatives of the market give you
late entries and exits in the market. Oscillators are considered therefore lagging indicators.
Since the ART® software uses both direct price and time it can be used without the lagging
problems of oscillators. The ART® software puts small triangles on charts that clearly give
entries and exits.
The ART® software works with many platforms such as eSignal, Trade Navigator, Ninja
Trader, TradeStation, Market Analyst, MultiCharts, MetaTrader 4 and MetaTrader 5. In this
review I used eSignal.
ART® trading software uses 3 studies. Pyramid Trading Points®, Reversal Bars and Color
Bars. These are used to determine trends, both dominate and minor. Triangles are labelled
with a P and and MP. The P is for the dominate trend and the MP is for a minor trend. It also
uses reversal bars, the 1B and the 2B, which are key pivot points in the market. It also has
color bars which are bullish, bearish and neutral. The Pyramid Trading Points® are designed
to give you high probability trades. The actual buy points are when the price action gets above
Chart 3
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the Apex of the triangle by one tick. By getting above the apex, the market gives you higher
highs and higher lows. See Chart 1. The opposite is the bearish Pyramid Trading Point®. A sell
is given when the apex on the low is exceeded by one tick. See Chart 2. Remember the apex
always points in the direction of the potential trend. Opportunities occur in a trending market
with support and resistance. Initial stops in an up market can be put in under the base leg of
the triangle and in a down market above the base leg of the down triangle. Later when the
market moves the stop can be raised to the later triangle base legs. This is only a simplification
of strategy. There are many other factors on how to raise stops. Money management also
must be used for successful trading. Many put multiple contracts on in the initial trade and
reduce the quantity as the market moves up.
ART® also uses reversal bars which are labelled as 1B and 2B. These are pivot points in the
markets. These can be used to scalp the markets or scaling in or out of the markets. These do
not indicate any major trend change, Pyramids are used for that. They do indicate resistance
and support. They are excellent to use in conjunction with the Pyramids.
Chart 4
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ART® also uses colors for individual price bars. They indicate who is in control of the
market, bulls or bears. Green bars indicate bulls are in control and red indicate the bears are
in control. The Pyramids add structure to your trading. Tells you how to get in the market if
you are out and where to get out if you are in.
Losing some trades are a normal part of trading. If you have tested your system you
should know the normal number of losers you are going to get before getting concerned. It
is all about knowing your system and what to expect of it. Many traders get very upset when
they have lost two or three times, even though that is in the norm of their system. This is a
problem with their psychology of trading. They may have some serious issues, which need
to be corrected before they can become a successful trader. Winning and losing traders are a
normal part of the trading business. The key is to keep losses small. ART® is a system that
can help you develop your own method of trading.
Traders must always have stop losses in the market. They are the emergency exits in the
market. When your stop is hit you need to get out. You should always have an initial stop
loss placed at the beginning of the trade. Also you should have a method of a changing that
to a trailing stop. This adds structure to your trading. The pyramid base lines are key level
stops and indicate where to get out of the market. That is the first stop loss that should be
entered when the market is entered. When new pyramids are formed your initial stop should
be changed and raised to the baseline of the latest triangle formed. That is your trailing stop.
The stops can be moved up again and again using the pyramids. The market will eventually
stop you out of all of your positions.
The PTF indicator can also be used to filter out the trades of ART® to improve the performance
of the system. When the system turns green you should scale in long positions and with red
scale out longs. Yellow is just neutral. The system can be used with any market or time frame.
When you see red it means more lows are coming and with green more highs are coming. The
PTF indicator needs to only be used as a filter or second opinion. It is not to be used as an
entry exit or loss control. For that you need to use the ART® system.
The Optimum Wave Locator (OWL Indicator) works on all markets and time frames. When
it recognizes the 3rd wave it will label it on the chart. You need to understand how the basic
Elliott Wave works in the market. There are 5 waves in every market. See chart 3. After the
5th wave the trend ends and the market changes trend. Wave 1, 3 and 5 all move in the
direction of the primary trend. Waves 2 and 4 are corrective in nature. This occurs in both
bullish and bearish trends. That is what you need to know to use the OWL indicator. When the
oscillator is above the 0 line it is bullish and below it is bearish. Green color is bullish and red
is bearish. It indicates wave 3 and it is indicated on the chart. The OWL indicator gives you an
idea of where you are in the Elliott Wave structure of the chart. See Chart 4. It also gives you
an 144 OWL Price Bar Line. With this we look back 144 bars. This is a Fibonacci number. The
OWL indicator can also be used to indicate a divergence in waves. That is indicated by a higher
high in price but not in the OWL indicator. This indicator should be used as a second opinion.
Use the ART® trading system as your main trading method.
For more information go to www.traderscoach.com
84
Know Yourself
Astrological Report
You need to know when it is favorable for you to proceed
aggressively or is it time to proceed slowly and cautiously!
It is the desire of Traders World Magazine that the magic of astrology should become
available to as many people as possible as inexpensively as possible. Traders World will
have a professional astrology report done for you. The professional report is approximately 30 - 50 pages beautifully presented in columns with beautiful fonts covering
both your personal and professional life. You can use the professional part of the report
to develop your talents, so you will be better able to attain your desired growth in your
profession. Problems can be avoided and transformed into positives through insight
and wise action. The personal part of the report given will deal with your identity,
emotion, love, destiny, etc. Another section of the report deals with the major times of
change in your life, showing clearly in graphic form the months when these changes are
the strongest. Through this timing you will know what to do and what not to do during
these changes. The report is in a pdf document and is $19.95 and is emailed to you. To
receive the report enter your order. We will send you back an email with the following
questions below to do your astrological report. It usually takes us 48 hours to complete
and email back to you the report.
Click to Order
Information we need from you to do the report:
(1) birthdate, (2) time of birth, (3) If you don’t know the time of birth then we need if you
were born in the morning, afternoon, evening, night, (4) city of birth, (5) state or providence
30-day
go to www.tradersworld.com
85
THE CRITICAL
NATURE OF
VOLUME
Part one
Jeffrey A. Kilian
Trader Technical Analyst Educator
As the market would have it most participants are wrong in their trading decisions and therefore
lose money when they invest or trade. We as professionals who work in the business every day
know that even though what most dedicated people do is correct………….sometimes they miss the
critical ingredient known as “volume”.
Volume is the catalyst behind the most explosive and profitable moves in trading and instrument
within any market place, and to this day still remains the number one factor that determines the
probabilities of future price directional movement. Where volume is the number of shares or
contracts that are traded over a calculated period of time, the result of those volume numbers
must then be used to determine the current and future Supply and Demand ratio of what we
are analyzing.
