[I]I continue now the series here, I write here down my own thoughts about my second COT book as I read it. I write down anyway always for myself what I think is important to look it back later, so I decided why not to post it here too? Important: I write down the own words of the author, in the right order as it comes in the book. However I will not structure the different thoughts and do not write down which pages they were. I just want to mention the sentences which I find important for myself. This is not the same value for you as reading the book (hopefully you will all read it when you have the time for it), however it is better than nothing. I also make my own summary in the end of each post.[/I]
[B]The One-Minute Commodity Trader[/B] - Part II
I pointed out that gold had a seasonal influence to rally around July of each year with a top in December.
[I]
Fundamental Lesson Two: There is a time to sow and a time to reap gold - it has strong seasonal influences.
Fundamental Lesson Three: The future price of gold is heavily influenced by what the commercials do.
Point Counterpoint: Gold does not rally when stocks or economies collapse [/I]
When inflation goes berserk, expect gold to rally. Gold rallies when there is money around, and it is afraid of losing purchasing power. In depressions and recessions there is no money around to buy much of anything, anyway.
The many years of trading have tought me two lessons: the markets are very simple and they are very complex. They are complex on a short-term basis, and simple on a longer-term basis.
[B]Charts[/B] - Part I
I like to look at charts for the following purposes:
1. to determine the trend.
2. to look for emotional binges
3. to find patterns that I know act as springboards to moves.
4. to find places where breakouts or greakdowns can be used for entries or stops.
[I]Bar charts
Candlestick charts
Closing-only price charts
Market profile charts[/I]
The charts may have their greatest value for stops and entries in very short-term time frames.
[I]Point-and-figure charts[/I]
The idea behind point-and-figure charts is that by ignoring trivial price fluctuations, the overall trend is made much clearer. What you see on the chart is a clear pattern of significant price movements up and down.
[I]Kagi bars[/I]
These are like point-and-figure charts in that time is not a consideration, only boxes are not used.
[I]Renko charts[/I]
Since a renko chart isolates the underlying price trend by filtering out the minor price changes, renko charts are supposed to be helpful when determining support and resistance levels.
[I]Moving averages[/I]
[I]Summary:[/I] these pages had nothing to do with the COT report. The first half was more for gold lovers, the second was a basic introduction to technical analysis. It was a good repetition and I even wrote from many chart arts one sentence out because I have never seen these charts. I wonder who uses them. I will continue the read with some technical aspects after the Moving Averages. I have to say Williams disappointed me the first time. The technical analysis is about to discuss that he uses the bar charts and all others are not so effective and he critisizes the other types. But the whole chapter until this point has the conclusion that people can use technicals but nothing can be compared to the COT report. Well, of course I know how important COT is as I would not read the book. But still, I like to be positive on something and not always critisizing other methods which I do not use; maybe I do not even know.