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rket in 1989 and why I went to the trouble of getting it published。 Beyond that； I'll share with you my experiences。of being both right and wrong； and of how to make the most of both。
Choosing Your Path
In trading there are few paths。to success。and many to failure。 In this。book； individuals。who have been involved in the markets for a considerable time share their secrets。 Each goes。about the business。of studying the markets。in a different way； but you'll find some mon denominators among all of them。
Many professionals； in their own way； have used the rules。laid down by W。D。 Gann before he died in 1955。 My own approach to the use of Gann’s。rules。is essentially a bination of things。I've put together over the last twenty years。
Some of these methodse from authors。other than Gann； and some are rules。that I've developed on my own。 Everything I'm sharing with you here has。worked for me； but none of it was。apparent from the start。 I only wish someone had taken the time to explain these things。to me when I first started out。
I started trading late in 1985。 My training consisted of trading for two weeks。with an old pro whom I had known for many years。 He was。my mentor。 After that； I was。on my own and I’ve never had a real job since。 During my introduction to trading； my tutor and I spoke about the works。of W。D。 Gann； but he had little faith in what Gann had to say。 For some reason； there seems。to be a well…above…average number of mathematical and grammatical mistakes in the lessons。left by W。D。 Gann。 But I focused only on what was。right； discarding what was wrong； and became a convert。 The mistakes。never bothered me much。 They only made it more of a challenge and made me read the lessons。very。carefully。 I thought that if I could make sense out of just one section of Gann's。lessons； I would be ahead of the crowd and could move on from there。
Calculating。a Range
The first thing I worked out was。how to calculate a range by taking the lowest point that the market had traded from the highest point。 That gave me a range。 I realize that this。can hardly be called a 〃breakthrough in technical analysis；〃' but it was。all new to me。
I bought all of the Gann books； and he seemed to be talking a great deal about ranges。 I know that Gann did not have a monopoly in this。area of technical analysis。 Many authors。based their theories。on ranges。and still do。 It's。called price action and reaction。 Over time； my research showed me that these ranges。were often repeated； exactly； in both time and price。 So I started to believe that the time range （that is； the elapsed time between； say； a bottom and a top—often called a wave or a cycle） was。even bit as relevant to my decision…making process。as。the price range。 I began to realize that time was。more important than price。
Time was。also more consistent。 Being more consistent； my research showed； made time more tradable。 I also found that the time spans。from bottom to bottom and top to top gave me cycles。that repeated。 That's。the information you need to plete a forecast。 If you're going to get your forecastsrrect and use them to make trading decisions； you have to identify cycles。that repeat。 If and when they repeat； you'll be right。 It's。as simple as。that。
Later； I was。to see this confirmed in major trading books。like The Major Works。of R。N。 Elliott； edited by Robert R。 Prechter； The Elliott Wave Principle by Prechter and A。J。 Frost； and in the work。of Frank。Tubbs。and just about everyone else who had written about price action and reaction。 But seldom did I see these masters。treat time as。an entity。 In this； my。inspiration came first from the works。of W。D。 Gann and what he had to say about ranges。
My。next inspiration came from Gann's。discussions。of 〃natural time”。 Put simply； he divided the year into the four seasons。and the price was。divided into 360o。 By simply doing some price action and reaction； I was。able to learn the lessons。as。outlined by Gann。 It's。best to master the price lessons。first； then move on to time。 After you've pleted the second part of the lesson and have gained an understanding of how these things。work； you can bine both lessons and get a time and price forecast。 To begin； you may draw a trend line or a moving average。
Market…Testing。a Trading。Plan
So far we've talked only about a theory； but you must acquire some data and back…test your theory on a market。 This。should result in your developing a trading plan。 You'll have a percentage of winning and losing trades。over a set period of time。 That's。called paper trading。 Next es。the fun part： You must take your trading plan to the market； and the market will tell you how good you are。 Sometimes； as。Jesse Livermore so aptly put it； 〃When the market moves。against you； it is。like having an amputation without anaesthetic〃。 Until you've market…tested your program； you've achieved nothing。 Remember； everything looks。good before it's。tested。 I see this。in building race cars。 In the shop； everything looks。like a winner。 Only out on the track do the defects e to light。 In trading—as。in racing； or a business。agreement； or a marriage for that matter—it all looks good at the start。
In technical analysis； all players。are like sailboats。 When the starting gun is。fired—in this。case； the start is。the opening bell—we're on our way。 We may take a different tack； looking for that magic puff of the wind to take us。from point A to point B in the shortest possible time。 But it's。not always。the shortest course that works。best。 We're all heading in different directions。to the same finish line。
There is。no monopoly。in market smarts。 The best indicator is。usually the checkbook； but this。is。not always。the case。 We enjoy the process。of winning； but in most cases。we learn more from losing。 Perhaps。that's。because we ponder our losses。more。 Never fear change； but make sure you have a process。to discriminate between changes。that are for the better and those for the worse。 Then follow up with an unremitting willingness。to shoulder whatever responsibility。is。required。
You must have a passion for trading。 You must love it； or you will never last。 I have found that too many wins。usually lead to a false sense of pride； and we all know that 〃pride eth before a fall。〃 You can either learn that lesson at the start or have the market teach it to you later on。
Over the years； I've found that many traders。are fighting a fear of monetary doom； some sort of financial Armageddon。 But if they do their research carefully enough； they can neutralize this。fear。 Many times。I've been broke and just had to get back。up off the floor。 So it seems。reasonable to me that I have lost this。〃fear of financial insecurity”。
Fears。notwithstanding； developing and proving a good trading plan is。a must if you want to arrive at the port called 〃financial security。〃 Initially； a large proportion of the capital you have on the table will be your own。 If you have all your eggs in one basket； it pays。to watch that basket carefully。 I say this。because I've done it。 In my case； it was。necessary。 When you have a win； make sure you retain some of the profit。 Don't keep doubling up against the house； because at some point the house is。going to take the lot。 Read whatever you can