V.6:4 (136-137): Price reactions within a trend by Bill McLaren

V.6:4 (136-137): Price reactions within a trend by Bill McLaren
Item# \V06\C04\PRICERE.PDF
Availability: In Stock

Product Description

Price reactions within a trend by Bill McLaren

I have, in the past decade, taught trading techniques to many students. Recently, most of my students have entered the markets after purchasing a personal computer and a technical analysis software package. These tools can be quite helpful but they are not the Holy Grail. A majority of my students' losses are related to one major weakness: little understanding of basic price movement.

Understanding price movement is the foundation of profitable trading and all else must be built on that foundation. Very simplistically, both stock and commodity markets move in only two ways—they trend or consolidate. You can view this from three perspectives: short-term (daily charts), intermediate-term (weekly charts) and long-term (monthly charts).

First, though, you need a discipline to measure short-term trends. In a powerful, short-term trend, the normal correction against that trend is three to four days, or 90 hours, which is one of the natural time cycle harmonics proposed by W. D. Gann. A movement that falls within the three- to four-day period is assumed to keep the strong trend intact. A shorter correction then indicates a stronger-than-normal trend, and a movement exceeding the fourth day indicates the trend may go into a consolidation or reversal. (This concept of normal movement against a powerful trend can be applied to weekly and monthly charts by using three to four weeks and three to four months as the normal lifespans of intermediate and long-term corrections.)

*Note: $2.95-$5.95 Articles are in PDF format only. No hard copy of the article(s) will be delivered. During checkout, click the "Download Now" button to immediately receive your article(s) purchase. STOCKS & COMMODITIES magazine is delivered via mail. After paying for your subscription at store.traders.com users can view the S&C Digital Edition in the subscriber's section on Traders.com.

Take Control of Your Trading.
Professional Traders' Starter Kit
All these items shown below only $299.99!
  • 5-year subscription to Technical Analysis of STOCKS & COMMODITIES, The Traders' magazine. (Shipping outside the US is extra. Washington state addresses require sales tax based on your locale.)
  • 5 year access to S&C Archive
  • 5 year access to S&C Digital Edition
  • 5-year subscription to Traders.com Advantage.
  • 5-year subscription to Working Money.
  • Free book selection.
  • Click Here to Order