Reality: The Road to Better Market Timing
WD Gann’s Key to Better Market Timing
Besides the great importance of being aligned with the dominant trend when trading or investing, WD Gann proved that there’s also the necessity of discerning a change in those trends (using market timing techniques) as early as possible.
Now, while the absolute top and bottom of a price move is what most newcomers to the markets think is what should be aimed for, a step back and analysis of the statistics will correct the notion that tops and bottoms are what should be the main focus of market timing.
In any time period, there will be an absolute high and low which will occur within that time frame. That is the Top and the Bottom of that market for that time period.
For a Year, which constitutes about 220 trading days, that means if we are trying to target those two single points of the High and the Low randomly, we’d have only 2 chances out of 220 of being correct in our assessments.
The percentage odds of that approach being ‘right-on-the-money’ correct are only .9 %!
Put another way, we have 99.1% odds of missing the High and the Low for the Year!
And, in the investing field, that means, at least half the time, selling too early to find the top (creating losses) and buying too early looking for the lowest low (also creating losses). That translates into loss for the trader and investor who tries to top and bottom pick at least 50% of the time!
‘Hope’ is fictional, Reality is self-defined
Tops and Bottoms to markets ARE Reality and, therefore, define themselves.
Hoping for a price top or bottom before the fact is, by definition, an act of fiction yielding Chaos.
Price Tops and Bottoms become ‘self-evident’ by what follows after they’re made.
To try and define ‘reality’ before Reality defines itself by it’s own price actions is an exercise that puts an investor at odds with Natural Law. This also means that market top and bottom pickers, unless aided by more reliable sources than their own intuition, will then, by definition, be wrong on the trend up to 99% of the time.
Fortunately, half of top and bottom pickers are just as likely to come into a trade late as early, so that put’s the odds a little more in favor on the win side of a trend, but, they’ll have missed the top or bottom day and therefore failed in their objective of picking the high and the low day.
In addition on the plus side, most use some sense of trend as an input into our decision-making and that little addition to the decision process raises the odds of being correct on market direction considerably.
However, leverage is introduced into the Game to take that advantage away again leading to the high percentage of losing trades.
Reducing one’s leverage in trading in order to increase the odds of success and profit over the long-term is a well-worn advice nugget from this writer to all who will heed it. Few do, however, or the statistics for success would be far better.
WD Gann: The Road to Better Market Timing
It’s far better to let the Reality of a Top or a Bottom present itself (through succeeding lower lows from a Top or succeeding higher lows after a Bottom) and to then take action based on what it’s telling us. That means that our best investment trend timing will occur AFTER the fact of a High or a Low becoming established, not before.
WD Gann knew and acted upon this successful strategy for over 50 years. A look at the angles on his charts shows that he was looking to establish positions after tops and bottoms were made, not before.
If that’s what a Master Trader like Mr. Gann did, then, as the Good Book says, we should: ‘. . . go and do likewise.’
The Advantages of ‘Early Bird’ Timing
If we let the Reality of price (defining a top or bottom to a trend) set the first part of our strategy for entering or exiting a market, we’re in an excellent position to catch that new trend IF we have a further way of confirming that top or bottom.
WD Gann wrote of using confirmations to aid in timing an entry or exit. Furthermore, he ALWAYS wrote of using STOPS to all trades. The fact that he insisted on using stops itself confirms that he wasn’t (nor can we ever be) absolutely sure that a high or a low was in place.
The stops are there in case our initial confirmations are premature and in error.
If we don’t anticipate a market high or low, but, instead follow the mathematics of the trend, it does make a difference in our potential results . . .
The above chart shows 2013 showing weekly bars. Instead of trying to find the lonely pair of red arrows indicating the low and the high for the year, we’ve followed WD Gann’s advice and
- First, waited for the market Lows and Highs to define themselves as Reality, then . . .
- Applied additional mathematical Principles (in this case using the Excalibur Method) to confirm the trigger point for shift in price momentum.
This is shown on both charts with yellow (golden) circles. In every case shown, these indication price points revealed themselves BEFORE the general public’s trading tools gave a clue. You’ll see this clearly on the chart below where a very popular trading tool’s signals are shown with the blue rectangles.
The Early Bird Factor represents the price difference between the two forms of analysis. It does add up! In this case in only 3-month’s time the difference between acting early or later amounted to over $5,000 in potential extra value per contract for Crude Oil.
