Business Summary
Potash Corporation of Saskatchewan Inc. is an integrated fertilizer and related industrial and feed products company. The Company’s potash is produced from six mines in Saskatchewan and one mine in New Brunswick. Of these mines, it owns and operates five in Saskatchewan and the one in New Brunswick. Its nitrogen operations involve the production of nitrogen fertilizers and nitrogen feed and industrial products, including ammonia, urea, nitrogen solutions, ammonium nitrate and nitric acid. It has nitrogen facilities in Georgia, Louisiana, Ohio and Trinidad. The Company’s phosphate operations include the manufacture and sale of solid and liquid phosphate fertilizers, animal feed supplements and industrial acid, which is used in food products and industrial processes. It indirectly holds all outstanding interests in PCS Joint Venture, Ltd., which formerly manufactured, processed and distributed fertilizer and other agricultural supplies from plants located in Florida and Georgia.

Why I choose this stock?
Q1:
P/E =

Q2:
P/E=

So, the P/E growth increased by.... %

USING OPTIONS
This covers the very basics.

What Options to Buy or Sell

Buying:
· Buy at least next expiration at a minimum. For example, if March options
expire on the coming Friday (the third Friday of the month), prefer May
options over April. That is the minimum. July or August would be better as
long as you can get the extra time at a decent price.
· Exceptions
o Pre-split plays
o Extremely expensive options; but has to be good pattern and must see
breakout
· Strike: Just in the money to 1 full strike in the money in most cases.
· Delta: We try to buy a 55ish delta as that gives us good movement for the
price.

Selling Puts:
· Sell shortest times (expirations) you can and still get good premium
· If can’t get good price for the next month out, probably not a good stock to
sell options on.
· Like to sell 2-3 weeks from expiration; will do more, but need good pattern
· Prefer to sell on a breakouts or when strong pattern forming and market is
strong, particularly on the test. On the test you know the breakout has held
and lessens the chance of the stock coming back on you.
· Always consider this play when see strong pattern in strong rally
· Spreads: Prefer $5 spreads between strike prices (e.g., 145 to sell/140 to buy)
as requires less margin
o Want to achieve a credit of $1.50 to $2.00 for a $5 spread.
Selling Calls:
· Want to sell when stock is topping and/or market weakening and has room to
fall before hits support.
· Signs of topping:
o doji’s after run
o close way off high
o volume down on rise
o volume up on fall
o break trend line
o bounces down from resistance
· Sell near term expirations so you can let time work for you
o Bonus: You can sell each month if the pattern holds.

Mathematics in TRADING

Gann Lesson 6
Mathematics

Mathematics is the basis of all forecasting in the markets.

Using mathematics is an absolute necessity to trade the stock or commodity markets successfully. The traders who master the art of trading the markets with mathematics will be successful. Those who don't will fail. It's as simple as that. Traders who rely on tips and rumors will eventually lose. By taking this course you show the desire to succeed by going beyond what the normal trader will do. You are showing your desire to study, understand and apply mathematics to the market. It will take a lot of study for you to succeed, but you are on the right course. Those traders who think they can use computer trading programs alone with simple oscillators will fail. Many of these traders spend hundreds of hours of their valuable study time trying to make some definite pattern or way to use oscillators. They won't be able to do it. You need mathematics to succeed in the markets.

It looks so easy to trade with oscillators when you look back on past charts. You just sell when the stochastics is at the top and buy when it's on the bottom. It works some of the time, but sometimes it sets you up for a blood bath. For example, sometimes when the stochastics gets to the top, in an apparent sell mode, the market will take off and explode, leaving you with big losses if you shorted the market. The same thing happens when the stochastics gets to the bottom. If you buy when the stochastics is at the bottom, sometimes the market will fall out of bed giving you huge losses. Traders who follow only oscillators don't know when the market is approaching major or minor geometric angles or timing cycles. They have no idea of where the market might be heading. They will short the market when the stochastics oscillator is at the top and not know that the market is resting on a major geometric angle or time cycle. The market will then explode giving them huge loses. Check around with traders that use oscillators. You will find that they generally loose money in the markets. The only traders who consistently make money in the markets are traders who use mathematical methods of trading. These are based on the true mathematics behind the market caused by the vibration of numbers. Prior highs and lows and their interactive harmony waves and geometric angles are the real cause behind market movements.

Oscillators can be used to successfully trade with, but only if they are used with other time and price trading techniques to support them. In this course we go over how displaced moving averages, stochastics and MACD can be used to trade the market mathematically. It is the only Gann way to use oscillators.

