Surfing is very popular where I live in Southern California. It is a sport that I took up while living on the beach. Analyzing and trading in the markets is very similar to that sport. In fact, many technical analysts have compared the market fluctuations to the waves of the ocean. Just like a surfer, it is easier to travel in the direction of the waves than to paddle against it.
The waves of the market are the trends. It is crucial for a trader to identify the trend that they can surf to profits. If you keep trying to paddle against the waves, you can make some progress but it is much easier to ride the waves to larger profits.
There are several ways to identify the trend you are trading or investing in. W.D. Gann was a trader in the early 1900’s who believed that price could be predicted by the use of three basic premises:
The only three factors you need to consider are: price, time and range
The markets are geometric in design; patterns can be identified
The markets are...
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