There are seven openings in the head – two eyes, two ears and two nostrils, equally divided, three on each side. From this we get our Law of Three and know the reason why the change comes after two and in the third period. The seventh opening in the head is the mouth and everything goes down. Study your seven-year periods and see how your markets go down and make tops and bottoms.
Most traders have heard the advice KISS–“Keep It Simple, Stupid.” As trite as it may sound, there is a good deal of wisdom behind the phrase. Similarly, everyone has heard the expression that the three most important rules in real estate are location, location, and location. From my perspective, the three most important rules in trading are focus, focus, and more focus.
Short-term traders don’t have the luxury of analyzing news or fancy indicators in the heat of battle. To prosper, you must have a framework from which to react quickly and ask questions later. For me, keeping it simple means focusing on price action, either on a daily, weekly, or intraday basis. The tale of the tape lies in listening to stock speak through the patterns created by buyers and sellers.
W. D. Gann traded for over 50 years and reportedly made $50,000,000.00 trading from the early 1900’s through the early 1950’s. In his Trading Course published in the early 1950’s, he said Geometric Angles were “the basis to his forecasting method”. Gann used many diverse complex and exotic techniques but angles and squaring seem to have been his primary methods. Therefore, this article concentrates mostly on the angles and squaring methods.
Live Cattle futures are one of the most difficult markets to trade. Bruce Babcock, who has done extensive testing of mechanical trading systems, has noted how few of them respond successfully to cattle data. What is the secret of this ancient market that has been an interest of traders since time immemorial? This article will attempt to suggest trading techniques combining heliocentric astrology, sidereal or Indian astrology, cyclical timing, and traditional technical analysis to improve your live cattle trading score.
The system I am going to demonstrate is based on some of W.D. Gann’s works. For those of you who are not familiar with Gann, he was a legendary stock and commodity trader who purportedly made over 50 million dollars in the markets using his unique mathematical trading techniques. The trading method I have developed is based on two of Gann’s most basic tools—his 1×1 or 45 degree angle and his trend line indicator. Refer to examples 1 and 2.
In The Elliott Wave Principle — A Critical Appraisal, Hamilton Bolton made this opening statement: As we have advanced through some of the most unpredictable economic climate imaginable, covering depression, major war, and postwar reconstruction and boom, I have noted how well Elliott’s Wave Principle has fitted into the facts of life as they have developed, and have accordingly gained more confidence that this Principle has a good quotient of basic value.
One of W. D. Gann’s methods to determine major trend changes is the “180 Degree” or 180-calendar day trend change. 180 degrees of the cycle of a year is equal to 180 days. Gann said to watch all markets that have been up or down that period of time. Let us look at a couple of markets on this basis. The December S & P made a contract low on January 7, 1985. Gann would be watching the area of July 7, 1985 for indications of a change in trend.
In Goodman Wave Theory an Intersection is a price where the points of two or more matrices or a matrix and a swing meet. The intersection of two swing points is not an intersection. To understand the Intersection Principle consider the 50% point in the 1-2 component in Diagram 2. ‘At the 50% point all the buyers and sellers in the swing are – in the aggregate – even. Half of the buyers and half of the sellers have profits; half of the buyers and half of the sellers have loses.’ The TP is an important equilibrium point. In the standard 50% component of two swings the EP of the secondary swing intersects the TP of the primary swing.
Goodman Wave Theory (‘GWT’ ‘Goodman’) was developed by trader Charles B. Goodman in the 1940s and 1950s. He used it very successfully in commodity futures and equities. GWT is derived from four simple and transparent concepts. In this article I discuss these – The Axiom of 1-2-3, the Propagation Principle, the Intersection Principle and the 3-C Principle. These will also demonstrate how Goodman differs from the more well-known Elliott. Finally, I will show the basic GWT trade setup. Continue reading Goodman Wave Theory: Part 1
The trendline for which Andrews is best known is the Median Line. The chart on this page shows an upward sloping Median Line. Three pivots are needed to draw a Median Line. Two of the pivots must be the high and low of a price swing. The mid-point between these first two points must be calculated. This is calculated through simple division and addition. The range between the high and low is divided by two and added to the low value. The same is done for the amount of time between the high and low. On the chart below, the middle point between pivots В and С is used to draw the Median Line.