It's a puzzle why most traders don't use mathematics to buy and sell stocks and commodities and to forecast trends in the markets. It's very easy after you learn the mathematical trading techniques and it's 100% more reliable than using other techniques. It's also much more consistent. Mathematics is something that you can depend on. In this course, after you learn the principles of trading market mathematics you will never want to hear tips or rumors again. You will find that if someone offers their view of the market to you, you'll want to shut them out and not let them influence you. After you know the rules of mathematics behind the market you will find your sixth sense develops and many of the techniques you learned in this course will start relating to each other. Your mind will have a unique sense of where the market is headed.

In using mathematics for trading the markets, it is important to know that the market can go only two directions. It can go up or down or it can just move sideways. Prices can increase or decrease or just stay the same. They can do nothing else. We will use mathematics to figure out if the markets will go up or down. There are various methods to use to determine this. They involve the use of mathematical trend analysis and timing techniques developed by W. D.. Gann.

The Cube
There are three measurements in a cube: length, width and height. We can use these measurements to figure out market movement. The market can be clocked in time in two different ways. One way is using trading days and the other is using calendar days. Many traders will use both as a check on each other. For example, a market might make a bottom and advance 90 market days to the next major top. That move would be 126 calendar days if you added the weekends. Most of the time the calendar day count will coincide with the market day count. The two together, will usually give you a time window. This window will contain 2 - 3 days where the market will top or bottom. In this example there are 90 trading days. Divide 90 trading days by 5 days to the week. You get 18 weeks. Weeks have two weekend days, so multiply 18 times 2 to get 36 weekend days. Add these 36 weekend days to 90 and you get 126 calendar days, which is very close to the 120 circle number. The ratio of trading days to calendar days is 1.4 which is close to the Gann Square of 144 or 10 times 1.44 is 144 a very important number.

Time measurements can be based on several techniques. One technique is using natural fixed numbers. These are the numbers that can be divided into the circle of 360 degrees. These are: 9, 18, 27, 36, 45, 72, 90, 120, 180, 270 and 360. Markets fall or rise by these exact numbers. The other technique is using variable numbers based on market highs, lows and ranges. If the market makes a high at 540 and a low of 410 the difference is 130. The markets often retrace one half of this or rise for 65 days.

The vertical or height movement of the market is price. Price calculations can use the same techniques as time measurements such as natural fixed numbers or variable numbers. For example, if the market makes a bottom at 90 it can rise 90 days and 90 points and square at that point and turn down.

A combination of height, width and length of a cube is volume of a cube. A market has to move up and down a certain number of vibrations to fill the volume of a cube before the market will change directions. Count the swings of a bull market and it should equal the swings of a prior bull market. See Exhibit 6.2. in the course book. A bear market also should have the same number of swings as prior bear markets and they should be in proportion to prior bear markets and bull markets. A simple example is the Elliott wave counts of the market. Wave one is a count of 1, wave two down is 2, wave three up is 3, wave four down is 4, and wave five up is 5. Inside of these waves are smaller waves and the total wave count of one bull market should equal some prior bull market of the same commodity or stock.

A cube also has six sides. This means that the market will repeat itself every 6 intervals. That means you should check back every 6 days, 6 months, 6 years, or (6 X 10) 60 years and the market will repeat itself. Be careful as the market has inversions in those repeat time cycles. That means for example 6 months ago if the market made a low, today it might invert and make a high instead. You should be watching for price patterns so you don't get caught in an inversion.

In geometry there are 3 basic shapes: the square, the circle, and the triangle. See Exhibit 6.4 in the course manual. The square, of course, represents time and price. The horizontal is time and the vertical is price. From the square we determine everything, both timing and price projection. If we put the 360 degree circle inside of the square and the three sided triangle inside the circle and the square this will give us the means to determine time and price points for forecasting the markets. As you remember, the fixed time points are from the circle of 360 degrees. The triangle helps us divide the circle into the three points of 120 degrees. The 120 degree points are some of the most important points of the circle. The Gann wheel or the Square of 9 is constructed from the square, the circle and the triangle.

We can use three different basic angles to determine time and price within the markets: the vertical, the horizontal and the diagonal line. The vertical is price, the horizontal is time and the diagonal is a combination of the two which is change of time and price. The horizontal and vertical lines divide the circle into the important 90 degree points. The triangle can then be used to divide the 90 degree points into 45 degree points. From these three geometric shapes, we get all the calculations in mathematics for time and price projections in the markets. In combination with the angles, we can use the squares of both odd and even numbers to get the cause behind the market movements. These numbers are actually part of the square when they are laid out according the Gann Square of 9.