Chart 1
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©2011 MetaStock Professional
Chart 2
A professional trader will focus his or her attention on the Smart Money Volume. This volume
is the most important type of volume as it is created by the people whom actually move futures
and securities from one level to another. These are the heavy market participants including off
shore hedge funds, US based institutions, major market makers along with specialists on the
trading floor who will orchestrate mechanics behind the new price move before the general
public is aware of what is about to happen.
The effect of what the Smart Money does now creates a new level of demand or supply that
was previously non-existent.
Where that ratio of supply and demand changes, so do the opportunities to invest or trade
in anticipation to make money whether long or short. However without a sufficient amount of
accumulated volume incorporated into the analysis of our trading decisions, we leave a reward to
risk ratio on the table that is just inacceptable. Let’s examine the various scenarios where volume,
especially a near historical volume spike or accumulated volume levels play a critical role in the
end result of being on the right side of the markets and ultimately, a winning or losing position.
See Chart 1 of Dow Index.
THE BASIC SCENARIOS OF VOLUMES TRUE COLORS
1) Excessive volume levels that occur at major turning points in stocks, subgroups, parent
groups, their assigned indexes, and the Major Market indexes, gives us the opportunity to get
in at the beginning of a change in direction with the potential for profit for that no other trading
opportunities can offer. For example let’s consider the following example. Trader A with 5 years
experience finds an individual stock by using an EOD scan from a free or low cost internet program
that has several favorable indicator formations and increasing positive volume. Trader A
Chart 3
87
Chart 4
has
considerable experience using Technical Analysis and believes that there are strong possibilities
for short term upside potential price movement. Trader A now analyzes the current state of the
overall market and concludes that his/ her timing is correct and now decides to trade the stock in
isolation. Trader A selected and traded a sub standard trade because of a critical failure to make
a relative comparison between the selected symbol volume on PNG and its assigned industry
group volume and then of its parent sector volume numbers. See Chart (2) PNG Trade that
never went here.
2) Successive volume spikes or sustained and consistent volume levels allow that trend to
continue in the same direction until the trend has exhausted itself
3) Where short term corrections within an uptrend present themselves, volume will have
temporarily dried up and prices will stall and reverse because of the inherent change in the
demand/ supply ratio, where supply……. now becomes clearly in control. This normal correction
will last a short period of time until more buying pressure shows up again in the form of volume
to act as the engine behind the renewed continuation of the uptrend.
4) The exhaustion of an uptrend is almost always evidenced by a drying up of volume leading
to a reversal pattern where the entire process in then repeated but this time leading to a down
trend See Chart (3) S&P500 EMINI FUTURES chart
Chart 5
88
Chart 6
CRITICAL VOLUME LEVELS RELATIVE TO KEY INDICATOR FORMATIONS
PROVIDE THE CONFIRMATION
• RELATIVE COMPARISONS of current volume levels to/ past levels provide confirmation of
Smart Money accumulation.
• MACD and Volume relative comparisons.
• STOCH and Volume relative comparisons.
• MONEY FLOW INDEX and Volume relative comparisons.
As traders we have a clear choice in front of us to either choose to trade the candidates that
have significantly higher volume levels or not. In choosing average volume level candidates the
statistics will quickly point to substandard trading results. This is a direct result of a lack of serious
interest in the security or futures contract for the simple reason that there is no real Smart Money
buying behind it. No professional trader would make a valid risk to reward calculation before
a trade is made without including volume as a serious portion of that equation. See Chart (4)
VOLUME chart
The MACD is to this day one of the best indicators to analyze and make trading decisions
because of its inherent ability to confirm that the trend has now officially changed from one
direction to another. Although at times it may lag price movement: Its most powerful attribute is
the confirmation it will provide us when prices achieve a new pivot point high or low or even a new
Chart 7
89
base formation, and then move up or down from there into a new direction. This again provides
the confirmation that the probabilities of a new trend are present an we as traders need to start
paying serious attention to the trade on our watch list. See Chart (5) Symbol JMP MACD slide
IF MONEY FLOW is now included into our end of day analysis to determine the validity of the
volume that we have now identified; it can provide us with a looking glass effect to determine
whether or not that volume is in fact real institutional and insider buying or not. Can you imagine
how your confidence level would change full well knowing that what you have found has the
people behind it that actually move prices from one level to another? This is the skill level that we
must invest in and train ourselves to arrive at now working every day in anticipation of finding
tracking and trading with these market players. See Chart (6) MONEY FLOW
The STOCHASTICS INDICATOR should be considered our chief scout or rather chief leading
indicator to confirm the high probabilities of future directional price movement. This it will all
calculate based on a relative comparison between where prices are tonight based on our EOD
analysis; as compared to x bars ago. I have chosen a 21 period look back for my trading. Before
priced moved Stochastics is clearly indicating what is shortly about to happen on the symbol JMP
See Chart (7)
STOCHASTICS
Now let us consider Trader B. Trader B has been properly trained as a professional and is
now able to detect and identify with institutional volume accumulation and its relative comparison
to key Indicator formations now giving him/ her an advanced white paper notice that what they
have in waiting is a substantially greater opportunity than Trader A .
With all the trading platforms available today is it easy to be swayed off course. By taking
the necessary time to educate yourself on the most important aspects of professional trading
it becomes second nature to spot turning points leading to the possibilities of a new trend, the
tracking of a trend and most importantly a futures contract or a stock that’s in waiting for a
substantial upside move. The critical nature of volume in this case being “an historical volume
spike or accumulated volume level identified at precisely the right time” guides you to the
true high probability trade vs. Trader A who will continue to make substandard trades and never
know the inner workings of what really moves prices from one direction to another. The obvious
question to ask yourself now becomes have you been trading on the A side or the B side?
Waiting for and trading with the correct volume level will put the risk/ reward ratio greatly in
your favor and your best positional advantage as a trader or investor is patience. It is always
better to wait until a significant or even historical volume level arrives before putting on a serious
position. This basic tenant has applied to the majority of the biggest moves in the history of the
securities market and still stands today as the mark of a professional trader. Volume is our trading
edge and puts it all in our favor. Once we learn how to employ its edge, we cross over to an
entirely different level of trading and investing.
Part 2: To be continued incorporating Group and Sector analysis for the final confirmation
before you trade!
