Like most traders, I started trading Stocks, Futures, and Commodities through news, government reports, crop reports, occasional tips, and a gut. Needless to say, these were not very effective.
But then, in the late 1980s, I learned about a few price charts and graphical indicators.
I was impressed by the chart indicators because I thought in advance what the market would do at the time. The stochastic oscillator was really interesting, and it almost predicted when the market would move up or down.
But again, as most have found, these indicators are not really predictable. How can they simply break it down into averages, or volume, or a bunch of other historical data based on back-tracking, into two forward projection algorithms that have no more than five dice in a shake bowl with the future!
Now don’t get me wrong. Graphic indicators are quite useful and I continue to use them today (now 3 decades later). However, the market forecast is NOT what these indicators do best. However, they provide us with a lot of useful information, which also has its place among those who are mostly based on market forecasting methods.
That yes. “Market forecasting methods,” I said.
In the early 1990s, I learned how to apply Fibonacci ratios to market price action. It seemed like a weird idea then, until I decided to try my favorite Pork Bellies at the market. Over the next 6 weeks, I would catch almost all of the bottom or top in a few ticks, turning a small amount of money into a smaller amount of money (I was using borrowed funds). Eureka!
But it soon became my loss. It was my long initial stretch to catch up with all the new moves in the market and I often started to think that I couldn’t go wrong within a couple of ticks from the bottom or top. Wrong! I did a Live Cattle business of the future, so I was sure I had to turn it around, but it wasn’t. I held on to the losing trade because it was impossible for me to be wrong. I didn’t have to admit that I was a human being until I was wiped out. My golden goose became my golden card for the bust-villa.
A lesson was then learned, and it put me on the path to greater enlightenment. Market forecasting, in fact, was possible. However, market forecasts required the incorporation of discipline and confirmation, and that you can never be 100% accurate 100% of the time.
It was also pretty clear to me that the path to greater market forecasting would need to delve deeper into the reasons why the Fibonacci could be effective at times, and not so much at other times. This made me realize that everything revolves around “natural laws,” which are part of Fibonacci.
A search in the realm of natural law led me to the teachings of WD Gann. With Gann, I came to the calculation of time and price squares (also known as the Gann Wheel Nine Square), calculating angles, ratios, market geometry, and much more.
Armed with Fibonacci and Gann and all the variations that come with their deep understanding, my research pushed me beyond the stars. Yes, the influence of the Sun and the Moon, and some of the planets adjacent to our planet Earth. It just made sense!
Now I’m not talking about astrology. That’s not my cup of tea. I am a man of science, not mysticism or riddle. What I am talking about is astronomy, and the gravitational and seasonal effects of the planet’s movements and interactive effects.
So let’s simplify this.
As the moon orbits the Earth, it has an effect on water masses as well as on the Earth’s electromagnetic field. As a result we have graphic tides, and it has been shown that humans act differently (as a group) on full moons. The term “crazy” comes from the Latin “Luna”, which means “moon”.
While the Earth rotates every 24 hours (gives us days), it revolves around the Sun every 365 days (a year). Since the Earth is in an elliptical orbit around the Sun, it will move closer or farther away, and as a result, it will be what we see as “seasons”.
Now think about how these ‘seasons’ affect our markets and start to see the relationship.
Once I came to see the connection between the Fibonacci, the Gann, the geometric price patterns, the effects of the Moon and the Sun, it all came together in what is called the CYCLE!
The 24-hour cycle (day), the 90-day cycle (year), the 365-day cycle (year), the lunar cycle, and all other types of cycles occur simultaneously but have different effects in varying degrees. different markets!
Market price action is influenced by human behavior (we are buyers / sellers), supply and demand are affected by the seasons, which is a cycle, and human behavior can be affected by the moon. cycle, and so on.
Understanding how it affects the markets, and realizing that a large part of it can be revealed through a price chart and different perspectives, the market forecast became even more effective than the simple Fibonacci model. This model only looked closely at the markets, so sometimes effective and sometimes lacking. Real market forecasting requires knowledge of a variety of techniques that address different aspects of price behavior.
When the avid board reader becomes aware of these effects on price action, the claim that “market forecasts really work” becomes a lost cause and becomes part of the ritual of reading daily charts.