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PHI-Ellipse The PHI-ellipse is a unique Fibonacci trading tool that can only be drawn by a computer. PHI-ellipses identify underlying structures of price moves and circumvent price patterns. When a price pattern changes, the shape of the PHI-ellipse circumventing the re-spective market price pattern changes, too. Nearly all market price moves follow the pattern of a PHI-ellipse. PHI-ellipses are related to the Fibonacci ratio PHI in a similar way as the Fibonacci summation series, as well as corrections and ex-tensions. Generally speaking, the ratio of major axis a to minor axis b de-fines the shape of an ellipse. Ellipses are turned into PHI-ellipses in all cases where the ratio of major axis to minor axis ex = (a ÷ b) is a member number of the PHI series. To make PHI-ellipses work as tools for chart analysis, we have applied a (proprietary) transformation to the mathematical formula that describes the shape of the ellipse. We still consider the ratio of major axis a to minor axis b of the ellipse, but in a Fischer-transformed way, in mathematical terms ex = (a ÷ b)*. Read More: https://sacredtraders.com/phi-ellipse/

Rules For Trading In Commodities RULE 1. Buy at new high prices or old top levels. RULE 2. Buy when prices advance above old low price levels. RULE 3. Sell when prices decline below old top levels or high prices. RULE 4. Sell at new low price levels. As a general rule it is safer to wait until prices advance at least 2¢ above high levels and still more important to wait until they close above these levels before buying and at the same time it is safer to wait until prices decline 1/2¢ below old levels and still safer to wait until they close below these old levels before making a trade. RULE 5. Closing Prices. Wait to buy or sell until prices close above old highs or below old lows on the daily or weekly charts when markets are very active and moving fast; it is important to use the daily high and low chart and the closing price above highs or below lows. Prices may advance rapidly during the day but when it comes to closing time they may run off several cents and close lower than the previous day, and at the same time when there is a sharp decline, prices may go below the low of the previous day but when they close they close near the high levels; therefore, it is the closing price that is always important to keep up on the daily, weekly or monthly high or low charts. Read More: https://sacredtraders.com/rules-for-trading-in-commodities/

Defining The Regression Channel Beginning investors are continually told to “trade with the trend” or “the trend is your friend.” That’s because once a securiry enters an established trend it tends to persist in that direction as more investors realize it is moving a certain way and get on board. George Soros (a great investor) has observed another reason that price trends persist which he calls “reflexivity.” His intriguing point is that a company’s increasing stock prices are helpful to the company in a number of ways and so the company becomes more successful, making the stock price go up farther. Soros calls this a positive feedback loop. Interesting idea, isn’t it? Makes you want to spot the trend as early as possible. Exactly how you can you do this is the subject of this book. THE PROBLEM WITH PRICE TRENDS The common methods of defining price trends all have serious flaws. Anyone with an interest in buying or selling securities of any kind has to decide if the security’s price is moving the right way. Sometimes it is obvious. Usually there are naturally occuring contrary movements that can be very confusing. Is it possible to see what others can’t see? Is there a way to observe the “hidden strata” beneath the obvious market terrain? Can one predict turning points? Before we tackle these questions, let’s start with a short review of traditional methods of price trend analysis. Read More: https://sacredtraders.com/defining-the-regression-channel/

When to Buy, When to Sell: Stops, Hair-Trigger Stops, Progressive Stops Stop orders, or as everyone refers to them, stops, are the instructions given to the broker or the market or the computer to buy or sell a security depending on speciﬁc criteria. For example, “Sell my 100 shares of IBM if the market price declines to 99.” Or, “Buy 100 shares of IBM if the price rises to 101.” Stops may be used as indicated for buying and selling. Here in this discussion we are concerned only with the use of stops for protective purposes, that is, to stop a loss from running, or to protect an accumulated proﬁt. First, no stop system is perfect. Regardless of the way stops are calculated, and there are myriad ways, losses will occur, proﬁts will not be efﬁciently seized, money will be left on the table. It is unfortunately an imperfect world. But almost any stop system is better than indecision, confusion, and doubt. John Magee developed a number of stop systems, all of them good. Their use often depends on the particular market situation and can be relatively complex (consult Technical Analysis of Stock Trends, 8th ed.), but here we cover the basics. Two situations exist in which stops should be calculated and used: entry and proﬁt protection. Read More: https://sacredtraders.com/when-to-buy-when-to-sell-stops-hair-trigger-stops-progressive-stops/

