In this edition of Q&A we talk to trader and market educator Alan Oliver. Located in Brisbane Australia, Alan's expertise is in Gann and Fibonacci techniques.  Alan is a member of the ATAA and he is the head of 'Trading with the Gods Pty Ltd', which also publishes a number of weekly newsletters utilising various Fibonacci and Gann methods.

Q. How did you get into trading / investing?

A. Actually, quite by accident! I was an employee of one of Australia's top 4 banks and was given stock as a performance bonus. This fuelled my interest as I watched the price of my bonus rise, and from then on I was hooked.


Q. How long have you been trading the markets?

A. I started physically trading around 1989 just after the big market crash of '87. I was one of these 'lucky' traders who seemed to have a Midas touch.  Everything I bought went skywards as the markets entered a bull phase after the crash. I was soon to learn that markets do fall just as spectacularly, and eventually all my profits were wiped out and then some. It was a good lesson that nothing comes cheaply or easily.

Q. Were there any authors, market teachers that influenced your style of trading as you started?

A. There were very few books or tutors in my starting days. I remember reading Alexander Elders 'Trading for a Living' and then I got a Gann book, '45 Years in Wall Street' as a gift. The thought of being self employed and making buckets of money appealed to me and I began to collect books on trading. I literally have hundreds.

Q. What was one of the most common mistakes you made when you started trading the markets?

A. Well, I have probably made every human mistake imaginable, but the most profound ones include overtrading (buying too much for my account size), failing to take a profit when the run nears exhaustion, and the most painful of all was holding a losing position because it must come back soon.

Q. Which exchanges do you prefer to trade and why? 

A. I now day trade the SPI on the ASX. This means I can enter trades and take profits before the day session ends. This was a complete reversal of my trading strategy after September 11 terrorist attacks. I was fortunate enough to be short on the SPI at this time, but I realised that taking a profit and sleeping soundly is so beneficial to my health.


Q. Are there any markets you won't trade and if so why?

A. I don't like markets that gap hugely overnight, e.g. BHP and Rio on the Australian Exchange. I could only trade these on a weekly chart, but the liquidity and leverage of the SPI makes trading these other markets less profitable.

Q. What time frames do you aim at for your trades (short term, mid-term, long term, combination of all 3?)

A.  I typically trade from a short time frame, e.g. 5 minutes to 15 minutes. I do all the preparatory work on the longer charts but I seem to be happiest when I trade for the intraday moves. I will hold a stock for days to perhaps a week when the right movement is there, but the SPI and Forex trading remains my basic strategies.

Q. Do you utilise any fundamental analysis in your trading, or do you use Technical Analysis exclusively?

A. Part of my job in the bank was dissection and recreation of company balance sheets, so I am aware of 'creative accounting' first hand. I have never nor ever will refer to fundamental analysis before buying/selling stock. A stock is only worth what someone will pay for it, no matter what any accountant deems a stock to be worth.

Q. What is the most important lesson you've learned as a trader so far?

A. Discipline and patience are the hallmarks and essential qualities of any successful trader. Without either of these, trading is a waste of time and money.

Q. Do you utilise leveraged products such as CFD's?   (can you explain why/why not?)

A. I will trade CFD's on the right set up on a chart. I am quite comfortable with high leverage trading for profit, however you need to be ruthless with your stops and exits otherwise the result can be disastrous. CFD trading is a real bonus for new traders with the right attitude as you can enter trading with smaller capital bases. Just because you can buy at 10% deposit margin doesn't mean you have to leverage this high.  You could buy parcels with 50% or higher margin to get the feel for market trading.

Q. Do you utilise any hedging products such as Options?  

A. I don't use options or any such instruments.

Q. Can you give the details of one of your best trades (setup, entry, exit, etc).

A. I recently traded Qantas with a brilliant set up on the daily chart. It made one of my favourite patterns, 3 lower tops on a Gann swing chart, and I made a great profit. Funnily enough, we went on a holiday recently which Qantas paid for, so I am delighted with the irony of it.

