With Gamma Technologies

With Gamma Technologies
On Target Trading With Gamma Technologies

The Application of Gamma Wave Theory
Our Purpose For even more than doers, we are deciders. And once the decision is clear, the doing becomes effortless.” The Book of Runes, by Ralph Blum Isn’t that the crux of trading. Making a decision, then doing it. Gamma Wave Theory is about making trading decisions rapidly, without effort, without fear. These decisions encompass trend, the length of a potential move, decisions about risk, and how big to make the bet. Steve Rhoads is the most effortless trader I have ever seen. He appears to trade without concious thought as though he knows where the market is going before it moves. He can draw patterns and price projections in both directions and simply go with the flow as it happens. That is the result of instant decision making, without hesitation or doubt. The Application of Gamma Wave Theory 09/04 Copyright © 2004 On Target Trading, LLC

Copyright © 2004 On Target Trading, LLC
Risk and Reward How do you measure risk to reward if you cannot reliably forecast a price target? How do I determine position size without knowing if my target can be reached within a trend? Questions every trader asks, whether they are day traders, swing traders, or long term players in the market. What’s the trend and how long will it last. 09/04 Copyright © 2004 On Target Trading, LLC

Two Types of Risk Control
Entry Risk Risk/Reward Position sizing Stops Risk to Capital Target Trading Allowable Pullback Trailing Stops 09/04 Copyright © 2004 On Target Trading, LLC

Market Structure Repetition of patterns within random price action. Identification of patterns using high and low price pivots and swings between pivots. Used to determine trend. 09/04 Copyright © 2004 On Target Trading, LLC

Mission Control Software Tools for Risk Control The Gamma Tool Kit Color Bars for trend Dots mark stops Color coded swings Zones of retracement identified Targets for profits 09/04 Copyright © 2004 On Target Trading, LLC

Definition of a Swing Pivots are determined when the market makes significant turns from high to low and back. Swings connect the pivots and connect together to create patterns. Pivots are determined when the market makes significant turns from high to low and back. Swings are the lines drawn between the pivots. Creates a simple 3 swing pattern 09/04 Copyright © 2004 On Target Trading, LLC

The Gamma Wave Each swing considered in relation to the prior swing and projects the next swing. Dynamic in nature. Creates low risk entries. Allows for forecasting profit targets. 09/04 Copyright © 2004 On Target Trading, LLC

Basic Gamma Target Trading
Simple 3 swing pattern with entry and profit target 1st Profit Target This is a 3 swing retracement of a larger down swing. However, it contains it’s own test of the prio low and expansion to higher target. These 3 swings can be measure with price and time. Entry Window Test 09/04 Copyright © 2004 On Target Trading, LLC

Assessing Risk Entry Risk and Reward Risk is the difference between the entry and the stop Reward is the distance from the entry to the profit target. 1st Profit Target The stop can be placed in one of two places, at the origin of the 3 swing pattern or a tighter stop at the test of the prior low. Stop Possible Stop 09/04 Copyright © 2004 On Target Trading, LLC

Capital Risk Letting the profitable trade retrace against equity.
2nd Profit Target 1st Profit Target Allowable Pullback and trailing stop Example of a successful test of a swing low, and sets up an expansion into the prior dotted swing as a larger degree retracement. Entry Window Stop 09/04 Copyright © 2004 On Target Trading, LLC

The 1st Gamma Form The beginning of the pattern or The Launch Pad The Launch Pad The basic 3 swing form to which other single swings are attached to make up a pattern. This is the beginning. The longest swing completes, paints yellow and then the first reaction is formed The Launch Pad 09/04 Copyright © 2004 On Target Trading, LLC

The Test Add a Swing Stop Stop The second swing provides us lots of data, it helps setup the target and determines where we place our stop. The length of the second swing helps set the profit target and determines the initial risk stop. 09/04 Copyright © 2004 On Target Trading, LLC

The Launch Window The blue box illustrates the potential area of entry The Launch Pad Launch Window It is not necessary to have precise entries, the best entry is closest to the stop naturally. The area of entry is determined by using a lower time frame chart and using the multi-time frame swing tool to view the swings with in the larger degree swing. 09/04 Copyright © 2004 On Target Trading, LLC

Finding The Tradable Swing
Launch Pad Profit Target 09/04 Copyright © 2004 On Target Trading, LLC

Pattern Recognition Traditional Patterns Now going to illustrate the traditional patterns with a Gamma Wave structure and how to identify the tradable swing. Two types of patterns, continuation patterns, where we re-enter or add to our position Reversal patterns, where we may take a contra trend trade or if we have had serious bottoming or topping price action we will trade for the new trend. Following are examples of these patterns and what they look like with the Gamma Software EXPANDED FLAT ZIG ZAG FLAT TRIANGLES 09/04 Copyright © 2004 On Target Trading, LLC

The Zig Zag A Reversal Form We teach our students to begin to recognize this traditional pattern beginning with the first swing, not waiting until it is finished and knowing that one has missed this move 09/04 Copyright © 2004 On Target Trading, LLC

Advanced Concepts Changes in degree are reflected by price exceeding the highest calculated profit target. We look to the next higher time frame to identify the next target and keep on doing so as price moves in the trend direction. This ability to see degree change keeps a trader in the trend to maximize profits. 09/04 Copyright © 2004 On Target Trading, LLC

Multi-time Frame Swing Tool

Trade Analysis The Decision Pyramid We start at the bottom and work out way up the pyramid. The most important aspect is to know which direction to trade. Then we assess the risk, where we would have to put the stop, and what size of a position to trade. Last we make a target projection, is it enough to meet our risk/reward requirement in our trading plan, if so the trade is on. If you are a day trader, this process needs to occur rapidly, and almost automatically. 09/04 Copyright © 2004 On Target Trading, LLC

Color Bars for Trend, Dots for Stops, Targets for Exits.
Effortless Trading Rocket Booster On Target Launch Pad Launch Attach color coded swings and forms Calculate your risk/reward set the Stop Trail the stop exit 1 at the Target hold 1 for trend Identify the basic Gamma Form Color Bars for Trend, Dots for Stops, Targets for Exits. 09/04 Copyright © 2004 On Target Trading, LLC

The Trader’s Questions?
How do I measure risk to reward if I cannot reliably forecast a price target? How do I determine position size if I cannot forecast trend continuation? 09/04 Copyright © 2004 On Target Trading, LLC

The Training 1. Form Recognition 2. Multi-Time Frame Analysis 3. Entry Techniques In order to make rapid decisions, with out a lot of effort, we train students to recognize forms or patterns, utilize the software with the multiple time frames. Teach easy to identify entry techniques and how to exit with that profit intact by using profit targets and position size. 4. Trading for Profit Targets 09/04 Copyright © 2004 On Target Trading, LLC

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