Dead-Cat Bounce If you trade stocks long enough, you will probably run across this puppy: the dead-cat bounce. (I could not resist the pun). It acts as a warning to exit the stock quickly after a dramatic decline. The dead-cat bounce pattern (DCB) consists of three phases. First, the event sees prices decline over 30% in just a few sessions, the majority of the decline happening the first day. Second, prices bounce, recovering a portion of what they lost; and third, prices ease down, giving back all of their gains and more in the postbounce decline. Surprising findings include the following. If price gaps down on the first day, how long does it take for prices to rise far enough to cover the gap, that is, to close the gap? About half the time, the gap closes within 6 months, leaving half of all patterns still lower than where they started. After prices bounce, they move lower and over 75% make a low below that posted during the event decline. In many stocks, one DCB follows another, especially in a bear market. The final surprise is that DCBs with large event losses tend to bounce higher but take longer to peak than events with small losses. Read More: https://sacredtraders.com/dead-cat-bounce/

Profits Can Be Painful, Too Profitable situations can provide us with as much pain and anguish as the unprofitable if we work it right. If they are tied to our self-esteem—if we are trading ourselves instead of wheat or GM—a paper profit presents us with a real problem: to take it, book it, feel good, and perhaps see it soar to extremes, leaving us kicking our-selves for exiting too early, or perhaps to see the profit erode away and not be takeable at all. Ego involvement and a lack of a mature methodology can only result in pain and regret for the unequipped and uneducated trader. One thing is certain: If perfection is your standard or goal, art (or machine tools or theoretical mathematics) is the field for you. Not Wall Street. We have seen how utter ruin can come about when a man perceives any need to alter his opinion as an attack on his ego. He can also be hurt when he is on the profit side, and for much the same reasons. Read More: https://sacredtraders.com/profits-can-be-painful-too/

Turtle-Style Building Blocks Let’s begin with a survey of many common trend-following build-ing blocks, including the ones we were taught in the Turtle pro-gram. These are ways to determine when a trend may be starting and when it may have ended. This is not a complete survey: You can ﬁnd entire books that do nothing more than outline different indicators and system rules that can be used to build trend-follow-ing systems. For other types of trading there are other types of build-ing blocks that may be useful. Since this book is not a comprehensive treatise, however, I’ll leave the discovery of those tools as an exercise for the reader. The building blocks discussed in this chapter are the following: Breakouts: These are situations when the price exceeds the highest high or the lowest low for a specific number of days. This was the primary tool used in the original Turtle system. Moving averages: These are continuously calculated averages of the price for a speciﬁc number of days. They are called moving averages because they are calculated each day and their value therefore moves up and down with the new prices. Volatility channels: These are built by adding a speciﬁc amount of price to a moving average that is based on a measure of market volatility such as the standard deviation or ATR. Time-based exits: These are the simplest possible exits: You exit the market at a speciﬁc, predetermined time (e.g., exit the market after 10 days or after 80 days). Simple lookbacks: These involve a comparison of the current price with a historical price at some earlier period. We will explore each building block in more detail and demon-strate how it can be used in a trend-following system. Read More: https://sacredtraders.com/turtle-style-building-blocks/

Cups and Caps Our next indicator is fairly well-known in one version or another. It’s been called, among other things, cups and caps because of the visual image it suggests. The cup side is the buy projection, the cap is the sell. Both involve three bar formations—take your pick, daily, ﬁve-minute, whatever. The second bar has the extreme (lowest, highest) price. Sometimes the price in question is the low (or high for caps) and some-times it’s the close. In this version of cups, both the lowest low and the lowest close have to occur in the middle bar. Also, the lowest bar must be lower than the three lows immediately preceding it. This is a rather arbitrary rule in-tended to limit the number of times the formation is occurring mid-range. Ideally, the cup should be a bottoming indicator, so think of the three-bar qualiﬁer as a kind of running start setup Read More: https://sacredtraders.com/cups-and-caps/

Planetary Aspects Planetary aspects are very important to watch for changes in trends around the key cycle times of: 50 weeks 25 weeks 17weeks 12.5 weeks 8.5 weeks 6.25 weeks 21.87 days 14.58 days 11.93 days 7.29 days 3.65 days Aspects occur between two different plants and with the Sun in the following aspects: Conjunction 0° Opposition 180° Sextile 60° Square 900 Trine 120° Semisextile 30° Semisquare 145° Sesquiquandrate 135° Biquintile 144 ° Quincunx 150° The Opposition, Sextile, Square and Trine are the most important of the above. The Conjunction, Semisextile, Semisquare, Sesquiquandrate, Biquintile and Quincunx are less important. Read More: https://sacredtraders.com/planetary-aspects/

