Basic Techniques  |  DEC 2006

Searching For (Trading) Certainty by Aaron Lynch

Stocks & Commodities V. 24:12 (20-24): Searching For (Trading) Certainty by Aaron Lynch Like dragons, markets are always uncertain, whether they are in a trading range or a trend. Here’s a way to make your profits (for certain) by following the short-term or long-term trend. One of the most basic human emotions dictating at least one decision each day is our confidence in a known outcome. This can be as simple as knowing the sun will come up tomorrow or the train you take to work will arrive on time (in many cities, of course, this is a forlorn hope!). Without this basic premise, however, our lives would descend into chaos, as we could not make a reliable or informed decision because we would be continually secondguessing all the choices confronting us. So how does this affect trading? A colleague of mine disturbs traders by making the statement that “if the markets were certain then there would be no markets.” This can shake the confidence of some. If every market reacted in the same way every time, that market would either be very easy to trade or break down, as it could not exist this way. CERTAINTY IN UNCERTAINTY Balancing the basic need for certainty coupled with an uncertain trading landscape, we must find an anchor or reference point from which to begin. For me and for all successful traders, that anchor is our chosen trading plan. My trading plan is structured around a tool known as a swing chart, based on the principles established by W.D. Gann.

by Aaron Lynch