Monday, October 7, 2013

Greenblatt, Breakthrough Strategies for Predicting Any Market,2d ed.

The first edition of Jeff Greenblatt’s Breakthrough Strategies for Predicting Any Market: Charting Elliott Wave, Lucas, Fibonacci, Gann, and Time for Profit appeared in 2007. Since that time Greenblatt came to embrace the work of W. D. Gann. He also found that Alan Andrews’ median lines served as “an excellent GPS system in order to understand how trends evolve.” The second edition (Wiley, 2013) thus includes new chapters on Gann, Andrews, and median channels. It also addresses market sentiment/psychology.

Greenblatt is the director of Lucas Wave International and editor of The Fibonacci Forecaster. And who was Lucas, you might ask. (Well, at least I did.) Edouard Lucas (1842-1891) was a French mathematician who invented the famous (some might say infamous) Tower of Hanoi puzzle. He also studied number sequences, most notably the Fibonacci sequence. The closely related number sequence (2, 1, 3, 4, 7, 11, 18, 29, …) is named after Lucas.

But back to the book.

Breakthrough Strategies focuses on chart reading, the idea being to wean traders away from a reliance on lagging indicators and to introduce them instead to the kind of pattern analysis/recognition that can serve as a forecasting tool. By pattern recognition Greenblatt doesn’t mean simply finding double tops or ascending triangles. He is looking for quantifiable patterns. He counts bars in search of cycles, squares time and price, calculates Fibonacci retracements and extensions.

He takes the reader chart by chart (some of them pretty difficult to decipher amid all the lines and numbers) to illustrate the various techniques he uses. The idea is to build up a repertoire of methods that are objective, not subjective. Of course, in trading nothing is purely objective. Just because a Gann calculation agrees with some Fibonacci level doesn’t mean that the trader has an objective signal. An Andrews channel in conjunction with another Fibonacci level might offer up a competing signal. Moreover, even when all the stars align the results may be disappointing, as Greenblatt readily admits.

So who can profit from this book? Certainly not a beginning trader; it’s far too complex for someone just getting his feet wet. Not the minimalist who likes clean charts. And, of course, not the person who thinks that all this old stuff is so much voodoo. Greenblatt is unlikely to win converts to his cause with this book. But for the trader who is using any of these strategies and is looking for a way to complement them (especially for those who might contemplate adding Gann to their quiver), Greenblatt’s book is a helpful guide.

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