Pioneers in the Scientific Trading
Charles Dow co-founded Dow Jones & Company with Edward Jones and Charles Bergstresser. He also co-founded The Wall Street Journal. He created the Dow Jones Industrial Average Index. In 1896, he calculated Dow Jones Industrial Average Index using the stock price of the twelve companies. Until 1902, he studied the price movement in chart and created the Dow Theory, the groundwork for the technical analysis. Dow Theory suggests that price shows a particular patterns before bullish market and bearish market proceed. In fact, Dow Theory was published much later by his colleague, William P. Hamilton in 1922.
Richard Wyckoff was one of the earliest scientific trader, who tried to identify underlying trends or logic behind market action. He worked with many legendary traders like Jesse Livermore, E. H. Harriman, James R. Keene, Otto Kahn, and, J.P. Morgan throughout his career. He is also famously known for the creator of the Wyckoff volume spread analysis. In 1922, he was publishing educational articles for stock market, which were run in New York’s The Saturday Evening Post starting in 1922. Throughout the trading history, his volume spread analysis made some influence on other technical analysis like the supply and demand analysis.
He is one of the earliest technical analyst in the stock market. In 1932, he published “Technical Analysis and Stock Market Profits”. In the book, he taught many price patterns, which are still used by the trading community nearly after 90 years. In his book, you can find the trace of triangle, wedge patterns, double top, double bottom, triple top and triple bottom, head and shoulder patterns. His book is one of the oldest book in the technical analysis.
Harold M. Gartley
Like Richard Shabacker, he is one of the oldest technical analyst in the stock market. He published “Profits in the Stock Market” in 1935. In his book, you can find the description of triangle, wedge patterns, double top, double bottom, triple top and triple bottom, head and shoulder patterns. He is also the creator of the Gartley pattern, which is one of the first harmonic pattern. In addition, in his book, you can find some other price patterns like the diamond pattern, circular top and square top.
Ralph Nelson Elliott
He was one of the oldest technical analyst like Richard Shabacker and Harold M. Gartley in the stock market. He is famous after his “Elliott Wave Theory”. In 1938, he published “The Wave Principle”. In his book, he showed how to apply the Fibonacci analysis to the Wave analysis. Impulse wave and corrective wave described in his book are still used by many technical analyst in the Wall Street. In his book, he tried to explain the triangle, rising wedge and falling wedge patterns using “Elliott Wave Theory”.
Benoit Mandelbrot was a Polish-born French-American mathematician. He is also known as the father of “Fractal” and “Self-Similarity”. He established the core theory behind the “Fractal” and “Self-Similarity”. His research in “Fractal” and “Self-Similarity” influenced many scientific fields including Statistics, Financial engineering, Economics, and Computer Science. He is also one of the influencer to Nassim Nicholas Taleb, the author of “the Black Swan”. In “The Misbehavior of Markets: A Fractal View of Financial Turbulence”, Benoit Mandelbrot and Richard L. Hudson applied the fractal theory to understand the financial market. They explained that the financial market can impose a greater risk than it can be explained by the modern mathematical assumption. In fact, in the Black Monday in 19 October 1987, the stock market declined largely unexpected. As it was pointed by Benoit Mandelbrot, this was something could not be explained by the modern financial mathematics.
Benjamin Graham was a British-born American economist, and investor. He is widely known as the “father of value investing”. He published two books “Security Analysis” (1934) with David Dodd, and “The Intelligent Investor” (1949). “The Intelligence Investor” is one of the most popular book for the stock market trader. The margin of safety described in his book is considered as one of the most important trading principle. He is also the great influencer in the trading community. Warrnet Buffet, Charles Brandes, William J. Ruane, Bert Olden, Irving Kahn and Walter J. Schloss are some of the famous investors influenced by Benjamin Graham.
Richard Dennis is a commodities speculator. He is the pioneer of the trend following strategy. In the early 1970s, he started trading with $1,600 and made $350 million in about six years. Although his fund incurred significant losses in the stock market crash of 1987, he is still considered as the legendary trader. He created the method called “Turtle Trading”. He emphasized that price analysis is important for practical trading, sometimes he put more weight on the technical analysis than fundamental analysis. Since he used ATR indicator mechanically, created by J. Wells Wilder, he is also considered as the pioneer in the mechanical or algorithmic trading.
About this Article
This article is the part taken from the draft version of the Book: Science Of Support, Resistance, Fibonacci Analysis, Harmonic Pattern, Elliott Wave and X3 Chart Pattern. Full version of the book can be found from the link below:
You can also use Fractal Pattern Scanner in MetaTrader to accomplish your technical analysis. Turning Point Probability (and also trend probability) can be used for the scientific trading. Here is the landing page for Fractal Pattern Scanner in MetaTrader 4 and MetaTrader5.
Below is the landing page for Optimum Chart