Jeffrey A. Kilian: www.theinsidetechnician.com
Presenter of: BI-weekly Inside Market Analysis webinar
Developmental Trading Education: Equities trading and S&P500 EMINI Futures Market
90
Indecision – Powerful
Candlestick Reversal
Information
by Stephen W. Bigalow
Candlestick analysis outperforms most, if not all, technical trading techniques – diminishing
fundamental analysis to a mere spoke in the wheel. Inherent probabilities built into candlestick
signals foretell more than reversals. Through centuries of scrutiny the Japanese Rice traders
discovered what was formulating in the minds of investors causing the signals to perform so
predictably. Candlesticks depict a graphical representation of investor sentiment at specific
points in time signalling potential price reversals; strong pattern continuations; temporary
pullbacks; and more. These early indicators provide knowledgeable investors time to prepare
portfolio positioning and/or run short-term day trading strategies.
Significant research in candlestick analysis unveils there is more to it than merely
identifying trend reversals. Due to the accuracy of the if/then results of candlestick signals,
the candlestick investor gains valuable insights into whether a trend is producing false signals
or only temporary profit-taking. This becomes an essential tool to prevent exiting big-profit
trades too early. Armed with the ability to recognize and interpret what the candlestick signal
is revealing provides immense advantages. It allows investors to confidently close, or hold,
Chart #1 Doji at the trend reversal
91
positions with the security of the meaning behind the signal formation. One major profitable aspect for recognizing and preparing for a trend reversal is ‘indecision.’
Indecision can be based upon a one-day indecisive trading period, creating a Doji or a Spinning
Top, or indecision could appear in a series of time frames. That was evidence at the recent
market bottom with huge days to the downside, followed by huge day to the upside, followed
by a huge day to the downside, and another huge day to the upside. These type of market
conditions obviously make it hard to establish positions and make a profit. However, knowing
what the results of what an indecisive trading period should be allows an investor to prepare
for the next trend move. See Chart #1 Doji at the trend reversal
The Doji and the Spinning Top illustrate indecision between the Bulls and bears during the
same timeframe. These signals are usually a prelude to a trend reversal.
Indecision does not have to be demonstrated in a one-day signal such as a Doji or Spinning
Top. Through centuries of observations, the Japanese Rice traders have pointed out that major
price reversals will occur when indecision enters the trading arena. This can also be witnessed
in the Dow in the early part of August, 2011. Huge oscillating days, down 500 points, up 400
points, down 400 points, followed by another up day of another 350 points clearly indicated
the Bulls and the bears were battling. Where most investors may be dramatically confused
by this type of trading movement, the candlestick investor will be alerted to a change of the
previous trend. This allows for early positioning in the new trend. See Chart #2 DOW August
2011
Indecision can also be represented by large magnitude oscillation before a trend reversal.
Whether managing other people’s money or your own portfolio, candlestick analysis provides
insight into a change of a major trend. This potent information allows for the preparation of
Chart #2 DOW August 2011
92
establishing positions at the bottom or taking profits at the appropriate time at the top.
Understanding the rationale that is built into graphic depictions dramatically reduces the
injection of emotional trade decisions. Entering or exiting a position becomes greatly influenced
by the probabilities, not the surrounding rhetoric
extolled by so many experts. An extended uptrend will often have the so-called professionals
professing taking profits which is usually well before the trend is finally exhausted. Their
recommendations are usually based upon indicators that are not as well researched as
candlestick signals. See Chart #3 DOW May 2011
The uptrend in May 2010 came to an end with a Doji at the top, followed by huge oscillation
days.
The utilization of candlestick analysis primarily applies to high probability trades setups.
The ‘high probabilities’ are the results of actual trading performance in the past. The basic
premise of candlestick analysis is that investor sentiment occurs in the same manner over and
over in the same conditions of a market trend. Simple observations, such as most investors
panic sell at the bottom and buy exuberantly at the top allows for graphic recognition of when
those situations are occurring.
Most investors have a difficult time finding the correct profitable trading technique that is
going to lead them to successful trading. The risk factor becomes spending time and energy
and money to learn a trading technique. When positive results do not occur from a newfound
trading method, investors have a double question. Was the lack of profitability a result of
the trading method that did not work well or did their application of that trading method
not perform correctly? Candlestick analysis reduces the self-doubt. Candlestick signals work!
Otherwise they would not have been around for the last 400 years. An investor has the
comfort of knowing that learning candlestick analysis is the correct method for learning how
Chart #3 Down May 2011
93
to produce profits. If those profits do not occur, the analysis can be narrowed down to the
investor not yet learning how to apply that trading method correctly.
Over the past 25 years, since the introduction of candlestick analysis into the United States,
there has been a vast amount of training that has shown investors how to use candlestick
analysis correctly. The knowledge incorporated into the signals can be used to extensively
improve an investors mental trading capabilities. Each signal, and each pattern, can be
analyzed with the background knowledge of why that signal or pattern occurred. The Japanese
Rice traders dissected each trading signal and pattern to understand what investor sentiment
produced each signal and pattern and the corresponding results. This is extremely powerful
information. It puts each investor in the category of understanding the market movements as
those of a seasoned investor.
Learning how to utilize each signal and pattern in specific market conditions is relatively
easy. The graphic depiction of fear and greed is easily learned by one’s own greed. An investor
will easily remember the elements that put a successful trade together. Because investor
sentiment produces the same reoccurring results year after year, decade after decade, century
after century, the probabilities of be any in a correct trade at the correct time is dramatically
enhanced when it can be graphically analyzed with candlestick analysis.
There are no “secrets” in learning candlestick analysis. Becoming a successful investor
involves finding a trading method that work successfully and then learning how to use it
successfully. The Japanese Rice traders have left us with knowledge that can be used for all
trading entities. As long as there is in existence of fear and greed, candlestick signals will
graphically depict the emotions of investors. When these emotions, trading formations, are
recognized, it becomes very easy to position one-self in high probability trade situations.
Learn to use the candlestick signals correctly, and you will control your own investment future.
Exclusive offer - Mr. Bigalow’s Major Signals Education Package; an 8 hour video tutorial
for profitable trading utilizing candlestick signals and patterns for a $12 processing fee – This
is the same package selling for over $500 in his educational website – available through our
exclusive offer by clicking here .
Stephen W. Bigalow is author of “Profitable Candlestick Trading: Pinpointing Market Opportunities
to Maximize Profits” and “High Profit Candlestick Patterns” and is also principal of the leading
website on the Internet for providing information and educational material about Japanese
Candlestick investing. Over 22 years of extensive study and utilization of candlestick analysis
has produced an array of easy-to-learn educational material about Candlesticks. As one of
the leading Candlestick experts in the nation, Mr. Bigalow, through his consulting with major
trading firms, has developed multiple successful trading programs, utilized in his candlestick
trading hedge fund, for the day-trader to the long-term hold investor.
