Dear Trading Friend, in this Edition of Traders Ezine we offer another amazing article contributed by Greg From Downunder, our Aussie Friend. Also, we are reprinting more of W. D. Gann’s writings, as they are so incredibly valuable. Even though it was written almost 1/2 Century ago, it has stood the test of time and is still highly applicable today, as it was in Gann’s time. THE GREAT ESCAPE – IS DAYTRADING THE ANSWER? - GREG FROM DOWNUNDER I guess most of us are attracted to the idea of daytrading because it opens up a lot of possibilities. The usual - freedom, flexibility, financial independence and control. At last, we have an opportunity to give the boss the flick and take charge of our own destiny and income producing capacity. But is daytrading all that it is cracked up to be? We have all read the many articles and surveys that point to the fact that most daytraders lose money! But lets disregard this because Dave and myself have both proven that it is possible to make regular and significant profits in daytrading. Unfortunately, while we may have solved one problem there are still others outside our control. The biggest problem is the time commitment. “ So what?” I hear you say – “If I had a regular job I would still have to report for duty for around 8 hours per day. At least this way I get to work in my pyjamas and don’t have the hassle of peak hour commuting”. Can’t argue with this, but daytrading does bring on its own peculiar set of stresses and strains. True, it does get you away from all those horrible, unreliable people with their messed up personalities. The ones that have little regard for the sensitivities of numero uno. Who needs em anyway! As time goes on, we get less and less interested in people and their many inadequacies and retreat into our secure little world of computer screens and emails. The perfect escape – or is it? Now that we are Daytraders, when people talk to us we only half listen because our minds are far away on the e-mini chart. Most people talk rubbish anyway. We superciliously look down on their idle prattlings knowing fully well that there is a higher purpose in life and we are the only ones connected to the heartbeat of the markets. Pretty soon, we get disconnected from partner and family and our presence becomes resemblant to that of the lodger in the manor. For those that are not single, I might leave the rest of this part of the story to your imagination. Some of us might not wish to go there. Being glued to a screen and earning income with a few mouse clicks can seem like fun at first, but before too long the novelty wears off. A million candles later, one gets sick of looking at charts. “Never!” says the chart junkie. Does boredom produce stress? You better believe it! Many Daytraders, including the successful ones, suffer from early burn out and finally seek refuge in teaching, broking, software design and other related occupations. Does this signify defeat or capitulation on their part? I don’t think so; maybe it’s a last grab at sanity? So, tell me – what was our original objective? Most of us would agree it was financial independence and a better quality of life. But somewhere along the line, this objective lost its way and finally mutated into daytrading. Daytrading, which was originally intended to be the means to achieve the end suddenly, became the end. So, what’s the problem – surely, a simple solution would be to take lots of breaks and holidays. Yes, possibly, but we do get used to bringing in a regular income and most Daytraders can’t stay too far away from a “market” fix. So, I offer you another solution. Split your business into two parts – one directed at short-term daytrading or scalping and the other longer term position trading. But most of us do this anyway. We all have a little dabble in the stocks or options from time to time. What’s new about this notion? I know, I know. What I am suggesting, though, is a more serious and absorbing “end of day” approach to trading the Futures and Currency markets. It provides the fix and also the ongoing income. We can still be trading when we are not daytrading. It makes it easier to take that break or reduce our overall time commitment. Our position trades can also act as a lifesaver when we have that bad day at the office with our daytrades. In contrast with daytrading, position trading can be a lot less stressful and at times a lot more lucrative. What? You mean more money than daytrading? No way! Well, allow me to give you skeptics a few examples to illustrate my point. Take a look at the attached chart for March Soybeans. The trades between 12/18/00 (the high) and 01/26/01 (current close) are as follows: (Incidentally, why do you Americans always write your dates backwards?) Soybeans Mar 01 Date Trade Profit to Date Dec 26 -1 @ 514.50 $ 2712.50 Jan 2 -1 @ 504.75 $ 2225.00 Jan 11 -1 @ 488 $ 1387.50 Jan 19 -1 @ 471.25 $ 550.00 Jan 25 -1 @ 467.75 $ 375.00 Total $ 7250.00 So, in a period of little over a month we have made $ 7,250 US with possibly a bit more to come from our open position. Not convinced? OK. So that was a fluke, but lets have a look at our friend Crude. This contract I would be less likely to pyramid because it is a little less trendy and also more costly to get wrong. So lets just take single trades as per the attached chart which covers the period from the swing low of Nov 3 to Jan 26, roughly two months. Crude Mar 01 Date Trade Profit to Date Nov 9 +1 @ 30.76 Nov 30 -2 @ 32.10 $ 1340 Jan 3 +2 @ 26.66 $ 5440 Jan 26 Still open $ 3110 Total $ 9890 Another fluke! But maybe by now I have your interest. OK, so lets have a look at a couple of currencies (again as per attached