Gann’s 50% Retracement Rule The 50% Retracement Rule, based on Gann’s 50% and 62-1/2% price levels, is this: GANN’S 50% RETRACEMENT RULE AFTER AN INITIAL, SUSTAINED PRICE MOVE, EITHER UP OR DOWN, PRICES RETRACE TO 50% (4/8) OF THEIR INITIAL MOVE. IF THE RETRACEMENT EXCEEDS 50%, PRICES SHOULD CONTINUE TO THE 62-1/2% (5/8) LEVEL, BEFORE A REACTION OCCURS. When prices begin to rise or fall, the most-important level at which some price reaction should occur will be the 50% level. For example, if prices have fallen from $2.00 to $1.00, and begin to rise, the strongest level of resistance to further price advancement should be expected at the $1.50 level. The next important level is the 62-1/2% level. Again using the above example, if prices continue rising past the $1.50 level, the next level of resistance should be at approximately $1.63. If prices continue past the 62-1/2% level, the third-strongest level of price resistance should be at the 100%, or $2.00, price level. Just the opposite is true for prices that have been rising and are now beginning to fall. Ifa bull trend occurs from $10.00 to $20.00, prices will decline to $15.00 before reacting to the upside. Read More: https://sacredtraders.com/ganns-50-retracement-rule/

W.D. Gann’s Philosophy William Delbert Gann (1878-1955) was an enthusiastic person. This was not only expressed in his investing and the studies he made about the economic markets but also in his religious ideas. Gann was an eager Christian. His passion was always his trademark. It was Gann’s opinion that you had to be intensely passionate about what you wanted to achieve; otherwise success wouldn’t come to you. With this he “extends you his hand” and sends you out to discover for yourself: he only names ‘the topic’. As reader you are forced to think for yourself. He lures you into discovery. You need to discover for yourself if what he says is correct. For a number of theories he has never revealed his secret recipe. One of these theories is The Master Time Factor. It is a mathematical calculation that explains the natural wave movements on the markets. On one hand he was very secretive but on the other hand he was also very open about his theory. Hard work and intensive study is needed, according to Gann. Read More: https://sacredtraders.com/w-d-ganns-philosophy/

The Vibration Spectrum Sound, light and heat are all forms of vibration. Each field has its own spectrum or scale of vibration. Sound is an impulse of air striking the organs of hearing with a perceptible effect. Light is that action wherein objects are made visible. Heat is another force, similar to sound and light, in that it has a rate of vibration also. Each of these natural actions have their spectra occupying niches in the huge vibrational spectrum of nature. Modern science indicates that all bodies, unless at the absolute zero of temperature assigned by physicists as minus 273 degrees Centigrade-emit vibrations. Most of these vibrations are not visible to the eye, sensitive to the touch or audible to the ear. The frequencies, or rates of vibration, vary from a few cycles per second to millions of cycles per second and include everything from sound waves to gamma and cosmic rays. Read More: https://sacredtraders.com/the-vibration-spectrum/

The Cycles of Wall Street Many scientists are presently involved with cycles, and the number is growing each year. But for the most part each is studying cycles in his own particular field-economic cycles, earthquake cycles, cycles of disease, cycles of animal abundance, and many more. Few scholars, if any, outside of the Foundation for the Study of Cycles are studying cycles as such. One reason for this state of affairs is that among those who have not examined the evidence there is a certain amount of skepticism about the meaningfulness of these cyclic behaviors. To allay this skepticism I thought it would be helpful if our method and results were to be certified, as it were, by some cf the world’s leading statisticians. This has been done, and I still think it was a good idea, although the concept was somewhat naive on my part. I believed that scientists would come flocking to the study of cycles once they were presented with irrefutable statistical proof that we were dealing with facts. Read More: https://sacredtraders.com/the-cycles-of-wall-street/