94
Protection and
Preference are
Personal
By Ron Keiser
e have never had more access from others to us or from us to others; or more
choices of how we facilitate that access. The one fact we cannot dispute is that the
access will use a personal digital technology device; such as a mobile phone, tablet,
notebook, desktop, etc. over some type of digital network. The evolution of technology has
provided each of us individually with the opportunity for to be a digitally connected to the
majority of the world. The current revolution with this evolution in technology is making all of
this technology small enough to comfortably carry; so we are now ubiquitously mobile.
This new freedom to not be tethered to the desktop and a physical wire connection; provides
us with a multitude of preferences, from how we facilitate access to what we access, where
we access it, and finally the amount of personal and professional information, some of which
is confidential, all of which is personal, we retain and maintain. This mobile revolution also
provides not only the opportunity, but even the expectation, of “always on” always being
available for access. This is very apparent in the daily lives of traders and investors dealing
with the many and always changing aspects of the world markets. It is now possible to access
and view the most current news, financial charts, and even execute trades anywhere using
mobile digital devices. There are 3 Cs that define the demands and benefits of this digital
evolution and mobile revolution on our daily lives:
Communication – with mobile phones, instant messaging, Voice over IP through computer
services, email, and even traditional land lines; we do and are expected to communicate more.
The traditional limitations of time, distance, and even availability have gone past being blurred
to practically being nonexistent.
Connectivity - usually is thought of in terms of the speed or bandwidth of an Internet
connection. However, more importantly today is the availability of connectivity to facilitate
communication. You need to be connected and many different forms of connectivity are
available: dial-up, broadband, cellular, satellite, WiFi, 3G, 4G, WiMax, etc. These technologies
make availability nearly geographically universal.
Content – is the underlying reason for the connectivity and communication; to receive
or impart content. Content, also known as, data comes in many forms, such as knowledge,
graphics, photos, video, and music. The two keys to data is always having
it available to call upon when the communication requires it, related to
that is never losing what you have acquired over time, because you
never know when you will need it again.
Each day it becomes more apparent of the importance to protect
the operation of your digital devices and the continual flow of these 3
Cs to the functioning of your personal, social, and professional trading
life. The access devices (mobile phones, tablets, and notebooks) seem
W
95
to keep multiplying and getting smaller; while becoming more powerful, and more mobile.
The need to always be connected to receive the latest market information and available for
professional or personal communication requires that when a device fails, is lost, or stolen that
you have a trusted single source to quickly call for assistance and service, and that service
provides compete professional service, just as so important to your trading clients, to keep
your personal data safe and get you back and operational in a very timely manner.
The mobile revolution requires true comprehensive protection for all your digital access
devices. Safe Reliable Computing offers the multiple preferences necessary to provide true
comprehensive protection of your financial investment in your devices, protection of your
professional commitment to be up to date and available for your clients, and protection or
your professional and personal data. Just as you earn the right to be the single source for your
client’s financial investments, the Traders World Safe Reliable Computing is your single source
for total protection.
Comprehensive protections include: Mobile Phones and Tablets:
24x7 Help Desk
Over 80 local and region repair facilities for walk-in or mail-in service
Accidental Damage – covers drops and liquid damage
GadgetTrak – Advanced theft tracking software
Unlimited Online Backup with Internet File Access
Computers:
24x7 Help Desk
24x7 Hardware Performance Monitoring
Next Business Day Onsite Repairs
GFI VIPRE Antivirus Software
Unlimited Online Data Backup with Internet File Access
GadgetTrak – Advanced theft tracking software
(Notebooks)
Safe Reliable computing offers you the personal preference of Extended Service Plans or
beginning on December 15th the new Total Protect Club (TPC) for individuals, families, or
businesses. The new TPC offers the same comprehensive services as the Service Plans; but
are designed for individuals with older devices that would not qualify for Service Plans and
for individuals that prefer to pay for repairs when they occur. TPC guarantees access to this
single source of services by paying a small membership fee and when a repair is required you
pay for services at discounted prices. The membership fee includes access to all services with
the addition of discounts for reconditioned mobile phones, new or reconditioned computers,
hardware upgrades, and supplies. The return on you membership fee investment is more than
100% if you take advantage of the discounted services and products available within TPC. Free
one year of unlimited online backup for anyone that signs up for the SRC Club membership
before Jan 1, 2012.
Stay connected; protect your mobile phone, tablet, computer, and personal data. Get all
the details and your protection.Go to www.safereliablecomputing.com
96
Review of XSitePro
Do You Need to Design and Market a
Website for Your
Trading Software, Course or Book?
O
By Larry Jacobs
ur subscribers have been studying technical analysis and ways to trade the financial
markets for years. Many have been so successful that they have developed their
own trading software, written courses, books and are teaching students their
trading skills. Unfortunately, most of these individuals don’t have the money or
the interest to hire a professional web design company and spend thousands of dollars for
construction of a website and the marketing of it necessary for it to be successful.
There are many software packages available to create websites. One such package is
Dreamweaver. We created the Traders World website with Dreamweaver, but it was extremely
difficult as the learning curve is very hard. It takes weeks and even possibly months to
understand and use all the functions of Dreamweaver. The program is also very expensive,
around $400.00. On top of that, to do a really good job with it you really need the full Creative
Suite that costs $1,400.
I recently heard about XsitePro from some our advertisers who were using it. Many of
Illustration #1
97
our advertisers are more just traders than they are website designers. They have very little
knowledge in this area. So when I heard they were using XSitePro to build their websites it
really opened my eyes when I saw the quality of the websites they were building. So I asked
XSitePro to do a review of it to help our potential subscribers that might want to promote their
trading products and services on the internet with a website. So here is what I found in the
review.
XsitePro, of course, is a software program that runs on your computer similar to Dreamweaver,
but it is much cheaper $297.00 and very easy to learn. It took me less than a week to fully
understand how to use all of its functions. It actually leads you through the website building
in a systematic process.
When you start it up, it simply asks you for questions such as your site name, your
description and then keywords. Next you select your template. See illustration #1. This part
is very impressive. The templates look like they are professionally built. You can modify the
templates easily with the Page Layout Manager if you want, but it is not really necessary. See
illustration #2.
In illustration #3 see how the software gives you a complete layout of the website structure.
You can create new pages, add text, graphics, videos or any content to them.
In illustration #4 you can see how the software gives you a page analysis tool. You can
run this analysis easily on every page you create and this gives you all the statistics of the
page, errors and even an SEO report, so the page will look good for Google, Yahoo, etc. The
software will also generate HTML Sitemaps. This helps Google and other search engines more
Illustration #2
98
easily spider the site and then put it in their search engines. You can also easily create RSS
Datafeeds for articles you write to spread across the internet.