charts). Unfortunately, we only got four bites out of Jap Yen (disgusting from day trader’s point of view) for a total of a mere 911 points or $ 11,387 US! The Swiss Franc was less disappointing with a result of 1525 points or $ 19,062 US over the last couple of months (refer chart). Of course, these results may have been improved if we traded more than one contract. So, are we saying that using position trading we could have pulled out a total of $ 47,589 US over the last couple of months? I have never been good at arithmetic but I think the answer is – “Yes”. Mind you, this is no comparison to what most of us Daytraders made during the same period – or is it? Hands up all you daytraders who had results similar or better than this………… Hello?? Still reckon that daytrading is the only way to go? Again, this is only four markets and we could conceivably do better if we traded more than just these few. The problem is that we might have to extend the time spent on our analysis from just a few minutes a day to possibly an hour per day. B…..i…..g time investment. If we got really serious, we might even have to give up two hours per day i.e. only if we turned up our MP3 music and had a few extra glasses of wine while we did our analysis (my style of trading). What a sacrifice! OK, so where am I going with all this? I think a lot of us have been duped by all the hype and razza matazz of daytrading, so much so, that position trading has become hugely undervalued and daytrading has become highly overrated. I think its time to redress the balance. We may be conning ourselves. True – daytrading does allow us to use smaller stops and therefore limit risk, but all those ins and outs can drive you around the twist. More often than not, we miss out on all the long runs, which is where the big money is. People sometimes say to me that I don’t sound like a daytrader!! Maybe, that’s because I have two separate compartments in my brain - two distinct mindsets. One for position trading and one for daytrading. Both operate simultaneously and often act in total contradiction to one another. It is quite common for me to take a daytrade on a 5 min currency chart that is completely opposite to my position on the longer time frame. As a daytrader I am simply trying is take a bite out of the days action. This does not mean I want to jeopardize my position on the longer time frame. I might for instance take a long looking for a 60% Fibonacci retracement, when in fact my position trading already has me short on the Daily time frame. Can you see how this might work? Am I nuts to work this way? I don’t think so. As highlighted above there is a lot of money to be gained from capturing the big long-term moves and I am not going to let my intraday activities screw up my thinking on this. As far as I am concerned, they might as well be two completely different markets. End of day position trading offers a lot less stress. Sure, there is quite a bit of tension when we enter our first position, but as soon as we are in the black we can loosen up and let our profits run, adding additional contracts as we go. Daytrading on the other hand keeps one constantly in a state of high tension. Pay very, very close attention to this last point because I cannot emphasize it enough. Think of what this tension is doing to your insides. Think of what your insides are doing to you. SUMMARY End of Day trading offers the following “lost and forgotten” benefits and advantages: Opportunity to capture most of the big moves Regular breaks, and much less time in front of the screen Diversification of investment Greater development of expertise from trading multiple markets What’s the catch? The catch is that markets don’t trend like this all the time. So it becomes important to pick the turns or reversal points and hang on for the ride without getting our stops knocked out. I can show you how to pick these turning points when you attend our seminars. THE PERFECT MARRIAGE No, I am not talking about your romantic prospects. Nor am I saying that you should give up daytrading. But, wouldn’t it be great if we could have the best of both worlds? We want the profits from daytrading but not the stress that goes with it. We want to be able to enjoy our lives without being chained to a computer. For some time now, I have been searching for the ideal combination. A service that will take care of the daytrading responsibilities and allow me to focus more time on leisure activities. Unfortunately, most trading systems out there have small profits and big drawdowns. What we need is a trading system that will provide the regular returns without the big risks. Dave and I have been working hard to present you with exactly this type of opportunity. At some stage we might also looking to provide you with a software update so that you can trade it yourselves, i.e. when you feel like it, not because you have to. We look forward to feedback concerning your preferences but as yet, no firm decisions have been made regarding the best way to meet your needs. Editor’s Note: Greg included a series of charts with this article. However, we are unable to include them here, as they are very large graphics files, which would take far too long for you to download. Plus, we are using MS Listbot which I do not believe allows Emails as large as what would be required if we included them here. Therefore, we will be posting Greg’s impressive charts at the Paid Members Only area of our webtrading site in a few days. We will also be able to print the charts in our next in-print issue of CTCN, which is only mailed to paid club members. ----------- EXCEPTS FROM THE WEBTRADING GANN COMMODITIES