Use:
Guppy
EMA 8 14
RSI
to time the enter and exit of good FA stock
all psychological
use both fundamental and TA
but I cant use fundamental, no way to match big research company....
TA can only be use short term trading, not long term,,,
so find good FA stock, monitor and wait for the price to crash and then buy
FA cant be use ??? so how to know when is the bottom.. ??
but it reflect the psychological thinking of the masses at he time, so use to gaude the thinkinh of these investors, thus can be use for Guppy....
Is Technical Analysis a Waste of Time?
There are some investors who believe they can profit by finding patterns in historical stock prices or trading volume. These investors are attempting to profit from technical analysis. Kevin Grogan, my colleague at Buckingham Asset Management, reviewed some evidence on these strategies and found that these investors could probably find a more productive use for their time.
William Eckhardt (trader)
William Eckhardt is a commodities and futures trader and fund manager. He began trading in 1974 after four years of doctoral research at the University of Chicago in mathematical logic.
Education
Eckhardt never finished his PhD in mathematics, claiming that he left graduate school for the trading pits after an unexpected change of thesis advisors. Despite leaving academia prematurely, Eckhardt has published several papers in academic journals. In 1993, Eckhardt's article "Probability Theory and the Doomsday Argument" was published in the philosophical journal Mind. His follow-up article, "A Shooting-Room view of Doomsday" was published in The Journal of Philosophyin 1997. Both articles make arguments skeptical of the Doomsday Argument as formulated by John Leslie. In 2006, he published "Causal time asymmetry" in the journal Studies In History and Philosophy of Modern Physics.
Career
In 1991 he founded Eckhardt Trading Company ("ETC"): an alternative investment management firm, specializing in the trading of global financial futures andcommodities, which manages over $1 billion in managed accounts, domestic and offshore products. The firm's international clientele includes "fund of funds", corporate, private, and institutional investors.
Having a strong analytical and mathematical background, Eckhardt believes that the correct application of statistics and mathematical concepts is key for successful trading.[1] However, he highlights the difficulties in using these concepts, mentioning that "the analysis of commodity markets is prone to pitfalls in statistical inference, and if one uses these tools without having a good foundational understanding, it’s easy to get in trouble".
Prior to founding ETC, Eckhardt was also involved in the Turtle Trading experiment,[2] set up by partner, friend and fellow trader Richard Dennis. The goal of that experiment was to settle a philosophical disagreement between the two partners, to determine whether the skills of a successful trader could be reduced to a set of rules (i.e. can trading be taught?). The experience was overwhelmingly successful with novice traders ending up making $100 million. Eckhardt, who believed trading could not be taught, had effectively lost his bet with Dennis.
Gann studies have been used by active traders for decades and, even though the futures and stock markets have changed considerably, they remain a popular method of analyzing an asset's direction. New trading areas, such as the foreign exchange market and the invention of exchange-traded funds (ETFs) have also made it necessary to revisit some of the construction rules and application concepts. Although the basic construction of Gann angles remains the same, this article will explain why the changes in price levels and volatility have deemed it necessary to adjust a few key components. (For background reading, see A Discussion of Gann or The Gann Studies)
Basic Elements of Gann TheoryGann angles are a popular analysis and trading tool that are used to measure key elements, such as pattern, price and time. The often-debated topic of discussionamong technical analysts is that the past, the present and the future all exist at the same time on a Gann angle. When analyzing or trading the course of a particular market, the analyst or trader tries to get an idea of where the market has been, where it is in relation to that former bottom or top, and how to use the information to forecast future price action.
Basic Elements of Gann TheoryGann angles are a popular analysis and trading tool that are used to measure key elements, such as pattern, price and time. The often-debated topic of discussionamong technical analysts is that the past, the present and the future all exist at the same time on a Gann angle. When analyzing or trading the course of a particular market, the analyst or trader tries to get an idea of where the market has been, where it is in relation to that former bottom or top, and how to use the information to forecast future price action.
Gann Angles Versus TrendlinesOf all of W.D. Gann's trading techniques available, drawing angles to trade and forecast is probably the most popular analysis tool used by traders. Many traders still draw them on charts manually and even more use computerized technical analysis packages to place them on screens. Because of the relative ease traders today have at placing Gann angles on charts, many traders do not feel the need to actually explore when, how and why to use them. These angles are often compared to trendlines, but many people are unaware that they are not the same thing. (To learn about trendlines, see Track Stock Prices With Trendlines.)
