As a trader of over 20 years, there has been a lot of trial and error. A lot of learning, it’s still continuing! I wanted to share some interesting pointers with the community;
People see charts really look deeper than that.
I regard a couple of men in trading terms as the “Greats” Would there be others you consider? Why?
Let’s start – the only order is the age (timestamp) rather than preference to their work.
Charles Henry Dow (November 6, 1851 – December 4, 1902) was an American journalist who co-founded Dow Jones & Company. Little known fact, Dow also co-founded The Wall Street Journal, which has become one of the most respected financial publications in the world. He also invented the Dow Jones Industrial Average as part of his research into market movements. This guy has his own chart.
He developed a series of principles for understanding and analyzing market behavior which later became known as Dow theory, the groundwork for technical analysis .
Dow theory explained
The Dow theory is based on the analysis of maximum and minimum market fluctuations to make accurate predictions on the direction of the market.
According to the Dow theory, the importance of these upward and downward movements is their position in relation to previous fluctuations. This method teaches investors to read a trading chart and to better understand what is happening with any asset at any given moment. With this simple analysis, even the most inexperienced can identify the context in which a financial instrument is evolving.
Furthermore, Charles Dow supported the common belief among all traders and technical analysts that an asset price and its resulting movements on a trading chart already have all necessary information already available and forecasted in order to make accurate predictions.
Based on his theory, he created the Dow Jones Industrial Index and the Dow Jones Rail Index (now known as Transportation Index), which were originally developed for the Wall Street Journal. Charles Dow created these stock indices as he believed that they would provide an accurate reflection of the economic and financial conditions of companies in two major economic sectors: the industrial and the railway (transportation) sectors.
This is another interesting topic in it’s own right, but not for this article.
“Pride of opinion has been responsible for the downfall of more men on Wall Street than any other factor.” Charles Dow.
Many of our modern techniques fit into Dow theory in some way, shape or form and most people do not realise this.
Ralph Nelson Elliott (28 July 1871 – 15 January 1948) was an American accountant and author, whose study of stock market data led him to develop the Wave Principle, a form of technical analysis that identifies trends in the financial markets. He proposed that market prices unfold in specific patterns, which practitioners today call Elliott waves .
Elliott Said “The forces that cause market trends have their origin in nature and human behaviour” as well as “Forces travel in waves, as demonstrated by Galileo, newton and other scientists.”
In the early 1930s, Elliott began his systematic study of seventy-five years of stock market data, including index charts with increments ranging from yearly to half-hourly. In1938, he detailed the results of his studies by publishing his third book, The Wave Principle.
Elliott stated that, while stock market prices may appear random and unpredictable, they actually follow predictable, natural laws and can be measured and forecast using Fibonacci numbers. Soon after the publication of The Wave Principle, Financial World magazine commissioned Elliott to write twelve articles (under the same title as his book) describing his new method of market forecasting.
In the early 1940s, Elliott expanded his theory to apply to all collective human behaviors. His final major work was his most comprehensive: Nature’s Law –The Secret of the Universe published in June, 1946, two years before he died.
In the years after Elliott’s death, other practitioners (including Charles Collins, Hamilton Bolton, Richard Russell and A.J. Frost) continued to use the wave principle and provide forecasts to investors. Frost and Robert Prechter wrote Elliott Wave Principle, published in 1978 (Prechter had come across Elliott’s works while working as a market technician at Merrill Lynch; his prominence as a forecaster during the bull market of the 1980s helped bring Elliott’s wave principle its greatest exposure up to that time).
This method has had a lot of popularity recently on social media
Richard Demille Wyckoff (1873–1934) was an early 20th-century pioneer in the technical approach to studying the stock market. He is considered one of the five “titans” of technical analysis , along with Dow, Gann , Elliott and Merrill. At age 15, he took a job as a stock runner for a New York brokerage. Afterwards, while still in his 20s, he became the head of his own firm. He also founded and, for nearly two decades wrote, and edited The Magazine of Wall Street, which, at one point, had more than 200,000 subscribers. Wyckoff was an avid student of the markets, as well as an active tape reader and trader. He observed the market activities and campaigns of the legendary stock operators of his time, including JP Morgan and Jesse Livermore. From his observations and interviews with those big-time traders, Wyckoff codified the best practices of Livermore and others into laws, principles and techniques of trading methodology, money management and mental discipline.
From his position, Wyckoff observed numerous retail investors being repeatedly fleeced. Consequently, he dedicated himself to instructing the public about “the real rules of the game” as played by the large interests, or “smart money.” In the 1930s, he founded a school which would later become the Stock Market Institute. The school’s central offering was a course that integrated the concepts that Wyckoff had learned about how to identify large operators’ accumulation and distribution of stock with how to take positions in harmony with these big players. His time-tested insights are as valid today as they were when first articulated.
Although it seems complex – the logic still holds strong and has been seen even in recent Bitcoin moves. (click article – below) to see the types of Schematics.
Wyckoff said “Successful tape reading is a study of Force; it requires ability to judge which side has the greatest pulling power and one must have the courage to go with that side.”
William Delbert Gann (June 6, 1878 – June 18, 1955) or WD Gann , was a finance trader who developed the technical analysis methods like the Gann angles and the Master Charts, where the latter is a collective name for his various tools like the Spiral Chart (also called the Square of Nine), the Hexagon Chart, and the Circle of 360 Gann market forecasting methods are purportedly based on geometry, astronomy and astrology, and ancient mathematics. Opinions are sharply divided on the value and relevance of his work. Gann authored a number of books and courses on shares and commodities trading.
Gann said “Time is more important than price. When time is up price will reverse.”
Another great man worth a mention, purely on these quotes 😉
If everyone is thinking alike, then no one is thinking.
Wyckoff would call this composite man logic!
Make yourself sheep and the wolves will eat you.
And this is how I feel the crypto market is currently looking.
Any others you think should be on the list, mention in comments and why?
This idea does not constitute as financial advice. It is for educational purposes only, our principle trader has over 20 years’ experience in stocks, ETF’s, and Forex. Hence each trade setup might have different hold times, entry or exit conditions, and will vary from the post/idea shared here. You can use the information from this post to make your own trading plan for the instrument discussed. Trading carries a risk; a high percentage of retail traders lose money. Please keep this in mind when entering any trade. Stay safe.