Foreign Exchange: Setting Up a Market
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May 9, 2008
One of my favourite quotes from WD Gann is “Make it a rule to quit wasting your time, because time is money. Put in your time studying and you will be well repaid for it.”
Having studied all of David Bowden’s courses, from the Smarter Starter Pack to the Final Six Day Trading Incubator, I can appreciate the amount of work David had to do to really get to know his market “like a cow knows its calf.”
David didn’t decipher Gann’s techniques through luck. If this were the case, many others would have done so before David. He did it through plain and simple hard work. As the old saying goes, “The harder I work, the luckier I get."
People are often surprised when I tell them I don’t watch much television. They are even more surprised when I quote the dates and prices of major turns on the Euro chart that I trade. There is no big secret to learning a market. You don’t need to be a genius with numbers, or have a photographic memory. But there is a lot of truth in the saying “What you focus on, grows.”
If you focus on your favourite television show, you will get to know it pretty well. You will know the plot, the characters, the history, the names of the actors.
If you focus on a market, you learn its history – where it has been, the patterns it formed, how it behaved around extreme highs and lows.
I’m going to show you the way I started to learn the history of the Euro (EC-Spotv in ProfitSource).
First, I constructed a monthly bar chart, and I wrote the dates and prices of the monthly highs and lows on the chart. You can use the Wall Chart Wizard in ProfitSource to print out a chart for your own market, or you can draw it up by hand. Chart 1 below shows how I marked up my chart.
Chart 1
click here for more detail
I started with three simple numbers, and learnt them first. The All Time Low, a Major High, and a Major Low.
Next, I prepared a weekly chart. On the weekly chart, you can zoom in a little bit more, and pick up more highs and lows in your market. Chart 2 below shows a weekly bar chart of the Euro.
Chart 2
click here for more detail
After you have done your charts up, put them up on a wall so that you can view them regularly. Knowing the dates and prices of major highs and lows is so important in Gann Analysis, but this is just one of the benefits of having wall charts. Over time, you will notice patterns in the market, and be able to anticipate where the market may head, based on a repetition of a previous move.
This is just the beginning of your chart work, but it is very important, and it certainly helped me to get a better understanding of my market.
Be Prepared!
Mathew Barnes
Trading Tutors Team
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