Constructing Charts Properly
For geometric angles to work properly on charts, it is necessary for the charts to be constructed properly. You'll find the rules in this chapter of the Gann Master's Course. If the charts are not constructed properly, then one small error can throw off your measurement and give you a loss in the markets. A very small error at the beginning can lead to a huge loss later on. Study this chapter in the course book so you know these rules.

Geometric Angles
Geometric angles accurately measure time and price movements. There are 360 degrees in a circle and certain numbers in the circle are very important. In this course, you will learn which numbers are important. These numbers will indicate to you when important tops and bottoms are being formed. They will also indicate important support and resistance levels in regard to both time and price. You must study and practice with these numbers once you learn them to determine their importance.

Geometric angles are used to measure time and price movements because they are much easier than using addition, subtraction, multiplication or division in the markets, provided you use correct rules for drawing the angles correctly. Angles can correct mistakes in mathematics. For example, if you count across the bottom of your chart 90 squares across and 90 squares up and draw a 45 degree angle down from the left high point, the angle should intercept the 0 line at exactly 90 squares to the right. Thus angles, if drawn properly, will help you to correct mistakes in mathematics on your charts. Angles, will help you to know the position the market is in all the time. If you figure the market using mathematics such as addition, subtraction, multiplication or division and write these calculations down on paper, you will misplace and lose these calculations much of the time. Having the angles drawn on your chart allows you always to know the position the market is in all the time and you will always know when the market changes trend.

Geometric angles accurately measure and divide time and price into proportionate parts. If a stock or commodity makes a low on a certain price for example 34, it has three dimensions of time and price. It can move sideways for 34 time units, it can move up for 34 price units, and it can move diagonally 34 time and price points from which it began. Accurate measurements can be taken from previous highs, lows, and the ranges in between. There is always proportion between previous highs, lows, and swings of the market.

90 Square Chart
The 90 square pattern chart is very important to use in trend analysis. See Exhibit 3.3 in the course. This chapter tells you the secrets of constructing this square on plastic. Study it carefully. It means a lot!

The 90 degree square also helps you to understand the principles of Gann's mathematics. First you divide the number by the odd or even numbers such as 4 or 3. Divide the sides of the square first by 4 and then by 3 giving you 1/4, 1/2, 3/4, 4/4, 1/3, 2/3, 3/3. Then if necessary divide the sides even further by going one step further such as 1/8, 1/4, 3/8, 1/2, 5/8, 3/4, 7/8, 8/8, 1/6, 1/3, 2/3, 5/6, 6/6. What you are doing is multiplying the 4 and the 3 by 2 to get the next divisions of 8 and 6. To go even further you multiply by 2 again to get 18 and 12. Keep going out further to find the more precision numbers.

Also in course manual all the angles are explained and what they mean. Study them carefully.

When to Draw Daily Angles
When do you draw the angles on the chart? You draw them only after the market has been in a downtrend for at least 3 days and then the market has a three day rally making higher tops and bottoms. The first angle you draw is the 1 x 1. You next draw the 2 x 1 and then the 4 x 1. If the market stays above the 4 x 1, it will accelerate. If the market breaks the 1 x 1 then you should be begin using the bear angles below the 1 x 1.

Also study in the course manual for this chapter when to draw weekly and monthly angles, and when to draw bull and bear angles.

Practice with all of these geometric angles over and over again. Knowing how to put these angles on your charts will tell you the position of the market at all times.

You will also learn how to draw the important fixed number lines and top and bottom of range lines. All of these are very important.

Did you know that geometric angles will hold only when the 5th, 3rd or C wave of a market is complete. If the wave pattern is not complete, then the angle will eventually break. This is why so many people lose money trading the Gann angles. They do not know what they are doing. If the market is falling and it lands on the 1 x 1 angle and it is only in its 3rd wave down of a 5th wave move, it may bounce off the 1 x 1, but on the next down it will penetrate the angle and go to the next angle until the market completes the fifth wave down. When the market does complete the 5th wave, then and only then can you look for the nearest Gann angle for support. This is one of Gann's secrets, which he failed to reveal in his courses. You must know not only the Gann angles, but also know where in the wave pattern you are. This tells you the direction of the market. The Gann methods only tell time and price support points.

For W.D. Gann books click here.