TRADING COURSE FOLLOW THE MAIN TREND You will always make money by following the trend of commodities up or down. Remember that commodities are never too high to buy as long as the trend is up and they are never too low to sell as long as the trend is down. Never sell short just because the commodity is high or because you think it is too high. Never sell out and take profits just because the price is high. Buy and sell according to definite rules and not on hope, fear or guesswork. Never buy a commodity just because the commodity is low. There is usually a good reason why it is low and it can go lower. Rules For Buying And Selling The first thing to remember before you start to apply any rules is that you must always use a STOP-LOSS order to protect your capital. When making a trade remember that you can be wrong or that the market may change its trend and the STOP-LOSS order will protect you and limit your loss. A small loss or several small losses can easily be made back with one large profit, but when you let large losses run against you it is hard to make them back. Prove All Things And Hold Fast To That Which Is Good The Bible tells us this and it is well worth remembering. Many people believe that it is wrong to buy at new high levels or to sell at new low levels but it is most profitable and you must prove this to yourself because when you do buy at new high levels or sell at new low levels you are going with the trend of the market and your chances for making profits are much better than guesswork or buying or selling on hope or fear. Prolonged Advances After commodities have had a prolonged advance and wind up with a fast, active, runaway market, in most cases they come down very quickly and much faster or in a shorter period of time than when they go up. That is why you must keep up some daily charts at the end of a fast move and keep up the weekly charts to determine the first change in trend and be able to go with it. Sharp Decline In A Short Period Of Time This usually follows a rapid advance and the first sharp decline, which may last from one month to as much as seven weeks, usually corrects an overbought position and leaves the market in position for a secondary advance. When you are able to catch the extremes at the end of any great time cycle, you can make a large amount of money in one year's time trading in fast, active markets. In extreme low or extreme high the opportunities are great for making money, providing you select the commodity that will lead. Large Profits On Small Risks You can make large profits on small risks provided you use a STOP-LOSS order, apply all the rules and wait for a definite indication of a change in trend up or down before you make a trade. Fixed Ideas And Fixed Prices Never get a fixed idea of just how high any price is going to go or just how low they are going. Never buy or sell on a price that you fix because you may be trading on hope or fear and not following the trend of the market and applying rules, which will determine when the trend is changing. How To Protect Profits After you have accumulated profits, it is just as important to protect them with STOP-LOSS orders, as it is to protect your original capital because once you have made profits it is your capital and STOP-LOSS orders must be used to protect it. The most dangerous thing that you can do is to let a trade start going against you and lose back your profits. A STOP-LOSS order will protect the profits and you can always get in again when you are out, with capital. Remember when you are out of the market the only thing you can lose or miss is an opportunity. My 52 years experience has taught me that thousands of people have gone broke trying to hold on until the trend turned. Avoid getting out of the market too soon after move starts when you have a small profit. This can be a great mistake. Get out of the market quickly as soon as you see that you have a mistake. If you place a STOP-LOSS order, this will put you out of the market automatically. Too Late Or Too Soon You can lose money or miss opportunity by getting into the market too soon or getting out too late. That is not waiting until a definite change in trend is indicated, or failing to act in time when you see a definite change in trend. Wait until you have a welldefined indication that the trend has changed, then buy or sell. Follow all the rules in my book, How to Make Profits on Commodities. There are many rules in my book, How to Make Profits Trading in Commodities which are not in this course of instruction and by using all the rules you will make a greater success. Hope And Fear I repeat this because I have seen so many people go broke trading on hope and fear. You will never succeed buying or selling when you hope the market is going up or down. You will never succeed by making a trade because you fear the market is going up or down. Hope will ruin you, because it is nothing more than wishful thinking and provides no basis for action. Fear will often save you if you act quickly when you see that you are wrong. "The fear of the market is the beginning of wisdom." Knowledge, which you can only obtain by deep study, will help you to make a success. The more you study past records, the surer you are to be able to detect the trend of the future. Make The Market Move Your Way You must learn to realize that you cannot make the market go your way, you must go the market's way and must follow the trend. Many successful businessmen who are accustomed to giving orders to others and have them carried out will often when they get into the market, especially for the first time, expect the market to follow their orders