Brief Summary of Book: Profits in the Stock Market by H.M. Gartley

Brief Summary of Book: Profits in the Stock Market by H.M. Gartley

CHAPTER I
THE TECHNICAL APPROACH TO THE PROBLEM OF STOCK TRADING

REFERENCES 
"Business and Investment Forecasting" R. Vance
"Business of Trading in Stocks, The" J. Durand
"Business Cycles: The Problem and
Its Setting" W.C. Mitchell
"Business Forecasting" L.H. Haney
"Business Statistics" J.L. Snider
"Economic Cycle, The" F.Y. Presley
"Financial and Business Forecasting" W.F. Hickernell
"Forecasting Business Conditions" R.N. Owens & CO. Hardy
"Forecasting Stock Market Trends" K.S. Van Strum
"Interest Rates and Stock Speculation" R.N. Owens & CO. Hardy
"Investment For Appreciation" (1936) L.L.B. Angas
"Practical Application of 
Investment Management, The" D.C Rose
"Practical Business Forecasting" D.F. Jordan
"Principles of Investment" J.E. Kirschman
"Scientific Approach to Investment 
Management, A" D.C. Rose
"Security Analysis" Graham & Dodd
"Security Price Movements" K.G. Karsten
"Statistical Methods" F.C Mills
"Stock Market, The" C.A. Dice
"Stock Market, The" S.S. Huebner
"Stock Market Profits" R.W. Schabacker
"Stock Market Tactics" L.L.B. Angas
"Stock Market Theory and Practice" R.W. Schabacker
"Tape Reading and Market Tactics H.B. Neill 
"Truth of the Stock Tape, and the 
Wall Street Selector" W.D. Gann

This Course, concerning the technical approach to 
the business of trading in stocks, is not to be considered 
as the philosophers' stone of the stock market.1
 It does 
not, by any means suggest a perfect solution to the 
problem of stock trading which will enable every reader 
to begin making handsome stock market profits as soon 
as he has read the last word. 
The average reader should leave the stock market 
alone, or learn enough about its intricacies so that in-

telligent action can be taken in trading stocks. It is the 
purpose of this Course to provide a means of learning 
some of the important essentials in a study of the market. 
The Primary Objective 
It is assumed that the reader takes up this work

with one primary objective, namely to make money by 
using intelligent understanding instead of ignorant 
gambling. The objective is easy to define. However, the 
procedure of accomplishing it is far from simple, in that 
it requires a detailed presentation of the factors which 
appear to make, as well as the manner in which, stock 
prices advance and decline. 
Gambling or Speculation 
There are two channels of approach which may be 
taken in attempting to make stock market profits. We 
may approach the problem as a gambling proposition, as 
unfortunately (for them) all too many persons attempt to 
do. Or we may approach the problem as a business 
proposition, involving greater than usual risk, but paying 
greater than usual profits to intelligent and patient 
participants. 
In suggesting the second and more logical of these 
two approaches, it might be well to point out the dif-

ference. In a gambling operation, the participant depends 
almost wholly upon chance (assuming that it 

is honestly run), as one of two or more unpredictable 
developments governs the determination of profits or 
losses. In many gambling operations, the risk is reduced 
to one of two chances, as both the maker and the 
acceptor of a given wager assume exactly the same risk. 
For the most part, intelligence is not the governing factor. 
Every time a roulette wheel turns, there is an equal 
chance that red or black will turn up. 
Quite different from gambling is speculation, 
wherein the participant depends (if he is to profit) upon a 
reasonably precise knowledge of the conditions which 
govern price trends. In speculation, the participant relies 
upon changes in the price level (stocks, commodities, 
services, et cetera), and not the mere operations of 
chance. These changes have their root in some specific 
cause. Many such causes may be studied and understood, 
and thus reasonable judgment may be applied. 
Unfortunately for most dabblers in Wall Street, the 
gambling approach is most often used. The reason is 
simple. The average person is too often governed first by 
downright laziness, and secondly by the silly desire to 
gain something for nothing. The intelligent approach, 
wherein stock trading is counted to be a business, 
requiring careful attention, robs the stock market of its 
romantic appeal to many people. It takes most of the fun 
out of it, if it becomes a job requiring patience and 
application. 
How futile it is to enter the stock market without 
fully recognizing that profits can be only a matter of 
chance, unless the market is patiently and carefully 
studied. The market is a complicated mechanism. 
Although man-made, and thus logically subject to in-

terpretation by other men, its complex workings require 
a systematic study, if losses are to be prevented, and 
profits made. 
Haphazard or Systematic? 
The difference between losses and profits frequently 
hinges upon trading in a hit-or-miss fashion, or 
systematizing one's speculation by studying the problem, 
estimating the risks, selecting what appears to be the 
most profitable opportunities, and adhering to a 
pre-conceived policy. 
The difference between the average investment 
counsellor and the average customers' man in a broker's 
office, is the fact that the former conceives a plan of 
operation, based upon a systematic approach to all the 
various angles of the problem including the requirements 
of the customer, and consistently pursues this policy; 
while the latter vaguely attempts "to make money." 
Our Purpose 
It is the purpose of this course to encourage the 
reader to study the market and train himself to arrive at 
his own decisions as to the probable future course of 
stock prices, by using certain systematic methods which 
have proved profitable to successful traders. 
Matter has been collected from many sources. The

phenomena explained and illustrated represent many 
years' work on the part of many market students. They 
should be the means of saving the reader many hours of 
personal research. 
However, thumbing through the pages which follow 
will not make-a-successful trader of any reader. To take 
some single idea which is presented, because it seems to 
have special appeal, and expect to make consistent 
profits by using it alone, is a dangerous procedure. 
Throughout the chapters which follow, it will be noted 
that there are constant warnings that the various technical 
phenomena suggested must be used, not singly, but as 
part of a program involving many different angles. 
Two Primary Problems 
Reduced to its final analysis, successful stock trading 
boils down to the matter of answering two questions, 
namely: 
1. WHEN to buy or sell; and
2. WHAT to buy or sell.
At first thought, and to hear some of the hangers-on 
in the brokerage offices tell the story, making money in 
Wall Street is all very simple, if you know "when to get 
in and when to get out". Although, as we shall learn, the 
solution to the "When" question is extremely important, 
it is also a fact that a trader can be fairly right in judging 
the reversals in the trends of stock prices, and yet make 
only a fraction of the potential profits available, because 
he is ignorant of systematic methods to assist him in the 
selection of the right stocks. 
The "When" question may be classified as a study of 
trends. Except for short periods of time, usually ranging 
for less than two weeks, stock prices have a habit of 
going somewhere. During the vast majority of the time, 
they are either advancing or declining. The successful 
trader must be conscious of a change in trend. Thus a 
continual knowledge of stock price trends is essential to 
the successful timing of commitments. 
The "What" question, on the other hand, depends 
chiefly on observation of the specific characteristics of 
individual stock price movements, and may be classified 
as a study of comparisons. 
The solution of each of these two problems, which 
are about of equal importance, requires equal attention. 
However, as the "What" to buy or sell problem usually 
covers a much broader scope, it requires a greater 
amount of time. 
Usually, the "When" question, that is the timing of 
commitments, is studied by observing the trends in the 
market as a whole, or at least its major parts. The "What" 
question, which is the selection of stocks, is observed by 
studying small groups and individual issues. 
Two Approaches 
It is the custom of those interested in stock prices 
trends to approach the solutions of these two primary

Brief Summary of Book: Profits in the Stock Market by H.M. Gartley