The software also allows you to add Google Adsense, and affiliate links so you can be
paid by outside advertisers if you want. This is another way to make money with your site in
addition to your own products.
Putting the site on a server is also extremely easy. Just enter your domain name, FTP
Server, FTP Directory, FTP Username and Password. Then just click publish and the site is
published within a few minutes. Then you can easily change anything in the website and
republish it with a click of the same publish button.
XSitePro also gives you other optional tools to make your site even better and more professional:
1) XHEADERPRO gives you 5000 stunning header graphics plus the software to customize
them.
2) XCOMMENTPRO lets you add commenting and rating to any web page or web site
3) COMPLETE GUIDE TO WEBSITE BUILDING - takes you step by step through building
a website. I was able to take this course during the review and it is fantastic. It a very details
and easy to understand. It uses videos that teaches you everything about how to build a
website using XSitePro.
Illustration #3
99
4) COMPLETE GUIDE TO TRAFFIC - I also was able to take this course during the review. It
teaches you everything you need to know about how to get traffic to come to your website after
you build it. This is the most professional training course I have ever seen in website marketing.
It teaches you the top 26 traffic techniques. Some of the topics covered are participation, viral
marketing, word of mouth, article marketing, E-mail marketing, marketing affiliate programs,
video marketing, social media, guest posts, pay-per-click, webinars, teleseminars, web 2.0
properties and more. You learn the techniques to drive traffic to your website used by top
companies such as Amazon, eBay, Dell, Costco, JCPenney, Zappos, and Best Buy.
GURU GUIDE TO TRAFFIC - Learn what the greatest minds in traffic generation have to say
about the best ways to get visitors and sales today on your website. In this guide the 10 most
successful traffic generation titans on the planet show you how to generate tons of unique and
fresh visitors to your website. This guide will save you hundreds of hours of trial and error.
So if you have new trading software, a book, course or service and you want to build a new
website and promote it you can’t go wrong with XSitePro. This is the best tool for anyone
to start doing business on the internet. This is one of the best investments you can make.
Currently there is a limited special on the software for only $197.00 save $100. For more
detail information go to: http://www.xsitepro.com/index_r.html?p=xsiteprowebdesign
Illustration #4
100
Trading
with
Notebooks
H
igh end notebook workstations for
traders are in a special class of their
own. This is the first time that I have
felt comfortable testing and using one of these
notebook workstations for trading. Before
this time I tested a Dell, HP and a Lenovo
T410, which were both underpowered and
not capable for trading. I also tested a Sager
Notebook which was powerful, but it got too
hot and was very loud. The Lenovo Thinkpad
W520 for the first time in my testing brings a
notebook to the class of trading and fits the
trader better than any other notebook in my
opinion.
The Lenovo Thinkpad w520 is extremely
fast, in fact it is twice as fast as last years
w510. The reason is basically because of
the new Intel Sandy Bridge chipset that it
incorporates. Additionally the battery life on
the w520 dramatically eclipses the w510. The
battery can now easily last up to 6-7 hours
at the medium screen brightness. The heat
management and noise control is excellent
and better than any anything that I have
previously seen.
The w520 unit I used for this review had
the Intel Corei7 2720M processor (quad-core,
2.210GHz, 6MB Cache) 8GB of DDR 3 memory,
Intel Turbo Boost 2.0 3.30GHz, with Hyper
Threading. The screen was the 15.6” FHD
1920 x 1080 color, anti-glare, LED backlight,
16:9 aspect ratio. The chipset was the 1000
NVIDIA® Optimus™ 1000. Also included the
Hitachi 500GB 2.5” 7200RPM Hard Disk Drive.
It has an Ultrabay which can accommodate
101
another drive if necessary. The w520 has a
chassis dimensions of 14.68" x 9.65" x 1.291.44" The unit has an Intel 6300 WIFI and
a Intel 82579LM Gigabit Ethernet chipset.
The Thinkpad comes with Windows 7 Prox 64
os. It also comes with both USB 2.0 and the
new USB 3.0 ports. Esata, displayport and
modem ports. It has excellent speakers and
a microphone and even a Fingerprint reader
for security.
The Mini Docking Station Series 3 allows
one to output to 2 large monitors. The
notebook screen also works at the same time
giving you a total of three monitors. In my
case I used two 21-inch monitors on a stand.
All monitors, external keyboard, mouse,
printer, internet connection can be connected
to the docking station. When the w520 is set
down on the docking station and locks in,
all the connections are active. It is excellent
and convenient for any trader. It is entirely
plausible to have a docking station with
monitors at home and one a work. So all you
need to do is to pull the w520 off the docking
station and go home and just put it on the
dock at home. You have multiple monitors in
both places.
For those who now want total portability with
power I would highly recommend this setup.
The Intel SSD and the extra memory makes
this truly as good as a desktop for trading.
This can be purchased through Traders World
Magazine - Sonata Trading Computer. Go
to www.SonataTradingComputers.com for
details.
charts ©2011 eSignal
Superior Image Quality for Multiple
Monitor Setups
Do you need a high quality multiple monitor
system? I would recommend the Asus VS 23”
LED LCD monitors with a quad stand. Here are
the details.
Number of Screens: 1
Screen Size: 23”
Maximum Response Time: 2 ms
Aspect Ratio: 16:9
Horizontal Viewing Angle: 170°
Vertical Viewing Angle: 160°
Backlight Technology: LED
Maximum Resolution: 1920 x 1080
Standard Refresh Rate: 75 Hz
Color Supported: 16.7 Million Colors
Contrast Ratio: 50000000:1
Brightness: 250 Nit
Monitor provides increased brightness,
enhanced color saturation with less power
consumption, minimizes eye fatigue and is more
eco-friendly to the environment containing no
halogen, mercury or lead, compared with a
typical CCFL backlight.
The ASUS exclusive Splendid Video
102
Intelligence Technology employs a color engine
to automatically optimize image quality with
intelligent color, brightness, contrast and
sharpness corrections for the best results in
image preview, movie playback and trading.
ASCR Technology automatically adjusts the
luminance of the backlight for better displays
according to the image contents, and improves
the contrast ratio to 50,000,000:1 for more
realistic depictions of night scenes during games
or movies.
The ASUS VH238H’s super-fast 2ms (GTG)
response time ensures speedy color switching
to eliminates ghosting and tracers for smooth
motion video and trading performance.
ASUS now covers return shipping as well as
shipping back to the end user, and offers free
cross-shipping advanced swap for all urgent
LCD RMAs requiring further expedition. Now
you can get a replacement LCD as you send
your RMA, because good customer service just
makes sense. Monitors $199.00 each. Stands
are available in 2, 4, 6 and 8 configurations.
