Since repetition is one of the great keys of learning, let’s keep an eye out for a new application and a new use of a rule until we are satisfied that this is truly the tool worthy of learning -- indeed, the one to open your trading future.
With this in mind, we will learn just how simply December corn of last year really SHOULD have been traded.
The TIME frame is again 90 days. One gets the feeling that Mr. Gann had an insight when he called the square of 90 his “Pattern Chart” or overlay. Our TIME by the calendar is exactly from April 11 to July 11 or exactly 90 days to make this recorded move.
Refer to chart #2. Note that we have segregated this chart into three separate sections or into three stages of development. This is done strictly for clarity so that you may observe the chart as it develops into each of the stages to give us our conclusions.
First, we would call your attention to the chart and you will notice that we have charted 360 degrees of PRICE in this 90 day TIME span. Realize that this represents a full circle of PRICE. At this point, take a moment to look at your “P.C.” You will observe that the high of this particular contract, 295, is located on the square of nine (“P.C.”) at just three numbers, degrees, under the 0/360 degree Cardinal line. Now note that 230 is exactly in the same line, just one cycle to the right, and one cycle down in numbers. This is obviously a 360-degree move. Now note where the 360-degree line is shown on the chart #2. DOES THIS ASSIST YOU IN SEEING THE PICTURE TO WHICH WE ARE ASCRIBING?
Logic will tell you that the four divisions in the 360 degree path of PRICE are important as well, for aren’t they relating to the 90 degree Pattern Chart which Gann talks about? At this point, chart #2 shows you the divisions and the 45’s of all of the 90-degree dimensions for this three month period. Notice that, as in all PYRAPOINT charts, that PRICE is shown in degrees on the vertical left of the chart while TIME is shown in degrees to the right on the horizontal, and is expressed in numbers of squares as well.
Now turn to chart #2A. As we begin adding features upon the face of this chart, hopefully you can follow and agree with each reason and learn to appreciate the uncanny manner in which this all falls into place. The first notation alludes to the great highways of PRICE, which are provided by the 45’s (when plotted in true PYRAPOINT programming). We have simply traced the 45’s from the top in this downtrend. We have no doubt, nor do we need fancy analysis to tell us the trend -- nor what PRICE must do to change this trend. The 45
shows us not only the highway of movement, but also when PRICE gets over the 45 “fence” which keeps it intact for short trades only during (and indeed, all along) this trek.
All charts may not be this perfect, but they will all tell the same data story. Notice that throughout the full 90 days, PRICE not only followed the 45’s, but just touched without violation all of the way down. COINCIDENCE? We think not! Mr. Gann could never have done what he did without something this powerful. History shows that he did approximately 268 profitable trades of a recorded testing of his skills involving some approximately 290+ trades. This is the kind of accuracy, which we are attempting to study and to perfect in the
PYRAPOINT system. As stated, it is our personal opinion that indeed this was his approach.
Chart #2A further demonstrates the points of EOS in each of the three TIME squares in which we have before-mentioned that one can expect a high percentage of trend-change status showing in the marketplace. Please notice the notation as to the regularity of the different applications of this “trend-change” phoneme.
Trend changes will usually be represented by the normal pivot of high-to-low or low-to- high as expressed in earlier information. What needs a bit of further elaboration is the other faces this trend-change animal CAN wear. Obviously, it is reasonable to believe that it could actually run out of energy, and go sideways while it gathered up momentum to go on. This, as shown in the notation on the chart, happens in some 15% of the EOS’s, while the only other option (at least as used by PYRAPOINT) is the identification of an “accelerated move”. This animal is most readily identified either by a gap at trend time, or at least a very accelerated action shown by an extraordinarily large range. The “accelerated move” is in no higher population than the prior-mentioned “sidewise” move. Obviously, too these both represent non- pivotal moves, or moves of the same direction as the approach PRICE has made just prior to EOS.
This explanation has no reason to cloud your confidence, or to confuse a good trading manner. It does let us know that at this particular point we need to manage our stops accordingly. It is no debit to have a good stop and have your plan unfold around it. Fear not -- you will be there for tomorrow’s profit. It is a debit not to KNOW where to protect your profit and your capital. It is all contained in these rules of play.
We have separated chart #2B out so that you can see the sequence and the validity of the actual exercising of points of sale (since this is in a downtrend). HARK! Remember, we do not want any trades against the trend -- identify them for your education and knowledge, but be VERY CAREFUL taking countertrend trades, even for retracement strategy. True, it can be done successfully, but it is much more difficult to let your stops give enough assistance in surprise moves. Amazingly, you will note that actually you did not have one “full-blown” buy signal all of the way down the highway of PRICE during this 90 days of history. Great, isn’t it? It goes without saying that the magical 45’s act well in the determination of a point to place one’s stops. It is your judgment call, of course, but in corn, for instance, we have found that 3 ¼ cents is about all that we need to risk over/under a 45 or a square -- or the low/high of pivot points. Almost sounds too simple, doesn’t it? You will find that the most difficult part of the trading plan is to get yourself disciplined to believe what you are seeing on your chart. Our challenge: study and trade it with diligence for 90 days or so and see if you do not believe that what we have told you is the way to trade as did the “Masters”.