Q. If you had to pick 3 things no trader should be without, what would they be and why?

A. Firstly, a written, tested trading plan. Your trading plan should be simple, precise, and set out exactly what you will do in any given circumstance as to entry, exit and stop loss. This is not optional, and anyone trading without this written road map is destined to fail. Secondly, where possible, a trading mentor who has the runs on the board is the best way to avoid some real costly mistakes. It costs money to hire a mentor, but I wish I had one when I started, as it costs more in mistakes than the price for tutelage by a real trader. Ask for references and check them out, healthy scepticism is important here. Finally, in today's environment a good software package is essential. I have used Market Analyst for many years, and the tools in it save me heaps of hours of manual research. The Gann tools just get better and the Astronomical version is a must have for Astro traders.  It is certainly the best available anywhere for this.

Q. W.D. Gann published a number of books in his time.  Is there one Gann book you consider a "must read" for market traders?

A. The easiest to read is '45 Years in Wall Street'. It is still a slog but well worth the effort. I also enjoyed 'Tunnel through the Air', it's a coded book of cycles and again it's a slog but if you read it enough times the message starts to evolve. Rarely do you get the message the first time through any of his books, hence the need for discipline and patience.

Q. In some circles the methods of W.D. Gann have a negative stigma about them.  What do you say to those people who doubt or disregard his work?

A. Well, I have seen Gann tools and strategies work so many times that I have lost count. I have no doubt that even today his theories are ahead of their time. I recently examined currency markets which were nonexistent in Gann's day, and his rules and strategies work there just as they do any other liquid market. I generally find Gann detractors are vendors of another book or product, or they simply just don't get it. After 20 years in trading I know Gann works, it takes time and effort to study it. Nothing worthwhile happens overnight.

Q. One of the tools you've developed is known as the Wedge Pattern.  Can you describe how you came across this pattern and how it works?

A. The wedge pattern is like a few other patterns of mine, they are so simple that most traders have tripped over them looking for the woods amongst the trees. The wedge pattern simply and so easily defines indecision in a market which at some point must be resolved. The pattern defines entry, exit and target and as such is the complete market pattern.

Q. In your book 'Trading with the Gods' you cover a number of topics including Gann, Fibonacci and a discovery you made with the Pyramids.  Can you explain a little on how the Pyramid comes into play with your methods?  What kind of impact did it have on your own trading style?

A. The Pyramids are a superb construction which were ahead of their time. The building has to be so precise otherwise the end result is a disaster. The measurements and angles fascinated me even more so when some of these numbers I had seen on my charts. The Fibonacci series is plainly evident in this construction centuries before Fibonacci popularised the relationship theory. Today, after many years at the wheel, I spot retracement levels by eye and invariably they are Fibonacci levels, again the detractors are only fooling themselves or missing great opportunities. I quite often look for Fibonacci or Gann levels or a chart pattern and start my analysis from there.

Q. Is 'Trading with the Gods' suitable for novice traders to read, or does it require some experience in the markets to be fully beneficial?  What knowledge were you hoping to impart to your readers?

A. I would recommend 'Trading with the Gods' to anyone who has been in the markets and is now looking for better ways to examine trades. There are some real clues in here for serious traders, and I receive many letters of thanks from those who have used the tools in their own trading. I deliberately made it simple and easy to follow, anyone with even a basic knowledge of markets will find something in this book to make them better traders.

I'd like to thank you for taking the time to share your insights and experience with the markets. I look forward to reading future Educated Analyst articles from you.

Trading With the Gods

The pyramids of Egypt have held man spellbound for centuries. Even to this day, we are unable to ascertain their exact age, and debate amongst learned circles places them anywhere between 4500 years and 11500 years old. The main issue is that granite cannot be carbon dated, therefore we have to rely on other means to hypothesise their date of origin.

The main focus should be why they were built, who built them and more importantly who designed them. If these magnificent structures were built as the final resting place for a beloved King, where is his remains, and why are there no hieroglyphics inside? The Valley of the Kings and its tombs are literally covered in memorial messages, yet these Valley graves are nowhere near the splendour of these outstanding monuments.

(Click to purchase.) If these buildings are not a tomb for a King, then why build them at all, let alone to such a degree of accuracy.

The buildings contain within their design a mathematical code, called the Fibonacci series, after the gifted mathematician who recognised these numbers and ratios form other research he had undertaken.  The basis for this code is that the addition of two numbers gives the next number in the sequence, such as 1,2,3,5,8,13,21,34 and so on. Take 5 and 8, added together equals 13. Then 8 + 13 equals 21, and this chain of events continues into infinity.

This is the very same mathematical code that nature uses in its creation of all things. Take a careful look at the Xray of the bones in your hand, and you will see this very same code at work inside you.

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