or move their way. They must learn that they cannot make the market trend go their way. They must follow the market trend as is indicated by fixed rules and protect their capital and profits by the use of STOP-LOSS orders. There is no harm in making a few mistakes and a few small losses because small losses are the expense of a successful speculator. If you intend to make speculation a Profitable Profession, you must learn all the rules and apply all of them to determine the trend Professional men, such as lawyers, doctors, accountants and engineers, spend years in training and a large amount of money to learn how to succeed in their chosen profession. You must spend time and money to learn the profession and become a successful speculator or investor. How To Make The Most Money In The Shortest Period Of Time Most people want to get rich too quick; that is why they lose their money. They start speculating or investing without first preparing themselves or getting a commodity education. They do not have the knowledge to start with and the result is they make serious mistakes, which cost them money. When you do have knowledge and are prepared, you can make the most money in the shortest period of time. You must learn to follow the rules which I have laid down and proved to you by examples that you can make a large amount of money in a short period of time when the market is at the right stage for fast advances and fast declines occur. Do not try to lead the market or make the market. Follow the trend which is made by big men who make big money and you will make money. Buy when the big market makers are ready for prices to move up fast, sell when they are ready for prices to move down fast and you will make large profits in a short period of time. Trade only when the market shows a definite trend and trade according to definite rules. Study the Chart (Editor's Note: This Chart and others are printed in our in-print Gann Course but not via email) on Soybeans for 1953 and 1954 and the examples, which I have given and you cannot fail to make profits, provided you use STOP-LOSS orders as advised. From March 8, 1954 to April 27, 1954, May Soybeans advanced from 343½ to 422, a gain of 78½¢ per bushel in 50-calendar days and 35 actual market days. This would give a profit of $7,60% on 10,000 bushels and you were buying after the price was up $1.05 per bushel from the low in August 1953, which proves that you can buy at new highs in the last stage of a bull market and make large profits in a short period of time. This is without guessing but following rules and buying when the big people buy and of course you are with the trend made by the big traders. Refer to the trading examples on May Rye and you will see how large profits could be made in a short period of time by selling short after prices were down to comparatively low levels against the extreme high levels. Why People Do Not Make Money Buying And Selling Commodities I have stated in my books many times the market does not beat you, it is your own human weakness that causes you to defeat yourself. The average man or woman nearly always wants to buy low and sell high. The farmer always wants to sell at high prices whatever he produces but he wants to buy what he needs at low prices. The laboring man wants high wages all the time but wants low prices for what he buys to eat and wear. This is a violation of a fundamental economic law and it just will not work. To make a success in speculation, you cannot expect to buy low and sell high. You will make money when you do exactly the opposite of what the average man or woman wants to do or tries to do and makes a failure and loses as a result of what they are trying to do. You will make profits when you learn to BUY HIGH AND SELL LOW. You must learn to follow the trend of prices and realize that they are NEVER TOO HIGH TO BUY AS LONG AS THE TREND IS UP AND NEVER TOO LOW TO SELL AS LONG AS THE TREND IS DOWN. ----------- The above material is excerpted from our Gann Commodities Course - Please note, we now offer two different Gann Courses, a low priced one we wrote, and also a republication of Gann's Original Commodity Course, including many of Mr. Gann's hand-drawn charts, plus some improvements and enhancements we have made to the course. Remember, it is said W. D. Gann sold his Commodities Course in the early 1950's for $5,000 a copy. In those days it was enough money to buy a real nice house! https://www.webtrading.com/gann-commodities-course.htm This Ezine is sent in Rich Text Format. As a result, it loses some of its formatting and does not look as good as it could. In the future we prefer to send these Ezines using Adobe PDF Format. However, it seems like when we send them in PDF Format for some odd reason many recipients have problems getting or reading the PDF File. We are still researching this and will once again try sending an upcoming issue using PDF. In fact, our friend Greg from Downunder has specifically asked us to use either MS Word or Adobe PDF files as they make the ezine look much more professional. Plus, they also allow for quality hardcopies. By the way, in the past we also tried using Word and had more problems reported than we encounter using Adobe. Editor Comments: We are taking pre-registrations for our No Brainer waiting list. The cost is $75. Please sign-up now https://stronghold.netnation.com/~webtrade/webtrading/seminarorder.htm as the number of participating traders is limited as we are concerned about the markets being adversely affected if too many of us are trading this method. We have changed our seminar schedule as follows. The first 3-day Seminar location has been