盈利魔法之股票交易时机的选择.doc

WISDOMBut where can wisdom be found?And where is the source of understanding?No man knows the way to it;It is not found in the land of living men.The depths of ocean say, It is not in us,And the sea says, It is not with me.1Red gold cannot buy it,Nor can its price be weighed out in silver;It cannot be set in scales against gold of Ophir,Against precious cornelian or lapis lazuli;Gold and crystal are not to be matched with it,No work in fine gold can be bartered for it;Black coral and alabaster are not worth mention,And a parcel of wisdom fetches more than red coral;Topaz from Ethiopia is not to be matched with it,It cannot be set in the scales against pure gold.Where then does wisdom come from?And where is the source of understanding?No creature on earth can see it,And it is hidden from the birds of the air.Destruction and death say,We know of it only by report.1But God understands the way to it,He alone knows its source;For he can see to the ends of the earthAnd he surveys everything under heaven.When he made a counterpose for the windAnd measured out the waters in proportion,When he laid down a limit for the rainAnd a path for the thunderstorm,Even then he saw wisdom and took stock of it,He considered it and fathomed its very depths.And he said to man:The reverence of the Lord is wisdom,And to turn from evil is understanding.(JOB 28)DEDICATEDTo Mr. Gann, a truly remarkable man, Thanks. You were right. If you seek, you will find. I wonder if you ever knew what your work would do. I wish we could have met. I believe we would have liked each other. We were just in different circles. Oh, well, as you said-big circles and little circles, old circles and young circles, past circles and future circles, will all come together and square out in time.UNTIL THAT TIME, RESPECTFULLY, THE SEEKERPREFACEThis story is a true story of a strange and curious search for a strange and curious secret of a strange and curious man who died almost 30 years ago.I have simply called myself The Seeker because we are all seekers. The final THAT WHICH IS SOUGHT of all our seeking is the same. However, we have many paths available to us. Some of us seek this THAT WHICH IS SOUGHT in material things of different kinds. Some of us seek IT in mysteries and secrets. My search was in both areas simultaneously in the commodity markets and the W.D. Gann trading philosophy. It is my hope that you can benefit from my search and that I can show you a proper path to take that will allow you both profitable and enriching experiences in both the markets and in life.As I said, MY STORY is a strange, curious one. When I try to recall it and write it for you, I keep running into a problem. The problem is-that the end of the story was the beginning and beginning of the story was the ending-except it was before the beginning. I know that I am not making myself very clear, but that is as well as I can say it for now. Perhaps it will clear up somewhat as I tell it.The real beginning of MY STORY11 was when I paid my trusted friend for the Master Time Factor, which he did not have. He just took my money and gave me nothing in return but a series of practically meaningless numbers and rules, which were devastating if used in the markets.One of the reasons that made the story curious and strange was that I already had the key to find the Master Time Factor, but I hadnt looked at it or read it in years. I paid my friend for something he didnt give me, but I GAVE him the real thing that I PAID him for, which he didnt give me. Very strange! You understand-I bought something from him but at the same time I gave him the thing that I was trying to buy from him-the thing that he did not have; but which I already had and gave to him. Neither of us knew it at time. Even today, two years later, he will not know the value of the thing that I gave him, unless he happens to read these words. EVEN THEN, HE WILL HAVE TO TAKE THAT THING AND LIVE IT, rather than read it. That thing was more useful than the Master Time Factor, and in fact, it is what we are all looking for when we desire the knowledge of the Master Time Factor.It is a strange, curious fact- the living of this thing makes it comes alive. The reading of it is just words.The thing that I am talking about is The Seekers Creed. It is in Appendix V in the Appendices.Until this very day my friend was the only person I had ever given My Creed to. Now, I give it to you. I hope you will PROVE IT-HOLD FAST TO IT-THEN GIVE IT TO YOUR FAMILY, CHILDREN, and AND FRIENDS. IT IS MORE VALUABLE THAN SILVER OR GOLDOR THE MASTER TIME FACTOR!THE SEEKER August 8, 1983TABLE OF CONTENTSChapter 1 - Introduction - My Story Begins 1Chapter 2 - Disaster For An April Fool 8Chapter 3 - What Next? Or More Aptly Where Now?13Chapter 4 - You Must Destruct Before You Can Construct. 16Chapter 5-1 Begin Again 19Chapter 6 - Stock Market,Astrology,Mindset,Mr. Gann & Me. 24 Chapter 7-1 Discover the Legendary Master Time Factor!. 35 Chapter 8 - Here Is A Path. You Could Try This One . 