Gann’s Master Mathematical Price & Time & Trend Calculator In 1954, at the age of nearly 76, W.D. Gann released a course based upon mathematical rules for making market predictions. In the advertisement for this method the author of the add writes: “We will not sell the course of instructions or teach the mathematical formula for market predictions just to get money, which we do not need or have to have; we will only sell the courses to people wh meet our requirements, and if we feel after a thorough investigation that a man or woman cannot make a success investing or trading we will refuse to teach them the courses”. “The Master Calculator can only be used with the Master Courses. It is not sold separate from the other courses”. The price shown for Gann’s Master Course in this ad is $5,000.00, it does not list the additional cost of the Master Mathematical Calculator. The ad describes the calculator as a plastic overlay that accurately measures Time, Price and Trend. Many Gann experts and students have tried to use these overlays, which require the chart to be hand drawn to a proper scale on graph paper that has 8 squares to one inch. This creates a lot of extra tedious work. Read More: https://sacredtraders.com/ganns-master-mathematical-price-time-trend-calculator/

Looking Back at the Past Thru the Square of Nine Gann students are all very familiar with the Square of Nine. Traders World Magazine has had numerous articles written in past issues about this very unique calculator. Past articles have primarily focused on the Chart’s unique number arrangement, which aligns the natural squares of whole numbers in a diagonal line. The squares of even numbers being opposite or 180-deg to the squares of odd numbers on the chart. The reason for constructing a chart like this is based upon the hypothesis that each positive whole number, i.e. the regular counting numbers1, 2, 3, 4, 5, etc. all correspond to some specific degree or angle of a circle between 0° and 360°. Pythagoras, one of history’s greatest mathematicians and philosophers said “ Units in a circle or in a square are related to each other in terms of Space & Time at specific points.” Gann’s Square of Nine is unique in that it achieves the ancient practice of squaring the circle and as a result is often called “The Pythagorean Cube”. Past articles have always focused on using the Square of Nine to calculate possible future support and resistance price levels based on previous highs and lows applying a modified version of the Pythagorean logic, which now reads as “Units in a circle or in a square are related to each other in terms of Price & Time at specific points”. This article will be much different! In my book The Gann Pyramid, I discuss several techniques, which apply to the trading markets, but in this article, I want to show another application of the Square. Read More: https://sacredtraders.com/looking-back-at-the-past-thru-the-square-of-nine/

Ratio Timing Line Square Outs The Idea of ‘time & price’ squared or equal, assumes a perfect balance. This is what you would have when a stock’s price is resting on a trendline provided that the trendline is a true 45 degree slope or a one unit of time and one unit of price. When the stock touches such a trendline the time duration is exactly equal to the price change so the balance is perfect and we then see the stock either bounce off the trendline (a kind of change in trend- acceleration of existing trend) or it breaks thru the trendline and a reversal trend is started. Since stocks bounce off trendlines all the time but don’t reverse the market there must be something else at work to create the ONE time the stock hits the trendline and breaks thru it. If you have understood the prior paragraphs up to now you will instantly know the solution. Since the 45 degree trendline is a ‘1 to 1’ relationship, which means that a stock with a $30 low will have a trendline at 31 one day later and 37 seven days later. If the stock touches the trendline now it will not reverse because it needs to square the ‘full’ low of $30, so it must touch the trendline 30 days later when the ‘final’ low is squared to the time of 30 days or time units. This is a full ‘Square the Low’ event but if the recent past high was $50 going down to $30 for the low, then we could ‘Square the Range‘ (i.e.20) when our up trendline from $30 crosses the $50 price. Note that this is a ‘timing line’ and not really a trendline (it could be but usually isn’t). Read More: https://sacredtraders.com/ratio-timing-line-square-outs/

The Genesis of Cycles Stock prices move in direct response to only two influences-stock market cycles and the economic outlook-and only indirectly in response to such things as fashion, fundamentals and fiction. This is fortunate ( 1) because economic trends are usually long-range movements and, in any event, are now so thoroughly studied and well-publicized that with a modicum of effort a man can become a passable amateur economist, and ( 2) because cycles in the market beat and repeat with such remarkable regularity that from a study of cycle history . . . “a man may prophesy with a near aim, of the main chance of things as yet not come to life … ” Cycles in the stock market arise from the rhythmic vibrations of the price of individual stocks as they respond to the daily forces of buying and selling and to the quantity of volume which is generated by these forces. These initial vibrations are recorded daily in your newspaper as the high and low prices reached by each stock, together with the volume generated. Read More: https://sacredtraders.com/the-genesis-of-cycles/

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