Gartley Trader

By Ross Beck, FCSI

For the week of March 23 – March 27, 2009

The Gartley Trader is a weekly publication that focuses on high probability trade
set ups in the U.S. Futures market. The Gartley Trader is a purely technical
newsletter with a focus on pattern recognition, Market Geometry and Fibonacci
ratio analysis. As such there will be no fundamental bias as to whether the trade
set ups discussed should be long or short. It will be left up to the individual to
filter these setups with additional fundamental analysis. In addition to the set ups,
all examples will use Single Entry Multiple Exits and Scale In Single Out advanced
money management techniques. For further information, go to
www.gartleytrader.com

Weekly Summary
Exchange Contract Month Setup Price Order Date

SPOT EUR/USD Front Bear Gartley 1.3635 Sell New

NYBOT SB Front Bear Gartley 13.55 Sell New

“Gartley Trader” is written by Ross Beck, FCSI, All rights reserved. Charting by Dynamic Trader. www.gartleytrader.com
Trade Setups of the Week
SPOT EUR/USD

Trade Set Up
We have a bearish Gartley setting up in the EUR/USD on the 5 minute chart. The pattern is
based on a 78.6% Fibonacci retracement and a simple ABC zigzag that completes at 1.3625. If
the EUR/USD rallies this week to 1.3635, the bearish Gartley pattern will be complete and we
will want to enter with limit orders on the short side.

“Gartley Trader” is written by Ross Beck, FCSI, All rights reserved. Charting by Dynamic Trader. www.gartleytrader.com
Entry/Exit Strategies
Our two favorite methods of entering/exiting our trade set ups are with SEME (single entry,
multiple exits) and SISO (scale in, single out). SEME dictates that we enter with a minimum of
three contracts and exit the position in thirds. The SISO strategy is a pure martingale and will
double the position size at specified intervals if the position moves against us. Once the position
moves in our favor by a single interval, we will liquidate all open positions. The SISO strategy is
VERY AGGRESSIVE but has the highest probability of winning.

Single Entry Multiple Exits

Entry Order - Sell three contracts at 1.3635 with limit orders. Enter the protective sell stop on
all three contracts at 1.3675. Set the first profit target to buy one contract on a limit at 1.3615.

If the first target is hit - Move the protective buy stop on the remaining two contracts to 1.3655
and set the second profit target to buy one contract at 1.3595.

If second target hit - Move the stop on the remaining open position to 1.3635 and use a three
bar trailing stop on the 60 minute chart as long as the three bar trailing stop is below 1.3635.

Three Bar Trailing Stop - The three bar trailing stop in the above example would put a stop
above the highest high of the previous three bars (ignoring inside bars) on a 60 minute chart.

Scale In Single Out (SISO)

Entry Order - Sell one contract at 1.3635 limit and set the profit target at 1.3595 to buy.

If the market rallies to 1.3675 - Sell two contracts and place limit orders to buy three contracts
at 1.3635.

If market rallies to 1.3715 - Sell four contracts and place limit orders to buy seven contracts at
1.3675

If market rallies to 1.3755 - PTP! (Pull the plug)

Entry strategies like the Gartley Pattern are only one part of a trading strategy. The most
important aspect of trading is the exit. In addition to the strategies described above, Majestic
Peak Trading offers a number of different money management techniques to empower traders.
For more information on expert exit strategies, go to www.majesticpeaktrading.com

“Gartley Trader” is written by Ross Beck, FCSI, All rights reserved. Charting by Dynamic Trader. www.gartleytrader.com
Trade Setups for the Week
NYBOT World Sugar

Trade Set Up
We have a Bearish Gartley in sugar on the 60 minute chart. The pattern is based on a 78.6%
Fibonacci retracement on the impulsive trend move down from the Feb.26th high at 13.93,
down to the March 9th low at 12.42. In addition, a simple ABC correction against the down
trend will be complete at 13.52. If sugar rallies this week to 13.55, the bearish Gartley might be
complete and we may choose to enter with limit orders on the short side.