63Chapter 9 - The Seekers Creed67Chapter 10 - For Me - The Closing Of A Circle69Appendix I - Forecasting By Time CyclesAppendix II - Fragments of Gann Monograph Appendix III - Learn Before You Lose Sales Brochure . Appendix IV - Forecasting (The Master Time Factor Lesson) .Appendix V - The Seekers CreedAppendix VI - Master Time Factor Charts Of The DJIA Appendix VII - Weekly Charts Showing Master Time Factor . . .CHAPTER 1 INTRODUCTION -MY STORY BEGINS-The first time I ever heard of W.D. Gann was in the late spring of 1979- Looking back, I was in a transitional period of my life. For the previous eight years I had made my living in real estate brokerage and buying and selling for my own account. I started with houses and then became mostly Involved with buying and selling farms and farmland for myself. I always have enjoyed dealing with farms and land and I still enjoy it today. There is some undefinable satisfaction for me in the process of buying and selling land.I had several good years financially in my real estate business, but in 1978, I began to become concerned about the economy in general and the real estate market in particular. Farmland prices were climbing sharply in my area and most of the buying was by large farmers and professionals who kept bidding up the price of any farm that came on the market.In my opinion, one of the primary reasons for this was that the agricultural lenders were encouraging farmers to get bigger, bigger machinery and bigger farms, because bigger was supposed to mean the same thing as efficient. The financing was done primarily by the local farm lending agencies and in many cases the lenders were loaning 100% of the then inflated values. I did not see how this ever escalating cycle could continue. I began disposing of my inventory of farms and land and shedding myself of debt. I simply felt uncomfortable and could no longer bring myself to buy except on options- which I would sell the farm by the time the option expired or, if I hadnt been able to do so, I would simply forfeit my option money. At this same time I began looking around for something to do which would allow me to buy and sell even in down markets. I had not been able to figure out a way to do this in the real estate market that I was used to operating in. Also, I wanted something that would require no inventories to be financed, no employees to be responsible to, and as little overhead as possible.Someone, I have forgotten whom, mentioned to me one day that I should consider the stock market, or even better, the commodity markets. I had purchased some stocks several years earlier but they did not turn out to be that successful in regards to the return on my money. I decided then that I could do more with my money than putting it into stocks. So I had not been interested from that time in the stock market.I did begin thinking about the commodity markets, though, and I thought, here is an ideal business for me. I like buying and selling and I can operate in up times or down times. I began following the commodity quotes in the Wall Street Journal. ThenI sent off for some information about commodity trading from an advertisement. This led to my opening a trading account some few weeks later. My first trade was in corn. I knew absolutely nothing about commodities. I didnt even know to figure out the price fluctuations. I asked my-broker what should I start trading and he said corn because it was easy to trade and the moves were not that big. So, I bought corn, I lost $4000 on that trade before I learned that the moves might not be big, but I had lost more on that one trade than I had on any of my real estate transactions. Obviously, I needed to learn something more about this commodity trading before I put out more money. So, I purchased my first book on commodity trading through a mail order advertisement. Will you believe that the first book I ever purchased about commodity trading was a book by the name of How To Make Profits In Commodities by W.D. Gann?So, here I was- a man who knew nothing about the markets at all, getting my introduction by W.D. Gann. I was hooked on Gann from the very beginning. I remember, I received my copy of How To Make Profits- on my birthday in June 1979 and I took it with me on a vacation that my family and I were embarking on. The whole vacation I read that book. And read it. And read it. The vacation passed and I came home and ordered the W.D. Gann Commodities Course.The material in the book and the course seemed difficult for me to understand at times and in places; but, I thought that it was just the fact that I had not had any experience or knowledge about trading and that once I learned the language of the market I would no longer have trouble understanding. Later, I learned that others had that same difficulty too.During the Summer of 1979 I studied my Gann book and Gann Commodities Course. I began spending more time studying it than I did in my real estate business. This may have been a good thing because the farm real estate market topped out in the fall of 1979 and has been down every since. Our average sales have gone from approximately $1900 per acre down to the present average of approximately $1000 per acre. This fall has indications of being even lower due to the number of properties needing to be sold.Going back to the summer of 1979, I read the commodity course over and over. I tried to trade occasionally, but my results were not satisfactory at all. I thought I understood most of Mr. Ganns rules and ideas but when I tried to put them into practice they just did not work out that well. I couldnt tell which top or which bottom to trade by. So I just kept studying and at the same time I started buying other commodity books and was studying them too. By this time I thought that I had learned that the most important thing in the market was to trade by following the trend of the market. The problem was I could not determine the trend or by the time I did determine it, it seemed to be going the other way.I was trying to trade all the markets. When I saw something that looked like a good trade, I would trade that market. I really had no set of rules. I traded mostly by what I felt was a good trade. My trading was not profitable by any means, especially, if you consider the time and effort I was putting into it.I spent the fall and winter of 1979 studying Gann, occasionally trading, never too successfully, but not losing any real money. By this time I had ordered charts and advisory services of all kinds. I had purchased many books about the market. I had more money Invested In advisory services and books than I had made in the market. They were all interesting but none of them seemed to provide me with the