The Gartley Trading Method E-Book

Ross Beck

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: Wiley Trading Series
• Sprache: Englisch

Seitenzahl: 252

Veröffentlichungsjahr: 2010

Beschreibung

A detailed look at the technical pattern simply referred to today as the Gartley Pattern Gartley patterns are based on the work of H.M. Gartley, a prominent technical analyst best known for a particular retracement pattern that bears his name. In recent years, Gartley patterns-which reflect the underlying psychology of fear and greed in the markets-have received renewed interest. This definitive guide skillfully explains how to utilize the proven methods of H.M. Gartley to capture consistent profits in the financial markets. Page by page, you'll become familiar with Gartley's original work, how his patterns can be adapted to today's fast moving markets, and what it takes to make them work for you. * Examines how to identify and profit from the most powerful formation in the financial markets * Discusses the similarities, differences and the superiority of the Gartley Pattern compared to classical chart patterns including Elliott Wave * Shows how to apply filters to Gartley patterns to improve the probability of your trading opportunities, as well as specific rules where to enter and exit positions Gartley's pattern is based on a unique market position where most traders refuse to participate due to fear. This book reveals how you can overcome this fear, and how to profit from the most consistent and reliable pattern in the financial markets.

Leseprobe

Table of Contents

Title Page

Copyright Page

Dedication

Foreword

Preface

Acknowledgments

PART I - Foundations

CHAPTER 1 - Trading Myths and Reality

WHAT IS A TRADER?

PULLING THE TRIGGER

TRADING VERSUS GAMBLING

SETTING REALISTIC EXPECTATIONS

DEBUNKING UNREALISTIC EXPECTATIONS

CAN YOU SIT?

I’M A TRADER

DO I NEED A COMPUTER?

CHAPTER 2 - Technical Analysis 101

FUNDAMENTALS VERSUS TECHNICALS

SHOULD YOU PREDICT THE FUTURE?

SETTING UP CHARTS

SWING CHARTS

OSCILLATORS AND INDICATORS

TRADING IN THE WHITE SPACE

VOLUME

DATA SOURCES

CHAPTER 3 - The Gartley and Elliott Wave Relationship

TRENDS AND COUNTER TRENDS

THE ALL-IMPORTANT CORRECTIVE PHASE

FIBONACCI RATIOS

PRICE RETRACEMENTS

PRICE EXTENSIONS

THE BOTTOM LINE

PART II - The Gartley Pattern

CHAPTER 4 - The Gartley Pattern Revealed

“ONE OF THE BEST TRADING OPPORTUNITIES”

MODERN VERSIONS OF THE PATTERN

HISTORICAL SUMMARY

OBJECTIVE PATTERN CRITERIA

RETRACEMENT AND EXTENSION CLUSTERS

CHAPTER 5 - Gartley Methods Compared

BACK TO BASICS

“ONE OF THE BEST TRADING OPPORTUNITIES” REVISITED

NEW LABELING CONVENTIONS

WHICH FIBONACCI RATIOS TO USE

GARTLEY METHODS COMPARED

TREND CONTINUATION

TREND REVERSALS

THE BOTTOM LINE

PART III - Application

CHAPTER 6 - Entry and Exit Strategies

ENTRY STRATEGIES

EXIT STRATEGIES

TRADING MULTIPLE CONTRACTS

CHAPTER 7 - Case Studies

CASE STUDY NO. 1

CASE STUDY NO. 2

CASE STUDY NO. 3

CASE STUDY NO. 4

CHAPTER 8 - Plans and Journals

DEVELOPING A TRADING PLAN

SAMPLE TRADING PLAN

KEEPING A TRADING JOURNAL

CONCLUSION

APPENDIX A - Who Needs Elliott Wave?

APPENDIX B - “Gann’s” Mysterious Emblem

APPENDIX C - Wolfe Wave

Glossary

Bibliography

The Market Analyst Beck Toolkit

About the Author

Index

Founded in 1807, John Wiley & Sons is the oldest independent publishing company in the United States. With offices in North America, Europe, Australia, and Asia, Wiley is globally committed to developing and marketing print and electronic products and services for our customers’ professional and personal knowledge and understanding.

The Wiley Trading Series features books by traders who have survived the market’s ever-changing temperament and have prospered—some by reinventing systems, others by getting back to basics. Whether the reader is a novice trader, a professional, or somewhere in between, these books will provide the advice and strategies needed to prosper today and well into the future.

For a list of available titles, please visit our Web site at www.WileyFinance.com.

