2. Fibonacci, Gann, Elliott
Many people believe in the above methods, indicators. I am
skeptical about the usability of them. I'll tell you why ...
Fibonacci, Gann, Elliott - all of them bring the laws of
nature into the trading. These are formulas and laws that
can be found in nature and form certain patterns.
Each of these methods have an incredibly wide-array of
literature on the web. Personally, I tried to understand the
Gann concept at the beginning of my career, that took me
about 1.5 years. I have read about 5000 pages of Gann
documents, and to be honest, I did not get much out of
them for my trading. However, I learned a lot of interesting
things about how the world works and the numerological
rules hidden in the Egyptian pyramids :).
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3. It was a dead end
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Here's a really
"sick" example of
what I drew on the
basis of the charts
following the Gann
principles.
4. Tunnel Through the Air
Instead of trading the market, I was looking for the nuts,
but in vain. There are no nuts, but I was looking for them
at the beginning :(
Gann has a book titled โTunnel Through the Airโ. Basically,
it is a trading guide embedded into a romantic novel, but it
stipulates at the beginning that you will not understand
anything in it at first and you have to read it at least 3
times. Well, I think what he wants to tell in this opus is not
clear even after that. Gann is considered by many as a
mighty genius, and he claimed to know the gospel truth,
but only those "who are at the appropriate awareness
level" will understand his works. This shows that I was not
there :D.
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5. Man and Nature
I agree that nature has well-defined laws and rules. But I'm almost sure
that these cannot be put one-to-one onto the market. Many people have
written that mass psychosis and its "ups and downs" follow the laws of
nature, but I think this is not true. Markets might have followed some kind
of law at the beginning of the 1900's (when Gann lived), but I am sure
that they do not do so today.
Today, mostly people manipulate the market. Internet presents the news
within seconds, anywhere in the world. Announcements, news, data can
move heaven and earth on the markets. In the past, these spread in days.
Today, supporters of laws of nature try to find the nuts between HFT and
the news. I'm skeptical.
There were quite a few examples in the past showing what happened
when people interfered with the laws of nature. The market is the same. It
does not work by itself, it never went by itself.
Today, Brazilian soap operas - like the US debt ceiling crisis, QE1, QE2,
QE3, interest rate increase or decrease, oil production cut or release and
so on - provide good examples of that. Decisions of large market players
keep prices moving and volatility increasing. This is not a natural wave โฆ
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6. Afterwards...
Of course, afterwards you can pull the matching fibonacci,
angles or waves on anything. But I have not encountered
any method that would have predicted the movement in
prices simply on the basis of charts. Mainly because there
are always many processes taking place in the background,
that are not indicated by any chart formations.
If, for example, the weather in America is much colder than
they thought, because the polar vortex comes from Canada
again, the price of natural gas will increase, as they need
to heat more. This is not Fibonacci, not Elliott and not
Gann. We simply feel cold :)
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7. Feel free to ask me!
Email: gery@optionsrules.com
My webpage: http://www.optionsrules.com/
You can find me:
Facebook: https://www.facebook.com/OptionsRules1
YouTube: https://www.youtube.com/user/optionsrules
Twitter: https://twitter.com/optionsrules
LinkedIn: http://hu.linkedin.com/pub/gery-nagy/6a/513/261
Skype: opcioguru
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