“Gartley Trader” is written by Ross Beck, FCSI, All rights reserved. Charting by Dynamic Trader. www.gartleytrader.com
Entry/Exit Strategies

Single Entry Multiple Exits

Entry Order – Sell three contracts at 13.55 with limit orders. Enter the protective buy stop on all
three contracts at 13.95. Set the first profit target to buy one contract on a limit at 13.35.

If the first target is hit - Move the protective buy stop on the remaining two contracts to 13.75
and set the second profit target to buy one contract at 13.15

If second target hit - Move the stop on the remaining open position to 13.55 and use a three
bar trailing stop on the daily chart as long as the three bar trailing stop is below 13.55.

Three Bar Trailing Stop - The three bar trailing stop in the above example would put a stop
above the highest high of the previous three bars (ignoring inside bars) on a daily chart.

Scale In Single Out (SISO)

Entry Order – Sell one contract at 13.55 limit and set the profit target at 13.15 to buy.

If the market rallies to 13.95 - Sell two contracts and place limit orders to buy three contracts
at 13.55

If market rallies to 14.35 - Sell four contracts and place limit orders to buy seven contracts at
13.95

If market rallies to 14.75 - PTP! (Pull the plug)

Entry strategies like the Gartley Pattern are only one part of a trading strategy. The most
important aspect of trading is the exit. In addition to the strategies described above, Majestic
Peak Trading offers a number of different money management techniques to empower traders.
For more information on expert exit strategies, go to www.majesticpeaktrading.com

“Gartley Trader” is written by Ross Beck, FCSI, All rights reserved. Charting by Dynamic Trader. www.gartleytrader.com
Weekly Technical Analysis Review
The Gartley Pattern – Part 4

On the internet today there is much conflicting information about what a Gartley pattern really
is. To clarify this matter once and for all, let’s see what H.M. Gartley has to say about his
namesake pattern. The following information is reprinted from “Profits in the Stock Market” by
H.M. Gartley with the permission of Nikki Jones from the Lambert – Gann Publishing Company.

“One of the Best Trading Opportunities”

In the life of those who dabble in Wall Street, at some time or other there comes a yearning –
“just to buy them right, once, if never again”. For those who have patience, the study of top and bottom
patterns will provide such an opportunity every now and then, - the chance dones not arise every day,
but when it does, a worthwhile opportunity, with small risk, becomes available. Let us look at Figure 27
(A). When, after an intermediate decline in either a bull or a bear market, such as A-B in the diagram,
has proceeded for some time, and activity has shown a definite tendency to dry up, indication that
liquidation is terminating, a minor rally like B-C sets in, with volume expanding on the upside. And when
a minor decline, after cancelling a third to a half of the preceding minor advance (B-C) comes to a halt,
with volume drying up again, a real opportunity is presented to buy stocks, with a stop under the
previous low.

In eight out of ten cases wherein each of these specific conditions occurs, a rally, which will
provide a worthwhile profit, ensues. In the other two cases, only small losses have to be taken. In
trading this formation, the observer is depending upon the probability that either a head-and-shoulders,
or double bottom, which are the two reversal patterns which occur most frequently, is developing.

The art in conducting an operation of this kind lies in:

a: Having the patience to wait until a decline of substantial proportions has developed;

b: Observing that all conditions laid down are present;

c: Having the courage to buy just as soon as the minor reaction which tests the bottom
shows signs of terminating; and

d: Having the courage to get out with a fair profit (10-20 per cent), or at least protect it
with stops.

Hourly charts of the averages, available for guiding the operation, repay the market student for
all the efforts he puts into keeping them day after day, when they are of less practical use.

Similar opportunities occasionally develop for that small part of the trading fraternity which has
the intestinal fortitude and temperament to sell stocks short. The case in reverse is laid out in Section B,
of Figure 27.
“Gartley Trader” is written by Ross Beck, FCSI, All rights reserved. Charting by Dynamic Trader. www.gartleytrader.com
In part 5 of this series of articles, we will continue to discuss the modern day version of the
Gartley Pattern.

Ross Beck, FCSI

To learn more about Ross Beck, FCSI or the Gartley Pattern, go to www.gartleytrader.com

“Gartley Trader” is written by Ross Beck, FCSI, All rights reserved. Charting by Dynamic Trader. www.gartleytrader.com