necessary knowledge to trade the markets successfully.I had begun studying Mr. Ganns angles and squaring of price and time. I had many problems deciding what was valid and not valid with both the angles and the squaring of price and time. I had a Hewlett-Packard 38C calculator which had a date function on it that I found invaluable in calculating the number of days between dates.I decided to take the May Soybean Contract and learn all that I could about it. I reconstructed a monthly and weekly chart back to the time it first started trading. I calculated the squares in monthly, weekly, and daily time periods from the extreme low and high and from the opening of the contract in 1936. I could see some interesting relationships but always in hindsight. I was not able to trade profitably or consistently using the squaring of price and time. I spent many weeks trying to find some method of using squaring of price and time that I could make into a trading rule in line with Mr. Ganns rules about price and time as I understood them. I could not come up with anything. Then I looked at his rules on angles. I ran angles on all the bean charts. I ran angles on monthly charts back to 1936, weekly charts, and dally charts as far back as I could get them. I spent considerable time and money trying to get data that I could use and then making dally charts by hand. Again, I saw some Interesting correlations in hindsight, but nothing that I could trade off of in a consistent manner. I wondered if the scale were distorted by time and the difference in the range of prices today relative to the time that Mr. Gann wrote his rules.This led to my investigation of scales of price and their relationship to Mr. Ganns rules. On a farm near town I had a barn with a sixteen foot ceiling in it. I ordered Mr. Gann/s original charts (weekly) that he had sold, then Mr. Lambert had kept up to date and sold until Mr. Jones purchased the material and which had been kept to the current time. These charts were on the same scale on which Mr. Gann had based his rules. I built a wall in my barn to accommodate these charts because it was necessary for me to see what they looked like. It required a wall 14 feet high for me to incorporate the May, July, and November contracts. It was 53 feet long. The end result of this was the same- interesting, but difficult to utilize.Next I tried trading by Mr. Ganns rules based on his mechanical method and trend indicator. Again I had the same problem-unsatisfactory results. Either I was using stops too close or did not understand his rules properly. I must confess that I was trying to mix all his other rules in at the same time.Then I looked at his rules and comments on time. I had always been intrigued by time and its meanings. Over the years I had always had an interest in natural things and nature. History and philosophy were of particular interest to me. Of course, I found time periods everywhere. Too many of them in fact. I knew that Mr. Gann said that the time factor was the most important to observe and that when time was up look for the other yardsticks to confirm time. My problem was that I could not tell which time was up and which yardstick to look to confirm the time. There were just too many times and too many yardsticks for me.Then I got into calendar time and market time. I concluded from my reading of his material that he put greater emphasis on market time than he did on calendar time because of his descriptions about how to make charts. I went into great detail and study of market time. I arrived at the same dead-end path here. Then I studied calendar time. I did find that trend changes of some nature were likely to take place approximately every 45 days or so on the daily charts. The problem was that they were usually a swing of some proportion and again difficult for me to trade successfully.Then I got into the squares and calculators and master charts. They were like puzzles. I would work for days and weeks trying to fit together one piece of knowledge from them. I worked on them so much that I actually would see them in my sleep. End result? Same old story!Then in the summer of 1980 I attended a Gann trading seminar in Florida. I took my wife and son with me. The seminar was well-planned and it consisted of two parts. The first part was an analysis of Mr. Ganns time rules as applied to the markets today. The second part was a presentation on astrology. It was an interesting and useful seminar to me, especially the first part on time analysis. I listened to the part on astrology, but, I Just could not believe that it provided any answers on how to trade the markets in a consistent and profitable manner. I could not believe that converting a price to the longitude of a planet could possibly determine whether that particular price as based on the longitude of a planet would make top or bottom or meet resistance of any kind. (I still cant believe it today.) This presentation on astrology probably turned me off on astrology more than any other one thing. I could not bring myself to study something so ridiculous. I knew that there were valid tenets and observations in all old and ancient beliefs but I just would not believe that the prices of beans and other commodities could be judged by these signs and houses.The most useful and important benefit to me of this seminar was the people I met there. Three or four of those people have turned out to be very good friends and I would never have met them had I not attended the seminar.While attending this seminar I heard several day-traders talking about how they used Gann successfully in their day trading activities. And I heard someone say that a ticker or quote machine allowed one to acquire years of experience in a few weeks by watching all of the trades and quotes every day. When I came back home the first thing I did was to order a ticker so