A Gann angle is a diagonal line that moves at a uniform rate of speed. A trendline is created by connecting bottoms to bottoms in the case of an uptrend and tops to tops in the case of a downtrend. The benefit of drawing a Gann angle compared to a trendline is that it moves at a uniform rate of speed. This allows the analyst to forecast where the price is going to be on a particular date in the future. This is not to say that a Gann angle always predicts where the market will be, but the analyst will know where the Gann angle will be, which will help gauge the strength and direction of the trend. A trendline, on the other hand, does have some predictive value, but because of the constant adjustments that usually take place, it's unreliable for making long-term forecasts.
Past, Present and FutureAs mentioned earlier, the key concept to grasp when working with Gann angles is that the past, the present and the future all exist at the same time on the angles. This being said, the Gann angle can be used to forecast support andresistance, strength of direction and the timing of tops and bottoms.
Gann Angles Provide Support and Resistance
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| Source: TradeStation |
Using a Gann angle to forecast support and resistance is probably the most popular way they are used. Once the analyst determines the time period he or she is going to trade (monthly, weekly, daily) and properly scales the chart, the trader simply draws the three main Gann angles: the 1X2, 1X1 and 2X1 from main tops and bottoms. This technique frames the market, allowing the analyst to read the movement of the market inside this framework.
Uptrending angles provide the support and downtrending angles provide the resistance. Because the analyst knows where the angle is on the chart, he or she is able to determine whether to buy on support or sell at the resistance.
Traders should also note how the market rotates from angle to angle. This is known as the "rule of all angles". This rule states that when the market breaks one angle, it will move toward the next one.
Traders should also note how the market rotates from angle to angle. This is known as the "rule of all angles". This rule states that when the market breaks one angle, it will move toward the next one.
Another way to determine the support and resistance is to combine angles and horizontal lines. For example, often a downtrending Gann angle will cross a 50%retracement level. This combination will then set up a key resistance point. The same can be said for uptrending angles crossing a 50% level. This area becomes a key support point. If you have a long-term chart, you will sometimes see many angles clustering at or near the same price. These are called price clusters. The more angles clustering in a zone, the more important the support or resistance. (For related reading, see Support & Resistance Basics.)
Gann Angles Determine Strength and Weakness
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| Source: TradeStation |
The primary Gann angles are the 1X2, the 1X1 and the 2X1. The 1X2 means the angle is moving one unit of price for every two units of time. The 1X1 is moving one unit of price with one unit of time. Finally, the 2X1 moves two units of price with one unit of time. Using the same formula, angles can also be 1X8, 1X4, 4X1 and 8X1.
A proper chart scale is important to this type of analysis. Gann wanted the markets to have a square relationship so proper chart paper as well as a proper chart scale was important to his forecasting technique. Since his charts were "square", the 1X1 angle is often referred to as the 45-degree angle. But using degrees to draw the angle will only work if the chart is properly scaled.
Not only do the angles show support and resistance, but they also give the analyst a clue as to the strength of the market. Trading on or slightly above an uptrending 1X1 angle means that the market is balanced. When the market is trading on or slightly above an uptrending 2X1 angle, the market is in a strong uptrend. Trading at or near the 1X2 means the trend is not as strong. The strength of the market is reversed when looking at the market from the top down. Anything under the 1X1 is in a weak position. (For more insight, readGauging The Strength Of A Market Move.)
Gann Angles Can be Used for Timing
Not only do the angles show support and resistance, but they also give the analyst a clue as to the strength of the market. Trading on or slightly above an uptrending 1X1 angle means that the market is balanced. When the market is trading on or slightly above an uptrending 2X1 angle, the market is in a strong uptrend. Trading at or near the 1X2 means the trend is not as strong. The strength of the market is reversed when looking at the market from the top down. Anything under the 1X1 is in a weak position. (For more insight, readGauging The Strength Of A Market Move.)
Gann Angles Can be Used for Timing
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| Source: TradeStation |
Finally, Gann angles are also used to forecast important tops, bottoms and changes in trend. This is a mathematical technique known as squaring, which is used to determine time zones and when the market is likely to change direction. The basic concept is to expect a change in direction when the market has reached an equal unit of time and price up or down. This timing indicator works better on longer term charts, such as monthly or weekly charts; this is because the daily charts often have too many tops, bottoms and ranges to analyze. Like price action, these timing tools tend to work better when "clustered" with other time indicators.
ConclusionGann angles can be a valuable tool to the analyst or trader if used properly. Having an open mind and grasping the key concept that the past, present and future all exist at the same time on a Gann angle can help you analyze and trade a market with more accuracy. Learning the characteristics of the different markets in regard to volatility, price scale and how markets move within the Gann angle framework will help improve your analytical skills.
