Using Price Charts to Remove the Fear of Trading
HOW TO REMOVE FEAR BY USING CHARTS
By G. R. Harrison (2014)
As mentioned in yesterday’s post, most of the public has been conditioned by the media to expect traumatic upheavals in government and the economy at any moment.
This is either a gross mis-interpretation of economic conditions or an outright lie broadcast to further one’s opposite investment commitments.
It’s the old sleight-of-hand maneuver using the media instead of a pea under a walnut shell .
Let’s see how we can use charts to remove some of this unnecessary fear from our trading and investment decisions.
A nation’s currency is an excellent indicator of it’s underlying condition, but, short-term daily charts will seldom provide the important context we’ll need to make an accurate evaluation.
We’ll start with a major Forex currency pair; the Euro-US Dollar.
The top chart shows the Eur/Usd over the last year. Outside of perceiving the upwards nature of the trend, what do we really know? Not much really at all.
The fundamental core of a successful enterprise is to BUY at a discount or wholesale and SELL at premiums or mark-ups.
One needs to remember that the currency market is, in the end, still just a ‘market’ and the same principle can be found at work in it if one takes the time to look.
If we examine the activity of the last 5-Years, we find a market that has provided 10% and 20% discounts from the Highs and provided even more upside profit potential on the mark-ups from bottoms.
Lest, one forgets, these are multiple 20% profits from a currency during a time when the Banks are only paying out 1% to depositors of this very same currency into their vaults!
The chart above shows a pattern of buying and selling on an institutional level that has maintained it’s integrity for the last 5-years.
This is the basis for an excellent investment when using the correct tools to interpret the ongoing price movements into the future (see ‘The Excalibur Method‘ for one of the easiest and most accurate tools to use – George)
Now, here’s how to use a chart like this to remove news-generated fear from your investment decisions . . .
First note the extreme mark-ups (the Highs) and extreme discounts (the Lows). These are the points of maximum danger to a currency and the government that controls it. The threat of Inflation at the one extreme and Deflation at the other.
Markets at these extreme points need to be monitored closely to determine if there will be an important shift in the economy.
However, most of the time, these become only BUY and SELL opportunities for institutions (like banks) as discussed above.
Note the red circle on the third chart. This is where price action is now. You’ll need to note that this price level is NOT near the extremes mentioned above.
Therefore, it is extremely unlikely that there’s any financial crisis at hand that will affect the base currency.
In fact, at the momentum rate we’re presently in for this market, it’s unlikely that we’ll reach the upper mark-up limits before 2015.
Determining and knowing that fact, the influence of current news becomes diminished and unimportant to the larger picture of events under way.
Charts like these therefore, can provide provide you with the Knowledge that conquers fear, removes panic, prevents emotional decisions and so, increase one’s likelihood of Investment Success.- GR HARRISON
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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