When I was in graduate school, I was taught that markets were impossible to predict. It was a “random walk”. The best we could do was to invest for the long term and hope that the long term trend remained up. I didn’t question this at the time. I had never traded, and had no idea that it was something I would one day get me excited.
One day a trader friend taught me how to read a price chart. He did not know any esoteric secrets of the markets, but he taught me what he knew, which was just enough to get me interested. As I thought about the whole random walk theory, I realized that the big money Wall Street traders who were earning millions of dollars per year trading MUST know something that wasn’t taught anywhere – not even to MBA candidates.
The First Trade
I made my first trade (in soybeans) the summer of 1993. As it happened, there was a major flood that summer, and by sheer dumb luck within days amassed more money than I made in several months at my day job. I was hooked on trading for life, though I did not know it at the time. For a few weeks I made so much money I thought the only difference between me and Superman was his cape…. But then the markets turned. My huge profit quickly turned into a serious loss. It was the first of many hard lessons in the school of hard knocks.
I started studying. I found myself in a cycle of making money trading, then losing it. I became very good at picking the right time to enter a trade, but I often chose the wrong direction. I did not know where resistance and support on the chart was, so I had no way of knowing which way to trade.
Ralph Elliott & William Gann
I studied Elliott Wave theory. I discovered that it was true, but the knowledge wasn’t enough to make me a consistently profitable trader. I started trying to learn what William Gann knew. I eventually discovered that unlike Ralph Elliott’s secrets, William Gann’s secrets were not clearly documented anywhere. Not even in his many books. I persisted in the search until I finally discovered something that transformed my trading. My losses started getting smaller, and my profits started getting larger. I did not tell anyone what had changed. It was my secret.
About a year ago, I shared some of what I learned along the way with a young trader. He begged me to teach him until I finally relented. It was a cathartic time for me. I realized that helping him trade profitably did not cause me to lose any money. I began sharing information with others more freely.
In early 2013 I began following Bitcoin, as I was intrigued by the concept of cryptocurrencies, and the promise they hold to free humanity. I started trading them and rode the wave up last November. What an exciting time! I got out at the top at the end of November expecting to buy a new BMW. But then disaster struck. All my hard-earned coins were stolen off an unscrupulous exchange. Every last one. I determined I would never trade Bitcoin again, and focused my trading on Forex.
In August, some trader friends (fellow Gann students) asked me to collaborate with them on forecasting the end of the Bitcoin bear market, in time and price. I agreed, and together we concluded that Mid-December was a likely time. I made a mental note of the date and went back to trading Forex. But in early November I thought it was a propitious time to start trading Bitcoin again as December would soon arrive.
This long intro is offered in the hopes of helping people how I got here. Perhaps some will understand that there is a way to forecast market turns. It is not a random walk. As they used to say on X-Files: “The Truth is out there.” But to find it, you’ve got to be diligent, humble and open to the idea that the esoteric might be reality, and reality the illusion.
Let’s close with looking at this 8-hour chart, which highlights the five forecasts/trading suggestions offered on these pages in the last month. We were not perfect, but overall our success should suggest that there is a reason 10% of traders consistently take everyone else’s money. Markets may never be easy to trade, but there are discernible patterns and clues. The 10% look for the right clues. The 90% look in the wrong places, imho.
- A few days after my first article, I offered my 1st trading suggestion. Sell at $380.
- Nine days later my 2nd suggestion was to take profits at $326.
- The next day (12/19) I suggested going long at $316. I thought perhaps the anticipated 12/22 low came in a couple days early.
- The next day I thought I saw evidence that the low was in, and said so. (The market has still not yet categorically confirmed if this is true. However, six days later, it looks like it might be.)
- Three days later I suggested traders take long profits at $344. (Unfortunately, we missed the cycle top by $6.)
- My final trading suggestion has been made several times in the past several days. It is this: Pay attention to the long term support line drawn from the two lows from 10/2013 and 10/2014. If price closes below that line on a daily chart, be prepared for more selling. If price stays above that line, remain bullish, and prepare for a GREAT 2015.
The price ratio page shows there are currently more buyers than sellers.
Happy Trading all! Maybe we will meet again on these pages in the not-distant future.
Disclaimer: Trading is risky. Past success is not a guarantee of future profits. CCN.com assumes no liability for any losses suffered as a result of this analysis.
Last modified: March 4, 2021 4:42 PM