My Trading Philosophy (Part One)

I'm  a student of John R. Hill and his two works

Stock & Commodity Trend Trading by Advanced Technical Analysis

and

Scientific Interpretation of Bar Charts

I've incorporated some of his ideas as my own.

I'm a firm believer that the composite opinion of the market is reflected by it's market action.

Timing is the essential ingredient.

Proper chart interpretation will reveal all the fundamentals that one needs to know.

A chart represents all the bulls and bears in a given market.

A technical analyst can cover all the active commodities/stocks.  This is not possible if one is a fundamentalist.  There are simply too many variables, some of which will be in conflict.

It is a wise man who knows which facts are important and which that are irrelevant.

A fundamentalist can be knowledgeable  and make money, but, is limited to 2-3 commodities or only several related sectors of stocks.

All stock or commodity markets behave in a similar fashion because you are dealing with its human emotions   --  fear & greed

Accumulated for a move up -- distributed for a move down both have somewhat similar characteristics.

The more that one studies commodity or stock price movements, the more they seem to defy analysis.

Many skilled mathematicians have attempted to reduce these movements into an exact science.

They are doomed to failure from the start, as human emotions are not an exact science.

There are various characteristics and repetitive sequences in the interplay of the underlying economic forces which disclose principles and methods for orderly buying and selling in harmony with these basic influences.

There are no life in the charts and it does not represent living psychology.

Life comes into them when past market action is used to project future course of price movement.

Charts are like a road map.  They are more than just history.  They depict the actions, emotions, and ideas of mass speculation.

Psychology of the mass mind. 

Man's mind cannot be reduced to an exact science.

Speculation is anticipation.  Market action discounts coming events before they happen.  The function of price is to integrate the supply/demand relationships.

Since the beginning of time, man has largely been controlled by the emotions of fear and greed.  When a  student of market action allows these emotions to influence his market response, one loses more opportunities in the market.  Must at all times resist those two emotions.  Confidence and Courage are required to overcome Fear and Greed.  Courage is inborn.  Confidence is gained by study, study, and more study.

Closing price is the most important price of the day.  It represents the final sentiment between the Bulls and Bears at the end of each trading day.