Deal in Reality and let Tops and Bottoms announce themselves instead of guessing when they ‘might’ take place. I’m not saying that we can’t be quite sure of when they’ll occur, in fact, the WD Gann work done over the last decades proves just the opposite. But . . .
Those expectations of Highs or Lows need to prove themselves out before it’s prudent to act with the lowest amount of risk exposure.
WD Gann did exactly that using several unique tools of price and trend discovery many of which have been recently rediscovered. – George
MORE ARTICLES ABOUT WD GANN:
- WD Gann Lost Secrets Rediscovered
- WD Gann’s Data List Secrets
- The Wisdom of Solomon & ‘The Solomon Clue’
- WD GANN: Going Beyond Astrology
- Proper understanding and placement of WD Gann’s critical price angles.
- Secrets to WD Gann’s greatest public trade (1909 September Wheat)
- WD Gann’s Law of Vibration
- Gann’s Lost Swing Chart Technique; WD Gann’s Data List Secrets
- Many more unique WD Gann Articles: HERE.
- WD Gann’s personal hidden chart key
- Gann’s secret counting sequence to predict monthly turns
- Rediscovering the secrets to Gann’s vertical & horizontal angles
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THIS WEEK EACH CRUDE OIL FUTURES CONTRACT VALUE INCREASED BY OVER $4,000
The real question was how to detect this CRUDE OIL move early enough to take advantage of a move of this size.
Crude Oil futures price values advanced by over $4,000 ($4.00/barrel) and, the Excalibur Method trigger price points gave early warning that the downtrend had shifted and upside potential was ahead.
You can view the trigger points on the chart below as red rectangles.
Today’s chart is a closer examination of yesterday members only post (which can be read below by JOINING TODAY).
The chart shows that an even earlier turn indication could be found when using a shorter-term chart combined with the Excalibur Method and other
techniques from the Harrison-Gann Trade Secrets Master Course.
You can learn more about these from elsewhere on this website.. – George
CRUDE OIL STIRRINGS
This week has brought new energy to the Energy sector and renewed stirrings of the Crude Oil market.
Using several WD Gann derived techniques as confirmation, there’s a highly likely . . .
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Mr. Gann stated that it took study to understand the concepts upon which to build one’s trading techniques and that certainly is true.
One of the ways to start is by reading the articles on this website in order to get a larger picture of Gann’s techniques and perspective.
WD Gann was a complex man who has proved to be worthy (in my experience) of the efforts spent in understanding and following him.
When it comes to understanding Gann’s works, never give up or surrender.
Even when faced with the seemingly complex and esoteric charts, papers and books. Press on. There is meaning and there are successful techniques to be discovered beneath much of the misunderstood charts, papers and courses. Never doubt it!
Now, on to the Crude Oil prediction:
Using several WD Gann derived techniques, there’s a highly likely upswing that’s now beginning to emerge in the Crude Oil market.
It’s still early but, heavy institutional buying seems to be coming quickly into this market and a new upswing in prices has already begun and is highly likely to take hold as long as the lows at the end of November continue to act as support.
The following chart will help clarify the trigger price points that have just been signaled . . .
Crude Oil prices have breached the important $95 price level to the upside.
As we’ve already experienced a 3-month pull-back in prices, this market has recharged enough to make a good attempt at resuming it’s previous uptrend.
We’ll need to have prices remain or exceed this present price level by mid-month to confirm the resumption of the uptrend for Crude.
Crude Oil is a market that’s much more than a market. It can be a political as well as a weather predictor.
A resurgence of increasing prices could possibly reflect or predict more tensions in the Middle East.
And, of course, of more immediate concern will be the Seasonal demands of Winter 2013-2014.
Believe it or not, crude oil prices can also be predictive of the weather to be experienced in the immediate winter season and this upwards spike can be locked into the upcoming weather cycle in the months ahead and be a warning of a colder season than normal.
Seasonal charts should always be used as one of the tools of the trader.
One needs to know whether a present market is in a ‘normal’ market or an abnormal one.
Take Crude Oil for example . . .
We’ve just experienced 3 ‘normal’ months of seasonal decline as shown on the chart here.
There is some expected lift in prices in late December.
And, the major upswing in prices doesn’t normally occur until February.
