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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 get on money management。 You will be told to risk。somewhere between 1 percent and 10 percent of your capital。 The hard part is。that you must take the greatest risks。when you start out。 It's。a learning curve。 Is。it possible to put an old trader's。head on a young trader's。shoulders？ I'm afraid not。
Your trading plan is。your ticket for the trip。 Not that a plan gives。you any guarantee of financial security； the point is。far more important than that： It’s。possible to pletely lose that feeling of impending doom just by doing your homework。 Your trading plan is。your security。 To paraphrase Ludwig Wittgenstein； 〃The world of the successful trader is。quite different from that of the unsuccessful trader。*
Technical analysis。offers。a smorgasbord of alternatives。 The object is。not to eat the lot。 The idea is。to select what you want。 The methods。used in technical analysis； such as。those presented in this。book； have been proven by each individual's。success。 There is。no guarantee that any of them will work。exactly the