GANN used SWING charts to trade and applied his techniques on Swing charts to come up with his forecasts which were correct over 90% of the time. If we are even 60% correct in forecasting the market movements, we will be billionaires, whether in Rupee terms or $, I leave it to you :)

In last post, I had completed how to construct Swing charts. While I covered constructing only Daily swing charts using Daily bar charts, you can construct Swing charts in the same manner for Weekly, Monthly, Quarterly or Yearly Bar charts. It all depends on which Bar chart are you using for construction of Swing Chart.

You may have heard the term, Trade with the Trend. If not, then you have come across it now. Why to trade with the trend?

Have you ever tried swimming or rowing the boat against the flow of the river?? It is tough, tiring, exhausting, risky and sometimes fatal. Same with Stock markets. If you have taken a Short position in BULL market, you know what happens! Similarly, Buy stocks when the market is going down, you know what your feelings are. You may emerge as a winner or profit even trading against the trend, but that will be exhausting, tough, take away your sleep at night and is RISKY as well.

Remember, our first resolve is to survive in the market. Objective is to “make big profits and keep losses small”. We will cover this piece in detail when we discuss the Money Management rules.

So, if we want to buy a stock but see that the Trend is down on that stock, what do we do. We do, NOTHING. Just wait for the trend to turn UP. Most people lose money because they were trading against the trend. And, irony is that they don’t even know what the trend is!! They just trade on TIPs, or GUT feel. You may work on TIPs given by someone, but you should use TIPs only as an additional information for your analysis. These TIPs may be correct sometimes and make you money, but then a dead wall clock (or any watch/clock) is also right twice every day!!

Before we trade, we need to know what the TREND is. And Swing charts help us in identifying the trend.

Meaning of Trend : Direction of the movement of the market or stock at a particular time.

Trend may be:
1. UP - when the market is moving in UP direction
2. DOWN – when the market is moving DOWN direction, or
3. Uncertain – when it is doesn’t have a direction. This is also called “Sideways movement” or “Range Bound”.

I will cover the trend determination in the next post.

Till then, I advise you to go back to the earlier articles and review them once again. Keep constructing Swing charts and keep reviewing more and more Bar charts that you can lay your hands on. You can find Bar charts online. Some places are Yahoo Finance, MoneyControl, NSE, Money.cnn, ICICIDirect.com, Commsec.com.au, MFGLobal.com.au, futuresource.com.