However, we may be on the leading edge of this normal upswing pattern which is starting a little early this year.
It’s still early, but, as WD Gann wrote, markets need to be monitored and their Histories are repeated in the future as there is ‘ . . . nothing new under the Sun.’
Keep a watchful eye to get in early if this is a market of interest to you.
We may well be at the beginning of the next uptrend right now.
Use the techniques ( Excalibur Method, Gann Angles, etc. for confirmation. – George
A WD Gann Reality Check:
The S&P 500 Yearly Trend
The weekend is a good time to sit back and inject some reality into the conflicting market news bytes.
One of WD Gann’s cautions to traders was to make sure they had enough history (shown through their historical price charts) to provide perspective and insights into the larger picture of price movements.
Today’s presentation chart will do exactly that by taking in a YEARLY view and applying a price angle to a chart that has some real momentum behind it. That means that the trend we’re looking at has enough Time behind it as a factor as to present a reliable indicator of future expectations.
Let’s take a look at just why the US Stock Market has been booming:
It’s just a simple chart, but, reveals the secret to why the US Stock Market has been booming.
It also shows why all the ‘doom-and-gloomer’ crowd (who have been anticipating a crash ‘any day now’ for years!) have been wrong over-and-over again.
As you’ll note by looking at the upwards sloping arrow (indicating trend and momentum), there’s been no hesitation in the upward march of the market during the last 4 years.
Also . . .
It’s important to note that this is a YEARLY angle line denoting a powerful period of Time and Price.
It’s also important to know that this market is advancing at a shallow angle and not at a 45 degree angle. We can draw an important conclusion from this: That Price is not getting too far ahead of Time in this market which can happen with too steep an angle of price change.
Also, please note that the red rectangle in the upper right part of the chart shows where there’s a very high probability that institutional selling will come into the market potentially creating a turn in price.
With the amount of enthusiastic institutional buyers in play, there’s also a possibility of a quick spike upwards in price before the next turn occurs.
There’s a blue rectangle on the chart that describes the price area where such an extreme upwards move could top out for your reference. [/private_WD GANN TRADING SECRETS GROUP]
To summarize, the stock market yearly trend is still sound and steady. All shorter-term news events and stories are just local ‘noise’ and need not create fear. – George
IMPORTANT GANN ANGLES IN PLAY
To update ourselves on market price realities of GOLD & SILVER and, at the same time, further distance ourselves from market propaganda let’s pull back to the solid world of mathematics, geometry and WD GANN.
By applying a sense of balance to market prices to separate time periods (Daily and Weekly) we can plot the angles which WD Gann made famous. I’m speaking now of the 45 degree angle applied in a disciplined way to the Gold & Silver markets.
You can view the results in the two charts following for both the Gold and the Silver markets.
The results will show that on the daily basis weakness in price persists.
First, the SILVER market which is the weaker of the two at present:
This market remains below it’s long-term 45 degree price angle and also it’s shorter-term Daily price angle (shown on the chart above).
The bottom line?
Silver remains weak and the pressure is to go still lower in price on just the momentum angle analysis alone.
As for the GOLD market, as you can see below, Gold has also adhered to the downward price pressure as indicated by the declining price angle shown for the daily prices.
The longer-term perspective for Gold prices is not as weak as the shorter-term lines indicate.
In fact, we’re about $300 above the critical angle from the 2013 High in Gold.
We’ve hit the support angle long-term four times this year so far, but, to touch it again would require a much larger fall in Gold prices (as mentioned $300 further downwards as of this date.
Gold prices are presently favoring a less steep descent of around $50 every 2-weeks as shown in the chart.
I haven’t altered my outlook on the present downtrend for the solid reasons presented by these techniques.[/private_WD GANN TRADING SECRETS GROUP]
Newcomers are always welcome to read the many articles that are on this website.
You can gain access by going to the lower part of this page and clicking on the many links there.
If you’re an active trader, you’ll probably be interested in also visiting my other website called www.money-tigers.com where you’ll find that I predicted these lower Gold prices some time ago using other techniques (like the Excalibur Method). Note that there are over 4-years of archived posts there with many, many spot-on predictions.
I’d like to point out that this is a tribute to technique rather than ego and that the techniques applied were developed from my many decades of research into Gann materials and personal research derived or inspired by Mr. Gann’s work. – George
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