John W. Henry: Top Trader
Wisdom from John W. Henry:
I don’t believe that I am the only person who cannot predict future prices. No one consistently can predict anything, especially investors. Prices, not investors, predict the future. Despite this, investors hope or believe that they can predict the future, or someone else can. A lot of them look to you to predict what the next macroeconomic cycle will be. We rely on the fact that other investors are convinced that they can predict the future, and I believe that’s where our profits come from. I believe it’s that simple… when I was designing what turned out to be a trend following system…[that] approach–a mechanical and mathematical system–has not really changed at all. Yet the system continues to be successful today, even though there has been virtually no change to it over the last 18 years.
If one theme summarizes Henry’s philosophy, it is the knowledge that one cannot predict anything. Henry is a long-term follower. His philosophy is based on the premise that market prices, rather than market fundamentals, are the key aggregation of information needed to make investment decisions. He says, The markets are people’s expectations, and these expectations manifest themselves as price trends. We live in an uncertain world. One cannot predict the future of anything. In an uncertain world, identifying and following trends may be the only reasonable investment approach over the long term. Henry feels that a mechanical approach has more value since no scientific approach or solid testing can be applied to discretionary trading. Henry says that when he first researched the markets in the 1970s, he was looking for a methodology that would work through many market conditions. His research showed that long-term approaches work best over decades. There is an overwhelming desire to act in the face of adverse market moves. Usually it is termed ‘avoiding volatility’ with the assumption that volatility is bad. However, I found avoiding volatility really inhibits the ability to stay with the long-term trend. The desire to have close stops to preserve open trade equity has tremendous costs over decades. Long-term systems do not avoid volatility, they patiently sit through it. This reduces the occurrence of being forced out of a position that is in the middle of a long-term major move.
Q&A With John W. Henry
Q. How did you get started in money management, and what advice could you give to someone who would be interested in following in your footsteps?
A. How did I get started? I was hedging crops for farmland that I owned in a couple of states. I just seemed to do fairly well trading by the seat of my pants. It was a broker at Reynolds Securities in those days that asked me if I would manage money for farmers, because I seemed to do so well in the grain markets. That is sort of how it all started. I said no to hedging for farmers. I spent five years working on some ideas I had for trading, and one thing led to another. I came up with a [trend following] philosophy.
A. How did I get started? I was hedging crops for farmland that I owned in a couple of states. I just seemed to do fairly well trading by the seat of my pants. It was a broker at Reynolds Securities in those days that asked me if I would manage money for farmers, because I seemed to do so well in the grain markets. That is sort of how it all started. I said no to hedging for farmers. I spent five years working on some ideas I had for trading, and one thing led to another. I came up with a [trend following] philosophy.
Larry Williams
Larry Williams is a well known commodities trader and author with materials dating back to the early eighties. In these past three decades he has written several best sellers and has secured his reputation as a trading expert.
There are several reasons why Larry Williams and his books have become so popular. He gained much credibility when a book that he published correctly predicted the upswing of the market at a time when the majority was forecasting a slowdown.
Moreover, Larry Williams shocked people in 1987 with his impressive results at the Robbins World Cup Trading Championship. Throughout the event Williams was able to turn $10,000 into a little more than one million dollars. To this day results like that haven’t been reported; supposedly this is why some have accused him of foul play at that tournament.
Larry Williams is also known for developing and teaching his own trading system. His methods have been called unconventional and at times risky. However, each trader should have their own system that is tailored to their financial situation, risk/loss threshold, and emotions.
His trading style does not rely heavily on charts so much as it does on indicators and timing tools that he has personally developed. These are known as the Williams %R and the Ultimate Oscillator.
There are several reasons why Larry Williams and his books have become so popular. He gained much credibility when a book that he published correctly predicted the upswing of the market at a time when the majority was forecasting a slowdown.
Moreover, Larry Williams shocked people in 1987 with his impressive results at the Robbins World Cup Trading Championship. Throughout the event Williams was able to turn $10,000 into a little more than one million dollars. To this day results like that haven’t been reported; supposedly this is why some have accused him of foul play at that tournament.
Larry Williams is also known for developing and teaching his own trading system. His methods have been called unconventional and at times risky. However, each trader should have their own system that is tailored to their financial situation, risk/loss threshold, and emotions.
His trading style does not rely heavily on charts so much as it does on indicators and timing tools that he has personally developed. These are known as the Williams %R and the Ultimate Oscillator.
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