Copyright © 2010 by Ross L. Beck. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, [phone], fax [phone], or on the Web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, [phone], fax [phone], or online at http://www.wiley.com/go/permissions.

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

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Library of Congress Cataloging-in-Publication Data:

Beck, Ross L., 1964-

The Gartley trading method : new techniques to profit from the market’s most powerful formation / Ross L. Beck.

p. cm. - (Wiley trading series)

Includes bibliographical references and index.

ISBN 978-0-470-58354-8

1. Investments-Psychological aspects. 2. Investments-Decision making. 3. Gartley, H. M. I. Title.

HG4515.15.B43 2010

332.63’ 2042-dc22

2010015532

This book is dedicated to the Creator of the Universe whose name הךהי was the subject of W.D. Gann’s final book, “The Magic Word.”

Foreword

Ross Beck has done a splendid job describing one of the most logical and consistent patterns when trading any market whether it be stocks, bonds, commodities, or forex. Mr. Beck explains in detail how a Gartley Pattern is formed and also integrates part of the Elliott Wave principle in conjunction with the Gartley Pattern. I would think that H.M. Gartley would be proud of the effort and detail Mr. Beck conveys to his readers.

H.M. Gartley’s book, Profits in the Stock Market, was published in 1935—in the middle of the Great Depression—and sold at the incredible price of $1,500, roughly equivalent at the time to the price of three new Ford automobiles. To my mind, that was a small price to pay as the Gartley insights into the market are worth far more than three new cars.

The AB=CD pattern is found in all markets and all time frames. The pattern is the foundation of Gartley buy and sell patterns and is also an integral part of other market patterns. Importantly, the pattern is a measured move where the CD leg should be similar in length to the AB leg, although sometimes the CD leg will extend. There are other rules regarding interpretation and structure that readers should endeavor to understand before attempting to trade the patterns.

Mr. Beck’s book is noteworthy in that it provides excellent examples of the patterns and how to best use money management principles that are so important to becoming a consistently profitable trader. Personally, I think Mr. Beck has produced an important piece of trading history that will help anyone in need of a methodology that is consistently profitable over any time frame! I know nothing can make an author happier than presenting something that can change lives for the better.

Mr. Beck’s book is part of a larger area of financial market study, market geometry, which began in the 1930s with the work of W.D. Gann. Gann became famous for the use of Gann angles, which are now found in many charting software packages. Another important but often overlooked market technician was George Bayer who wrote a book called The Egg of Columbus, which once sold for $25,000 in the mid-1980s. The book described the progression of Fibonacci series using diagrams of birds, fish, and mammals as a type of mystical code that has parallels to the financial markets.

One unique interest Gann and Bayer shared was an interest in cycles. It is worth noting in an article by Lisa Burrell in the Harvard Business Review of November 2006 that cites research by Ilia D. Dichev and Troy D. Janes into stock prices during the 28.5 day cycle between a new moon and a full moon. The article states the cycles may have application to predicting stock prices.

This is not at all surprising, given that markets are fueled by the energy of market participants. Changes in peoples’ moods and behavior around moon cycles have been well documented throughout the years. And, of course, investor moods and emotions play a huge role in price behavior in the markets.

Finally, we should mention Bryce Gilmore of Australia—in many ways the father of contemporary market geometry—and author of the book Geometry of Markets. All of us owe Bryce a great deal of gratitude for discovering market geometry in the same manner that Gartley shared his discovery of the Gartley Pattern.

Mr. Beck’s book is a worthy addition to the long line of technical analysts and their books that have helped to unlock the secrets of the financial markets.

Larry Pesavento

Preface

Many successful traders around the world agree that there are distinct patterns that repeat in the financial markets. Each trader has a favorite—head and shoulders, Elliott Wave, and so on. However, you have to ask yourself, Are some of these patterns more reliable than others?

In The Gartley Trading Method, I will prove to you beyond any doubt that the Gartley Pattern is the mother of all trading patterns.

As a professional derivatives trader, I have been using the Gartley method for over a decade. I will begin our discussion with an explanation of the foundation laid by H.M. Gartley in his classic book Profits in the Stock Market. This discussion will be followed with a description of the historical evolution of the Gartley Pattern over the decades and uncover a dimension of the setup that has been overlooked for over 70 years.

Elliott Wave traders will be relieved to find out that Elliott Wave counts don’t matter anymore if you simply look for Gartley Patterns. In addition, you will learn how the original Gartley Pattern is actually a trade setup to trade Wave 3. Gann traders will be happy to read the information on W.D. Gann’s mystical emblem of the circle, square, and triangle symbol in Appendix B. Is the secret of this symbol finally unlocked?

