Market Timing using Time & Price Cycles
Catch a Trending Commodity Market
with Charts & Gann Techniques
This one comes from the KISS school of commodities and stock market trading systems - designed for the part-time trader who hasn't time or inclination to constantly monitor the financial markets and closely watch his computer all day.
- All commodities and stock market trading systems are trend following - it's just that the length of trend may be long or short. My intention was to find a commodities and stock market trading system that catches the long swings, filters out as many go nowhere whipsaws as possible and can be monitored without the use of a computer and with the minimum of time spent studying chart moves.
We all know stocks are constantly on the move. Do you know which stocks are at the top right now? If you are trading stocks, this free, dynamically updating list of the 50 Top Trending Stocks can be extremely helpful. This complimentary list is updated every day and is based on MarketsClub’s “Trade Triangle” and “Smart Scan” Technology.
Top Dividend Plays (Stock and ETF)…
When your baby-sitter knows that the market is on a roll, there is no question it’s a bull market! It may also be time to keep an eye out for a correction.
No one knows when a correction will take place and you don’t want to miss gains in a bull market. So what do you do?
Easy! Continue buying good companies with outstanding fundamentals, but look for “defensive” sectors and throw in some outstanding dividend payouts for good measure.
W.D. Gann inspired the use of swing charts as a filter for indicating trending movements. He used a combination of time frames, the most well known being 3-days, 7-days and his quarterly swing chart. Gann taught that the longer the time frame used, the more reliable and powerful was the buy or sell signal given.
My analysis uses a 14-day trend reversal. How do you plot it? Simply mark on some chart paper a vertical line when today's price is higher than it was 14-days ago and keep drawing on up until today's price is below that 14 days ago when you show the line coming down again. What could be simpler?
How then is a swing chart used? First, it gives a broad indication that the trend could continue in the direction of the current swing. Support and resistance areas are clearly shown and once the swing passes previous swing highs or goes under prior swing-lows, greater weight is given, Gann teaching that new highs should be bought and new lows sold.
However, as with all long term trend following systems - first pick a market with prolonged trending action. The British Pound is my current favorite - frequently embarking on long term trends with a minimum of whipsaw and sideways market price action.
Using the swing-chart to place trades, the swing commodity trading system is always in the market. Over three years prior to the 1992 bull, then spectacular bear run, the system has produced 48 trades with an impressive 2:1 win loose ratio. This producing a profit of 29.5 cents or $18,437.5 per contract. However the maximum drawdown was 19.5 cents - more than most would stomach.
By adding a simple rule of setting a maximum stop-loss of 2 cents, the maximum drawdown became 8 cents with profitability boosted to 49.5 cents or $30,937.5 per contract. After deducting $100 slippage and commission per trade, this easy to monitor trade system shows how a simple technique can produce impressive profits.
Gann's forecasts of price movements and his ability to multiply money was mind-boggling, not only for traders of that era but by any standard of today. For example, he would predict a stock (or commodity) trading at 145 would go to 164-7/8 but not to 165, and it would do exactly that.
William Delbert Gann - known world-wide as W. D. Gann. Gann is a legend in the world of Stock & Commodity trading. Born June 6, 1878 in Lufkin, Texas. W.D. Gann started commodity trading and stock market trading in 1902. In 1908 Gann moved to New York City opening his own brokerage firm, W.D.Gann & Co., located at 18th & Broadway. On rollover you only pay a fixed commission which is not tied to interest rates. After many decades of incredible trading success, W.D. Gann moved to Miami, Florida where he continued his writings and studies up until Mr. Gann's death on June 14 1955.
W.D. Gann's trading profits are estimated as high as $50,000,000. Keep in mind he traded in the first half of the century. Mr. Gann, in the presence of representatives of a major financial publication, made 286 trades in 25-market days, on both the long and short sides of the market. Of these 286 trades, and amazing 264 were profitable trades, which is an incredible 92% profitable transactions!
W. D. Gann Commodities Trading Course - 218-pages, plus charts hand-drawn by Gann with many W. D. Gann's hand-written annotations and written notes on the stocks & commodity charts, now available as an ebook...
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