From the April 01, 2011 issue of Futures Magazine • Subscribe!

The Gartley Trading Method: New techniques to profit from the market’s most powerful formation

The Gartley Trading Method: New techniques to profit from the market’s most powerful formation
By Ross L. Beck
John Wiley & Sons, Inc., 2010
$65.00, 190 pages (including graphs)

In “The Gartley Trading Method,” Ross Beck examines how to identify and profit from logical and consistent patterns when trading any market, whether stocks, bonds, commodities or forex. Beck discusses similarities, differences and the superiority of the Gartley Pattern compared to classical chart patterns, including Elliott Wave theory, head and shoulders, and Fibonacci. The author also describes how to apply filters to Gartley patterns to enhance the probability of trading opportunities, as well as specific guidelines for when to enter and exit markets.

As a neophyte in the world of technical analysis, the phrases “head and shoulders formation” and “Elliott Wave theory” are two forms of technical analysis with which I am familiar, but never fully understood. I had never heard of the Gartley Pattern, or of its creator, author H.M.Gartley, whose book on the subject, “Profits in the Stock Market,” was published in 1935 in the midst of the Great Depression. Now, as the U.S. and other countries emerge from the Great Recession, this book is a timely and informative reminder of what Gartley wrote back in 1935 and why his trading methods are so relevant today. In “Profits in the Stock Market,” Gartley described a chart pattern known as the AB=CD pattern. That pattern illustrated how the market will rally in an uptrend and then retrace; rally again and retrace again.

Traders new to technical analysis, as well as more experienced operators, will learn a lot from this book. For the mathematically literate as well as the mathematically challenged, Beck applies his talents for communicating the intricacies of market geometry to real-life situations faced by traders everywhere.

Beck contends that the Gartley Pattern applied in today’s markets does not supersede the Elliott Wave theory, so long as one keeps in mind that it is indeed a theory.

For those of us who have been on this planet for a while, it is refreshing to note Beck’s view that Gartley got by without a computer; and the modern trader may be well-advised to trust his own decision-making without reliance on a machine nor the Internet. “I believe that most system traders fail when they remove the human element from the trading decision process,” Beck says.

True in principle, but in an age of stunning technological advances including sophisticated software tools to create and apply geometric patterns to plan and effect an entry and exit strategy in financial markets, a fast computer would seem to be a prerequisite.

Patrick Kelly is a freelance writer with a background in commodity market reporting.

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