After studying many books on technical analysis, I often noticed how often the techniques they presented almost overlap each other, yet I couldn’t seem to logically describe these similarities and put them to practical use for trading. I call the Gartley Pattern the missing link of technical analysis, because it is the mortar that binds most of the technical disciplines together. As you will see in Part Two, the Gartley Pattern fits within the context of most of the common classical trading patterns. In this sense, the pattern can be described as an “all-purpose” pattern. As with most patterns, it is a pattern that represents the psychology of the participants and therefore can be used on most liquid markets and most time frames.

It is my solemn responsibility as one human being to another to try to save you from yourself. If you continue to read this book, it will require you to undertake a vigorous self-examination to determine whether you should enter the trading arena. I will not make the occupation of trading look glamorous and a surefire way to get rich. It can be one of the most brutal and at times nauseating occupations of all time. Yet, if you have what it takes, you might be rewarded handsomely. If you don’t have what it takes, that’s OK, just admit it and stop fooling yourself and others. Admission is the first step of any twelve-step program. If you admit that you are more of a gambler than a trader, then return this book and buy one that will teach you how to count cards.

This book is more objective that a lot of the rather sensational material available in the trading field. It reminds me of the muscle magazines I would read as a teenager. It didn’t matter how many protein shakes I drank, supplements I took, or workouts I did. I could never come close to looking like the behemoths in the magazine advertisements. I really wanted to believe that there was a new scientific breakthrough that would allow me to purchase a supplement to give me the body of a Mr. Olympia competitor. But is that realistic? No. The realistic part of competitive bodybuilding has more to do with the illegal use and abuse of anabolic steroids, a subject avoided by most of the sponsors of bodybuilding competitions and magazines. So it is with trading advertisements that make unrealistic claims. Remember the poster behind Mulder’s desk in The X-Files? It had a picture of a flying saucer with the caption, “I want to believe.”

I will not teach you any technical method that I have not used myself. In my quest for the holy grail, I have rediscovered a pattern that, has served me well over the years. Some may ask, If it is that good, why don’t you keep it to yourself and not share it? That is a good question and should be asked of anyone who is selling you anything to do with trading. Remember the movie Back to the Future 2? The character Biff obtained a sports book with the final scores of sporting events that were going to happen in the future. He quickly started placing bets on future events and became fabulously wealthy. In a similar vein, we may fantasize about having tomorrow’s Wall Street Journal today. I’m sure we could all agree that we could become rich with such information.

However, the more important point that I’m trying to make is this: Is it possible to lose money trading with tomorrow’s Wall Street Journal? Yes! Have you ever had the experience of putting a trade on perfectly, where it instantly started to make money, only to watch it over subsequent days turn into a loss? In view of the foregoing, it is a certainty that someone can have the best trade setups on the planet, the proverbial “holy grail,” and still lose money. Why? As we all know, the entry is only half (or less) of the equation. Trading is not just about good entry signals, it’s about good entry signals combined with even better exit strategies. Trade management is crucial and it wasn’t until I combined the best trade setup (the Gartley trading method) with proper exit strategies that I was able to make the Gartley Pattern work as part of a comprehensive trading system. A quick, cursory look for Gartley Pattern setups on a chart may lead someone to quickly write off the Gartley as a viable way to make money trading. However, as we will see in Part Three, “Application,” with proper money management, we can make a good system great, or turn a potential losing trade into a winner with sound money management principles.

Novice to expert traders should be able to glean something from The Gartley Trading Method, which has as one of its main messages “Do more of what works and less of what doesn’t.” After reading The Gartley Trading Method, you will start to question all that you ever knew about technical patterns, and you will learn a comprehensive trading method, from start to finish, based on natural law and timeless principles.

Acknowledgments

First, I would like to thank my mom and my loving wife Lindsay—thanks for your patience, Zeeta! Next, my children Ceara, Hadrian, Aisha, and Trajan (aka Cearup, Gin, Lala and Purple Fish)—I will always love you. In addition, I must thank the legendary technicians who were not afraid to introduce original thought: W.D. Gann, H.M. Gartley, and William Garret. Further, I must acknowledge those market geometers still with us: Michael Jenkins, Robert Miner, and Larry Pesavento, along with special thanks to Bryce Gilmore for pioneering the use of modern market geometry for the twenty-first century! Last, but not least, I must thank Mathew and the boys at Market Analyst; Nikki and Cody at Lambert Gann; and Kate, Kevin, Meg, and Michael at John Wiley & Sons.