These monitor setups are available at:
www.SonataTradingComputers.com
Building the Perfect
Quiet Trading
Computer
By Larry Jacobs
Today trading computers require more power than ever before. They must run multiple monitors
so the trader can view dozens of charts, watch news websites and even listen and participate
in trading chat rooms. The unfortunate side effect is these types of powerful computers are
noisy. The major manufactures such as Dell and HP do not really design their computers
for low noise. They are generally made of low quality parts for profit. Companies that do
specialize in trading computers on the internet are more interested is designing computers
for power, not for silence. Many of these companies brag that their computers have speeds up
to 4.5GHz. They tell you that the computers are low noise, however, don’t believe them. You
can clearly see from the parts that they use, cases, video cards, case fans, and CPU fans that
these computers are clearly noisy!
Why do these high powerful trading computers produce noise? The reason is that when
you put a high performance CPU in a computer it will run hotter than a low powered CPU. The
stock CPU cooler provided by Intel will spin much faster to keep it cool. Also the fans in the
case and the power supply will also run faster and louder to keep the computer cool. These
are not low noise parts.
103
It is very important that a trading computer be quiet. The background noise of a trading
computer disrupts a trader’s concentration. The National Institute for Occupational Safety and
Health, says that ambient noise even affects the health of a person by increasing the stress
levels and can even affect a person’s high blood pressure, coronary disease, peptic ulcers and
migraine headaches. Additionally they say that the noise even impairs your function in the
prefrontal cortex, which is the emotional learning center that regulates planning, reasoning
and impulse control. Therefore, in my opinion, this may disrupt your capacity to think and
trade the markets clearly.
Your computer has a direct effect on your success in trading the markets for two reasons.
First an out-of-date low speed computer can’t keep up with today’s fast markets. It may
give you slow quotes, charts and even executions. This will cost your money. Second as I
said above, it is entirely possible that your noisy trading computer affects your higher brain
function, impairing your ability to trade successfully.
Traders World designed the Sonata Trading Computer to be quiet, yet very powerful. It is as
powerful as any other computer produced by those specialized companies that make trading
computers but yet quiet. Sonata is the only quiet trading computer manufactured in the world.
So how is the Sonata made to be quiet and yet very powerful. Let is look at what makes the
Sonata quiet:
The case used in the Sonata is designed for quietness. We use a specially made case,
which has soundproofing on both sides and the front panel to substantially reduce noise.
The front and rear 120mm fans in the case are large and they run slower yet push more
cooling air because of their size. The fans are controlled by the speed control in the bios of
the motherboard. The case does not have an open side or top openings which leaks noise, but
only the back. All noise is forced directly back to reduce noise. Air-flow comes in through the
front side ventilation louvers and the bottom of the case and out of the back to reduce noise.
The video cards used in this computer are powerful, and also use large 120mm fans to help
keep them silent.
The power supply used has a large 120mm fan on the bottom of the case forcing the airflow directly up and then out of the back of the case. Power supply is guaranteed for 5 years.
The CPU cooler used is the Hyper 212 which uses a large quiet anti-vibration 120mm fan
controlled by the motherboard bios.
The motherboard uses large heatsinks to control temperature with no small fans to make
noise. The motherboard can easily run (overclocked at full load at 4.5GHz) and idle at 3.4GHz.
Additionally the Sonata has the option of a Solid State Drive, which is also silent. It is faster
and more reliable.
So the perfect silent trading computer is the Sonata, with its combined silent case, video
card, motherboard, power supply and drives.
Sonata has a base configuration, Intel Core i7-2600 @3.8GHz, Asus P8P67 Certified B3
motherboard, 8GB DDR3 RAM, 1Terabyte SATA III Drive, 4 Monitor Support, Windows 7 64bit
OS with 1Yr. warranty for only $1477.00 (6-monitor support add $99, 8-monitor support add
$199.00, add a 128GB SSD for $225) comes with free shipping in the U.S. Does Not Include
Hawaii or Alaska. 30-Day Money Back Guarantee if you are not completely satisfied.
104
Traders Book Library
Classical and Modern
Technical Analysis
www.tradersworld.com
800-288-4266
A Unique Approach To Forecasting Market Reversal Points, A
comprehensive guide for predicting precise, price and time
turning points for any market. Price: $36.00
By Ivan Sargent This book is possibly one of most advanced books in technical
analysis you will read regarding price and time reversals. Knowing the Price
and time of a stocks reversal point is undeniably an important element for to
successful trading. Unlike most trading books which use indicators, oscillators,
and basic geometry to forecast the markets outcome; this technique uses a series of lines
which when accurately placed can deliver reversal points with amazing accuracy. Trend lines,
retracements lines, channels, fan lines, pivot points etc, all inspect a stock chart from the
outside, which is more or less the obvious point of view. While these techniques can give
probable predictions at times, for many of us this just isn’t enough. Now what would happen
if you were able to analyze charts from what I like to refer to as, “the inside” of the chart?
As you read on in the book, you soon will discover an amazing way find reversal points, and
finally realize that back doors to chart analysis do exist.
When attempting to look at the market from the inside the main thing you need to understand
is that the rules in which how the market is predicted changes completely. Normally when using
trend channels or retracement lines to determine the markets trend direction for instance, it’s
ok to allow the chart to slightly exceed or come close to either of these lines and still be in legal
limits for correct analysis. However these rules do not apply to this different type of analysis.
This type analysis requires that all lines be accurately placed for accurate predictions. It’s a
little more work, but at the end of the day it has its virtues.
When using tools which allow you to see the market from the inside the predictions that
manifest within the analysis are totally different than common technical analysis. Here are two
main occurrences that you will notice when working with this type of analysis. A) Exact target
points will be forecasted or, B) A complete miss of a target point, and nothing else.
This is not a case of a 50/50 hit or miss. When you apply this technique to the markets it
becomes a matter of line accuracy resulting in high target percentage. As you read on through
the book, you understand how to use this technique and see how easy and powerful this
technique can be when used in conjunction with other analysis.
105
Patterns of Gann Price: $159.00
By Granville Cooley This set of books [included within this bound volume]
is not about pulling the trigger. It is not a system on how to make a million
dollars in the market in the morning. It is about certain mathematical and
astronomical relationships between numbers and their possible application to
the number of W. D. Gann.
The Definitive Guide to Forecasting Using W.D. Gann’s Square
of Nine Price: $150.00
By Patrick Mikula It has been almost ten years since I wrote a book about W.D.
Gann’s forecasting tools. I wanted to return to this subject with a book that
would stand the test of time. This book was written with the intention of creating
the official book of record for all the Square of Nine forecasting methods. I
believe I have achieved that goal. This book contains virtually very Square of
Nine forecasting method.
