Stock Trading by Larry Pesavento GREENVILLE, SC 29606 Books and Gifts for Traders and Investors.Preface Over the past 20 years the use and misuse of the Fibonacci Summation series has proliferated to the point that commentators on the nation’s TV business channels are now resident experts. Tlay no claim to being an expert. I have, however, studied the subject of Fibonacci numbers ex- tensively, especially how it relates to trading. I have always taken the pragmatic position that if T could not use what I was studying to help in trading, then I was not interested in pursuing it any further. If this material can stimulate your interest in the subject, then introducing you to the subject will have been worthwhile. A word of caution, this material is based on the prob- abilities of trading, The art of trading is one of risk management. Amos Hostetter, one of the founders of Commodity Corporation in Princeton, New Jersey, used to say, “Take care of losses and the profits will take care of themselves.” 1 use this quote a lot because I believe it is very im- portant! ‘The pattern recognition methodology illustrated in the text will be of interest to anyone that has ever traded using technical charts. I can say with confidence that there are very few who have researched patterns to the extent I have. Some of the references date back to the carly 1900s. Each of these patterns is based on ratio and proportion. A technical chart is nothing more than a road map with a price and time axis, These patterns repeat with a great deal of regular- ity. Some of my best students have been airline pilots. They seem to approach trading like they approach flying, following a flight plan. The similarities to trading are numerous. Finally, one of my goals in writing this book is to expose you to the subject of ancient ge- ometry, Fibonacci numbers are an integral part of the numbers that make up the subject of ancient gcometry. It will be of interest to some of you that many of these sacred ratios have their origin in the cosmos. I will not spend a significant amount of time relating my experiences in astro-harmonios research. The subject is too vast for me to consider here. More importantly, it is not necessary for profitable trading.Contents Introduction ... Harmonic and Vibratory Numbers... Geometrics of a Price Chart.... The Primary Patterns..... Classical Chart Patterns Using Ratio and Proportion....... 71 Bonus Pattern: The Butterfly ..... The Opening Price .... Entry Techniques .... It’s Different This Time..... The Non Random Nature of Chaos Theory ... Appendices... | Description of the Gartley “222” Pattern... 133 Il Some Practical Tips on Cycles ..... Ill Some More Practical Tips on Cycles .. IV Additional Reading