Anyone that is around the commodity or stock markets for very long starts reading about the “masters” of trading. If they (you) are like me they start to develop a reverential awe with regard to past master’s supposed trading abilities. How is it possible for someone to be so consistently right or to make so much money? Could it be that some past master’s trading abilities or supposed earnings could be larger than life? Could an entire trading record be based on one magazine article? We all are looking for the supposed “Holy Grail” …the trading method that is never wrong and requires no work. I think traders look for esoteric things as Gann’s or Bayer’s writings or things like astrology or cycles to take them to this given point. Is there anything wrong with this quest for trading perfection? If it is tempered with knowledge and a true desire to learn it is a never ending search that will last a lifetime.
There is a story of an ancient well loved, gracious and benevolent king who wanted to leave the world a legacy on which to base further knowledge and also to preserve all the knowledge that had been accumulated up until his time. He brought together all the wise and learned men of the kingdom and told them to put all knowledge down on paper so it could be recorded for all posterity…. both rich and poor were to benefit. He said they had 5 years to accomplish this. Well, the five years went quickly and the learned group arrived and presented the king with twelve VOLUMES of accumulated knowledge. The king briefly looked at the volumes and quickly made a decree for the group to reassemble and condense the knowledge so that the common man could understand it too. In a year the prestigious group was back with a single large volume. The king again briefly looked at the book and again sent the group of scholars on their way to condense it one more time. Again the year quickly passed and the assigned group came back with a single page.
This time the king read the entire page and said it was very good…but …still much too long. Again they were told to condense all knowledge so that the great and the meek, all, could understand it. The next year quickly passed, as the previous ones before it had. By this time many of the learned men had quit but a few persevered. They presented a SINGLE PARAGRAPH to the king. Surely, this time, they thought, it would be alright. The king’s eyes lit up when he read it. He said it was almost perfect. He asked them to try one more time. Condense it once more. The group left muttering but vowed to make one more condensation. This year went slowly by for the scholars. How could they condense all of the world’s knowledge into a length of less than a paragraph. Night and day they worked to do this. It was finally decided that they had succeeded. They sent a message and arranged an audience with the king. They further let it be known that they had taken all knowledge from all of recorded history and had put it in A SINGLE SENTENCE! They met with the king at their appointed time and handed the sheet with the single sentence to the king. The king read it. As he did the astute group of scholars saw his eyes light up again. Had they been successful… they waited to hear from the king. The king was overjoyed with what they had accomplished. He said they had, indeed, succeeded. On the sheet of paper was one sentence that described all knowledge up to that point. It read “THERE AIN’T NO-FREE LUNCH.”
Traders are hopelessly “hooked” on mysticism in the markets. If there is any doubt to this last statement I would suggest you look at the ads in this magazine that you are reading now. It may go by many different names. Gann angles, Elliott wave, Astrology and Natural law are buzz words and theories that come to mind. Does it exist within the confines of tradeable markets. The answer in my mind has to be a resounding YES!!!! When we hear the word mysticism it conjures up visions in our minds of fortune tellers or people gazing into a crystal ball. Webster’s New World dictionary defines mysticism this way: belief in direct or Intuitive attainment of communion with God or of spiritual truths.
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If we could understand the LAWS OF GOD wouldn’t that make our trading easier? Read 2 Corinthians 5:18. Gann stated many times in his writings that the Bible would teach you all you needed to know about trading. He also said it should be read more than once. Perhaps it would do any country good if everyone read the Bible more than once. His square of 144 comes directly from the Bible. Many of Bayer’s writings focus on Biblical truths. If we had “TH-E TRADER’S HANDBOOK of DIVINE NATURAL LAW” written by the Lord we would all be 100% traders. It is my belief that bits and pieces have been discovered by many of the past “giants” of trading. Many of today’s successful traders use these laws both knowingly and unknowing in their day to day trading. Many repetitive cycles are related to the various orbits of the planets. Didn’t the Lord create them too? My research has always been to understand the why of the markets and then apply it to my trading. Do Gann angles apply to natural law. Of course they do! Does Elliott wave fit in? Yes, it is also there. How are we to discern which, if any, is the trading method that will work for us? Do we need it all?
Let’s use an analogy to understand mysticism or Natural Law. When we drive down the street we should marvel at this great invention called the automobile. I am typing this article on a Macintosh computer. Both of these inventions are modem day miracles. Our car can be as simple as a Ford Escort or as complicated and costly as a Mercedes 450 SEL. We don’t need all the bells and whistles to take our kids to school everyday. We choose to have what makes us happy (or what we can afford). By the same token we don’t need to know every Natural Law in the markets to make us successful. On any computer program for commodities there are so many indicators that it is hard to decide which one(s) to use. Do traders use them all. I have, perhaps, 35 indicators on my quote system. At the very maximum I use 3! Why? The rest are pure garbage!
Let’s get back to natural law. I seem to have wandered off for a minute. I strongly believe that all natural law originated with our Creator. I further contend that everything was set in motion at the time of creation. Is Astrology natural law or some tomfoolery dreamed up to separate people from their hard earned money? Both! Astrology and cycles go hand in hand. Indeed, each one is a different way to describe almost the same thing. I have constantly ridiculed and good naturally made fun of people that use astrology in their trading for a long time. I don’t intend to quit. Do I believe it is in sequence with other God inspired phenomena? Definitely! It is just one of the many Natural Laws that I do not use in trading. Let’s go back to our automobile analogy one more time. Our most basic auto today has an air conditioner, a cigarette lighter, seat belts, radio, rear window defogger and on and on and on. Do we need any of these things to go to the comer market (if there is such a thing anymore)? The answer is an obvious no. By the same token we only need a very few natural laws to tell us whether to be long or short. Which laws? There’s the problem! It takes a long time (more than one lifetime) to search through all things that seem to affect the markets. The search is endless!
America wants patience and wants it when? NOW! Commodity traders are basically the same. They (we) all know that the HG (Holy Grail) system exists and is just around the comer if we keep spending money for every new curve fitted $3,000 system to come out from this year’s IN trading guru. Technicals get stranger and stranger by the day. The people selling systems do to. (If you don’t believe that you should see me.) I am trying to make a point. The basic laws that govern the universe are unchangeable. Christ said, I’m the Alpha and the Omega, the same from the beginning to the end.” Doesn’t it seem to make more sense to rely on God inspired Natural Law in your trading than manage things like changing open interest? Your quest has begun when you take up the Natural Law banner. Good searching to you my friend.
Terry R Davis is a small business owner and trader. He has written two widely acclaimed courses on trading: Market Structure and Bubble Theory.
Give thanks you for committal to writing this.
Very take this