Complete Stock Market Trading and Forecasting Course Price:
$529.00
By Michael Jenkins The author is a serious, highly successful, professional
trader. In his two books, Geometry of the Stock Market and Chart Reading For
Professional Traders, he shares some of his ideas on how he trades. Hungry for
more of his ideas and direction, many of his readers literally begged for more.
Jenkins has written this complete course in response to these requests. In his
books, Jenkins explains, among other concepts, how he uses some of Gann’s methods and
techniques, but he never mentions Gann. In this course, by contrast, he specifically states
that many of the ideas are those originally developed by Gann, and he goes into great detail
on how he personally uses these ideas and techniques. If you want a detailed, in depth course
on how to use Gann in your own trading, this may prove to be what you have been seeking
all this time.
W.D. Gann in Real-Time Trading Price: $69.00
By Larry Jacobs If you feel that you would like to do short term scalping or swing
trading in the markets, then this book might be for you. It illustrates many
short-term Gann mathematical trading techniques which have a high tendency
to work intraday. Various intraday time frames are shown and how they can be
used together to keep you in the direction of the market. 200 pages
106
Patterns & Ellipses Price: $49.95
By Larry Jacobs Stocks and futures move in elliptical paths. When a market makes
a gap, its price action usually passes into a new sphere. All its activity will remain
in the current sphere until it moves into another new sphere. This new book tells
you how to use ellipses along with detailed chart patterns to determine if a stock or
futures contract is bullish or bearish. 100 pages
Pyrapoint Price: $150.00
By Don Hall Mr. Hall discovered a secret from one of Gann’s associates “Reno” who
shared a desk with him on the floor of the Chicago Board of Trade. Apparently
Gann carried a piece of paper with him to the floor every time he made a
successful recorded trade. Mr. Hall found out what that paper was and developed
the Pyrapoint trading method around this. An easy to understand trading software
program was fully developed. It creates a natural trend channel and areas of both support
and resistance. It’s clearly tells you when the trend changes. 300 pages.
The Structure of Stock Prices Using Geometrical Angles Price:
$49.95
By Russell M. Sedlar “This chart based book shows how the Geometrical Angles
described by W.D. Gann, when used is this newly discovered way, literally become
the controlling force of stock price fluctuation, causing tops and bottoms to form
and trend lines to be determined.”
Gann Master Charts Unveiled Price: $49.95
By Larry Jacobs Complete 100 page book explaining how to use Gann’s Master
Square of Nine Chart, The Gann Hexagon Chart and the Gann Circle Chart. Many
articles on the square of nine are also included from past issues of Trades World
Magazine
The Geometry of Stock Market Profits Price: $45.00
By Michael Jenkins This book is about Jenkins’ proprietary techniques, with major
emphasis on cycle analysis, how he views and uses the methods of W. D. Gann,
and the geometry of time and price. You’ll find angles are important & how to
draw them correctly and more.
Geometry of the Markets Price: $49.00
By Bryce Gilmore Book explains the theory behind time in the markets, Ancient
Geometry and Numerology, Squaring Price Levels, Time Support and Resistance.
Heliocentric Planetary Cycles.
107
Chart Reading for Professional Traders Price: $75.00
By Michael Jenkins This book is a complete, comprehensive study on reading
charts, forecasting the market, time cycles, and trading strategies. Explains
reversal of trends, when to expect them, and how to know the trend has change.
Shows you how to forecast with great reliability how long the new trend will last
and its price target.
The Secret Science of the Stock Market Price: $149.00
By Michael Jenkins In this book Mr. Jenkins gives a start to finish ‘scientific’
examination of time and price forecasting techniques starting with basic line
vectors and advances the concepts to circles, squares, triangles, logarithms, music
structure and ratio analysis. These concepts are developed into a comprehensive
method that allows you to forecast any market with great accuracy. Mr. Jenkins
demonstrates how a few simple calculations would have predicted many of the greatest stock
market swings of the past seven years with accuracy down to the day and price targets within
one point on the market averages. This new book advances the work started in his other
books and course but goes much further revealing little known secret methods only a very
small handful of professionals know and in many cases he reveals proprietary techniques
never before revealed to the public at any price. The chapter on the Gann Square of Nine
is much more complete than 90% of courses available selling for hundreds to thousands of
dollars more. This chapter alone is worth several times the cost of the book but the secret
ratio analysis at the end of the book will truly change your trading habits forever. When you
finish this book there is little left to learn about advanced trading and forecasting techniques
with the rare exception of astrological methods, which are not covered in this work. This
book goes from beginning concepts to the most advanced so anyone can greatly benefit from
reading it. All concepts are demonstrated with actual chart histories. It is not, however, for
the casual investor who does not want to take the time to calculate a simple square root on a
hand held calculator. If you liked Mr. Jenkins’ previous books and/or his trading course, then
this one will easily surpass your expectations.
Simple Secrets of the Trading Master Price: $90.00
By Jack Winkleman In the ebb and flow of the markets over a longer time such as
one year or more, it is important to know what the market has done in the past.
Certain years seem to follow the patterns of previous years with uncanny likeness.
This is a book put together by Mr. Winkleman and is a very valuable tool. This book
tells a trader how to used past harmonic cycles for forecasting future trends. This
book is a picture of the markets since 1920 in Soybeans. As an added bonus, it has a track
record of the Dow Jones Cash Index from 1900 - 2006. Cycles are nothing more than repeating
patterns. Trends follow cycles. This book gives you the key cycles in the market. All you need
to know is what those repeating patterns are. That is why the historical charts become so
valuable and this is why this book is so important. With the content of the book along with
charts, it is nearly 200 pages in length.
108
The Art of The Trade by Jeff Rickerson Price: $24.95
In this book the author focuses on some of his basic theories such as The Seven Golden Keys
to unlocking unlimited trading profits/success. He introduces his UNIFIED THEORY of Price/Time
and THE POINT OF SINGULARITY. Also introduces to the reader Albert Einstein’s method of
predicting price movement. Reveals his Price/Time Quadrant Analysis and why knowing these
four quantrant’s are important to maximizing trading profits. Learn the Anatomy of Picking a Top
or Bottom and the simple formula for Trend/Profit as well as the Four Key principles to generating
MILLIONS in trading profits! He discusses the Cracking the Code & Unlocking the Secrets of
Trend/Profits. Finally learn “How to Accomplish your Investment Goals and the Secrets of The
Riches People.
