"The Contributions of the Market Masters"

Neil A Costa

 

  • The history of technical analysis.
  • The origins and developmental stages of many of the analysis and trading tools that are used.
  • The extent to which the tools have gained or lost acceptance over the years.

They will almost certainly come to realise that many modern technical analysis tools were used by the masters of yesteryear. Sure, many have a different name today, but many date back to at least the early 1900s.

W. D. Gann regularly quoted one key phrase in the Bible:

"The thing that hath been, it is that which shall be; and that which is done, is that which shall be done: and there is no new thing under the sun".

[Gann, W. D., The Tunnel Thru The Air, Lambert-Gann Publishing Company, 1927, page 76, quoting the Bible, Eccl. 1:9.]

In the case of market analysis, it is true that the more things change, the more things stay the same. We only have to study market manias of the past, such as the Tulip Mania of the 1630s, the South Sea Bubble of the 1700s, the 1929 stock market bubble, the Poseidon madness of the late 1960s, the stock market crash of 1987 and the Internet Boom of early 2000, to see how human nature does not change when people are members of crowds. Markets reflect the human emotions of greed and fear - greed being the dominant emotion when markets are accelerating at an unsustainable rate, and fear as a market crashes.

So-called 'modern' technical analysis uses approaches which include Dr Alexander Elder's 'Triple Screen Trading', which he outlines in his popular book Trading For a Living. The technique is very similar to the advice given to traders by W. D. Gann who suggested that traders should look at the big picture first. No doubt Gann and Elder thoroughly tested the technique and found it to be very effective - despite the fact that they undertook their research at the beginning and end of the 20th Century, respectively.

Gann also wrote that when a market moved in a narrow sideways range, and then broke above or below that range, the trader should trade in the direction of the breakout. Today we call a technical analysis indicator that measures this low volatility 'Bollinger Bands'.

W. D. Gann used a combination of bar and swing charts to analyse and trade markets. He based his entry and exit techniques on the action and reaction of the market itself. Many people using today's 'modern' technical indicators fail to realise that such indicators often give a delayed entry and exit signals compared with an entry or exit based on price action alone.

Today, in the 21st Century, candlestick charts continue to grow in popularity. These charts were first used some 300 years ago - long before bar charts.

As you undertake your trading and investment journey, you will gain an understanding of topics such as support and resistance, trend, market action and reaction, and waves and cycles in markets. You will also gain some invaluable insights into the discoveries of the market masters - traders, analysts and writers such as:

 

  • L. L. B. Angas
  • Charles Dow
  • Richard Donchian
  • William Dunnigan
  • Robert Edwards
  • R. N. Elliott
  • W. D. Gann
  • H. M. Gartley
  • Joseph Granville
  • J. M. Hurst
  • Jesse Livermore
  • John Magee
  • Robert Rhea
  • Richard Schabacker
  • George Taylor
  • Frank Tubbs
  • Richard Wyckoff
  • and many others.

I encourage you to explore further the works of the market masters and how their works can make you a significantly better analyst and trader.

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