The lead article in the December 2006 issue of Stocks & Commodities magazine is titled, "Searching for (Trading) Certainty." The teaser says, "Trading is uncertain, but here's a sure thing." How could I not read it?

The author, Mr. Aaron Lynch, says, "Balancing the basic need for certainty coupled with an uncertain trading landscape, we must find an anchor or reference point from which to begin. For me and for all successful traders, that anchor is our chosen trading plan. My trading plan is structured around a tool known as a swing chart, based on the principles established by W. D. Gann." He also says that Gann referred to the swing chart as his "trendline indicator." It removes noise and allows for easy determination of a trend. Certainty is increased because even the most basic investor would benefit by looking for solid trends in which to take profits.

In their most basic form, swing charts are nothing more than bar charts of price plotted over a period of time. One can draw support and resistance lines on these charts to identify trends. More elaborate analysis of the price data may be used to eliminate time as a factor, creating Kagi charts and other similar charts. Lazy, as I am, I don't like drawing lines on lots of charts and, besides, I don't like Kagi charts. So I determine price trends using our Standard Graphs, and I also like to use ProTrader graphs.

Let's take a look at a 1-year, Daily Standard Graph of Florida Rock, FRK, for example. Change the default setup to eliminate Stop and add a 20-day Price MA. Now it is incredibly easy to see that FRK's Price began to rise on January 20th, hit a peak on May 10th, fell until August 14th and has been rising since then. It is interesting to note that RT was hitting a series of higher lows in December and January before FRK's Price took off on January 24th, and it began rising from its lowest point on July 28th, eleven days before FRK's Price touched bottom. A swing chart would never show you these momentum changes.

If you have ProTrader, the default DEW setup will also show you price trends. I like to clarify the graph by eliminating the envelopes and by increasing the height of the DPO section. Here too, it is incredibly easy to determine the price trends. The trend is up when Price is above the 30-day, Weighted MA and DPO is greater than zero, and it is down when Price is below the 30-day, Weighted MA and DPO is less than zero.

Now that we can easily determine price trends, Mr. Lynch says we have to have reasons to enter and to exit our trades. I agree. Clearly defined entry and exit points are crucial to any successful trading plan. Finally, Mr. Lynch says that money management can either make you or break you. This is true and VectorVest helps you here with the various money management selections available in Portfolio Manager.

The bottom line, then, is that the market is uncertain and it always will be. Your profits will increase, however, with a solid trading plan, executed with discipline. That's A Sure Thing.