The Art of the Trade II by Jeff Rickerson Price: $24.95
In his second book on trading the author reveals what Albert Einstein had to say about predicting
prices; (most traders never have learned this valuable trading idea by the one of the most
profound thinkers of our time!) How to apply a simple rule to generate 16 times more profit and
how to properly design and develop trading systems and the three most important aspects in
trading. He also discusses his Market Timing Matrix. He also discusses his Dynamic Trend Syntax
and Delta Neural Analysis. You will also learn a simple formula for calculating buying/selling
pressure within a market and how to trade it and The Ten Laws/Principles of Price Trend. Also
covers Options Trading Made Simple. Author also goes into how to use volume and price when
trading.
What Works on Wall Street, Fourth Edition: The Classic Guide
to the Best-Performing Investment Strategies of All Time by
O’shaughnessy, James P. Price $45.00
Historically tested long-term strategies that always outperform the market
“O’Shaughnessy’s conclusion that some strategies do produce consistently strong
results while others underperform could shake up the investment business.” —
Barron’s “What Works on Wall Street is indisputably a major contribution to
empirical research on the behavior of common stocks in the United States. . . . Conceivably, the
influence of What Works on Wall Street will prove immense.” —The Financial Analysts’ Journal
“O’Shaughnessy’s latest, What Works on Wall Street, is a serious inquiry into the investment
strategies that stand up under long-term scrutiny and is refreshing research for every investor.”
—Stocks and Commodities Recent history has witnessed one of the worst stock market beatings
ever. As a result, abysmal returns are being called “the new normal,” financial “experts” are
ringing the death knell of buy-and-hold, and investors’ faith in equities has hit an all-time low.
You have two choices. You can abandon the stock market based on what is happening today.
Or you can invest today based on what will happen in the future. Containing all new data, What
Works on Wall Street, Fourth Edition, is the only investing guide that lets you see today’s market
in its proper context— as part of the historical ebb and flow of the stock market. And when you
see the data, you’ll see there is no argument: Stocks work. Now in its second decade of helping
investors succeed with stocks, What Works on Wall Street continues to provide the most effective
investing strategies, presenting incontrovertible data on what works and what doesn’t. Updated
with current statistics and brand-new features, What Works on Wall Street offers data on almost
109
90 years of market performance, including: *Stocks ranked by market capitalization *Priceto-earnings ratios *EBITDA to enterprise value *Price-to-cash flow, -sales, and -book ratios
*Dividend, buyback, and shareholder yields *One-year earnings-per-share percentage changes
Providing you with unparalleled insights into stock performance going back to 1926, What Works
on Wall Street is a refreshingly calming, objective view of a subject that is usually wrapped in
drama, hyperbole, and opinions that are plain wrong. This comprehensive guide provides the
objective facts and winning strategies you need; all you have to do is make the decision to ignore
the so-called market experts and rely on the long-proven approach that has made What Works
on Wall Street an investing classic.
The Little Book of Stock Market Profits: The Best Strategies
of All Time Made Even Better (Little Books. Big Profits) Price:
$22.95
Over the years, various approaches to investing have emerged, but it’s fair to say
that some of them have been less than impressive. Today, the challenge for almost
every investor is finding the right ways to earn above average returns. The Little
Book of Stock Market Profits will show you exactly how to achieve this elusive goal. Author Mitch
Zacks—Senior Portfolio Manager at Zacks Investment Management—understands what it takes
to make it in even the most dynamic markets, and now, with The Little Book of Stock Market
Profits, he breaks down some of the best investing strategies of all time and reveals how you can
effectively incorporate them into your own investing endeavors. Engaging and informative, this
reliable guide takes you chapter by chapter through various strategies that will help you improve
your investment process, while allowing you to take advantage of certain market anomalies.
Along the way, it skillfully addresses: *Using momentum-based strategies and what type of
stocks this method works best with *Piggybacking on the trading decisions made by informed
individuals—from large shareholders to CEOs—through the use of publicly disclosed insider data
*Understanding Initial Public Offerings (IPOs) and whether they will help, or hurt, your portfolio
*Following specific rules when buying value stocks *Implementing an earnings accrual investment
strategy that helps you try to outperform the market by effectively focusing on the quality of
earnings *Handling earnings announcements and what to make of post-earnings announcement
drifts *Following seasonal patterns in your investing activities by looking at common calendar
anomalies such as the January Barometer, May/October Effect, and much more Rounding out
this detailed discussion of equity investing, Zacks touches upon the use of multifactor models in
this process. Here, you’ll learn how combining two or more different factors—for instance stocks
trading at attractive valuation metrics and exhibiting strong price momentum—can generate
returns that are greater than any one of the factors by itself. Investing can be difficult, but with
the right strategies you can improve your overall performance. The Little Book of Stock Market
Profits will show you how.
110
Mastering Market Timing: Using the Works of L.M. Lowry and
R.D. Wyckoff to Identify Key Market Turning Points Price:
$44.99
Combine the powerful, long-proven methods of Richard D. Wyckoff with the analyis
of Lowry Research. Renowned technical analysts Richard Dickson and Tracy Knudsen
help you gain deep new insights into price/volume interactions, and uncover emerging
trends faster--no math degree or deep technical analysis experience required.
Commodity Trader’s Almanac 2012: For Active Traders of
Futures, Forex, Stocks and ETFs Price: $45.00
An indispensable resource for today’s active commodity, currency, futures, and
ETF trader In the 2012 Edition of the Commodity Trader’s Almanac, Jeffrey Hirsch
once again teams up with veteran trader John Person to create an essential tool for
both professional traders and those just getting started, to help them understand
the complex and exciting world of alternatives. Created in a similar fashion to
the Stock Trader’s Almanac—trusted for over 40 years—the Commodity Trader’s Almanac is a
comprehensive guide featuring monthly strategies, patterns, trends, and trading techniques
geared towards the major commodities and currencies, as well as ETFs, futures, and options.
It also contains in-depth insights on various topics of interest to the active trader and investing
public; as well as market highlights that cover key supply, demand, and seasonal tendencies
on markets including crude oil, ethanol, and precious metals; critical agricultural products such
as corn, wheat, and cattle; and foreign currencies like the British pound and the Euro. The
Commodity Trader’s Almanac also describes how investors can utilize futures, options, and ETFs
in their endeavors. Helps you understand how commodity pricing works and offers great insight
into investing in them Alerts you to little-known market patterns and tendencies to help forecast
commodity market trends with accuracy and confidence Contains expanded coverage on timing
tools with tips on utilizing candlesticks and pivot points to better time seasonal trades, and more
Includes business cycle analysis and trading tips for the current climate Intended for active
traders and investors interested in making the most out of today’s commodity, ETF, futures,
options, and currencies markets, this guide will make you a better trade in the search for greater
profits.
111

Notes on Gap Theory - Traders World Magazine

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