scheduled for June and also changed to Las Vegas, NV due to a number of requests from traders who preferred not traveling all the way to London, and also wanted to attend the as soon a s possible. The links to the seminar details are here https://www.financial-seminars.com Therefore our first Seminar teaching both Real Success-2 and Real Success-3 and also Greg From Downunder and his End-of-Day method will be in Las Vegas June 9, 10 and 11, 2001. Be sure to attend. Greg will be our featured speaker all 3-days, including the Live Internet Trading day on Monday when Greg and I both will be pulling the trigger on some real-time trades. Greg has expressed a desire to not reveal his No Brainer Daytrading secrets and prefers to teach his EOD Position Trading Method. Click-Here for his letter regarding this https://www.financial-seminars.com/invitation.htm I can't promise you this, but there is a possibility Greg may relent and reveal some (but likely not all) his No Brainer secrets at this Seminar. In either case, you will find his EOD Method extremely valuable and potentially profitable involving position trades. Please note our Seminar offers both Short-Term Daytrading and longer-Term Position trading methods. Real Success-2 will concentrate on daytrading the E-Mini S&P Market, Real Success-3 is more devoted to the E-Mini NASDAQ Market, and Greg from Downunder emphasizes his Overnight End-Of-Day Trading Method. As mentioned before, our Real Success 2nd Edition Course is getting good feedback reports on how the RS2 Video Tape Training Course has been helping our trader clients, both daytraders and also longer term position traders in misc markets. To help even more we have expanded the new RS-2 Trading Course from 4 Tapes to 6 Video Tapes (2-Hrs each). That's approx 12-hrs of learning, including a number of real-time 100% Internet Based trades made during the filming. The 2 additional tapes have also been sent as a FREE bonus to early RS2 clients. We are announcing some great extra benefits (for paid club members only). This reduction in CTCN printed issues is due in part to more and more of our articles and resources being targeted to Traders Ezine's sent via email approx 36 times per year, and also website content, including our new Paid Members Only area. Also, we have received considerable support and requests to do this more and more electronically or over the Web for its speed in delivering content and its great cost effectiveness. For example, Greg’s article was received only yesterday, Jan 31. By sending it electronically, you get it in one day compared to weeks or months later waiting for a printed issue to arrive in the mail. However, it is nice to get occasional printed issues in booklet format via the postal service, so we expect to mail them out from 2 to 4 times a year, on an irregular schedule. Our Traders Ezine frequency is normally 3 electronic issues per month (or 2 monthly Ezines when we have extra large issues) is about right. This way you will get more and more rapid trading knowledge to help you get on the road to profitable trading! This is the 1st Ezine for February 2001. In January we published 62-pages of trading knowledge for you. This Ezine is 12-pages of trading knowledge for you. All the best, Dave Green, Editor/Publisher ----------- Here are some suggested trading related links for you: More details on the upcoming Seminars are located here: https://www.financial-seminars.com/brochure.htm ----------- Commodity Traders Club Free Knowledge Based Primary Website https://www.webtrading.com ----------- Real Success 2nd Edition Trading Course Information and Buying Details are located here https://www.traders.org/realsuccess2.htm ----------- New RS-2 (New and Very Strong) 1-yr No-Strings-Attached Guarantee of Satisfaction Details https://www.traders.org/guaranty.htm ----------- To Order New RS-2 6-Tape Video Training Course: https://www.traders.org/rsorder.htm ----------- Go here to Become a CTCN Paid Member https://www.webtrading.com/member.htm ----------- Traders Organization Portal Guide for Daytraders https://www.traders.org ----------- Year 2001 (June) Las Vegas, Nevada Combined RS-2 & Greg From Downunder Trading Seminar (special Discounts for Early Registration & Prepayment: https://financial-seminars.com ----------- Webtrading Knowledge Based Free Traders Search Engine https://www.webtrading.com/searchengine.htm ----------- Low-Cost W. D. Gann Trading Techniques Gann Methods Trading Course by Webtrading https://www.webtrading.com/gann.htm ----------- Low-Cost Options & Spreads Trading Course - The author (Mr. Donio) say's 90% Wins Are Possible with this specific options strategy! https://www.webtrading.com/options.htm ----------- If you are reading this and you are with a trading related firm, please go here for Website Sponsorship information https://www.webtrading.com/advop.htm ----------- Please send me an email mailto:dave@webtrading.com whenever you have any questions on trading related issues or if you wish to sign-up for a service and have questions about it. ----------- As a reminder, you are getting email from us because you once either asked to go on this Traders Ezine list, or requested info on a trading related subject we normally cover via this communications method, or you are a client of ours. Your email address and other information will be kept confidential per our online Privacy Pledge. Of course, you may opt-off this Traders Ezine at any time if you do not find this trading knowledge useful. ----------- This Ezine was thoroughly virus checked just before transmittal using the latest McAfee Virus Scan, which version is freshly updated. -----------