GSCS - ‘The Return’ - By Michael D Archer

GSCS - ‘The Return’ - By Michael D Archer

When I tutor traders on Goodman I break up the study into ORDINAL and CARDINAL.

We study Goodman Wave Theory without respect to measurements first, and only then

overlay a study of the Goodman Measurement Theory. These involve Goodman Ordinal

Rules and Goodman Cardinal Rules.

Here is a nice formation to look for in GWT. It has some high probabilities, especially

with the use of filters and GMT (the latter beyond the scope of this short primer). Charlie

called it the’ Return’.

Elliott identified the basic market way as in 5 components:

This is incorrect. The basic market wave is has 3 components:

According to Goodman a wave propagates or builds in such a way that it appears to be 5

components, but the ORDINAL rule is actually this: If the first (primary) component

of a wave is a simple, single component, the second (primary) component will be

complex - consisting itself of 3 components and visa versa:

This propagation rule can be extremely useful in and of itself in anticipating the ordinal

template of the market as unfolds, but further details are beyond the scope of this short

document. There are 16 basic propagation schemes or templates.

 Charlie identified what he called a ‘RETURN’ - defined here as the price location (+/-)

in a wave propagation where the secondary wave of the primary wave approaches the

secondary wave of the complex component:

This feature has some interesting ramifications for anticipating the basic market template.

But for the purposes of this article, I want to draw your attention to a single idea, as a

possible short-term trading tactic.

The market will very often reverse from the ‘Return’ point for some price value.

How much is variable depending on other factors such as the market template and

GMT, but as a short-term trade or ‘spot-play’ it can be quite useful.

To use this in isolation as a short term trading tool you will need a timing method - I

recommend a three-box reversal point & figure chart. Also helpful - monitoring the

Goodman templates at one higher and one lower matrix. The Return can also be useful in

identifying the market template itself!

Typically (but not always) if the Return is short the Point of the BC wave, the market will

‘build’ a bit before reversing. If the Return is long of the Point of the BC wave, the

market will often ‘spike’ through the Return point and then reverse.

When this is overlaid with the Goodman Cardinal rules, it becomes a very powerful tool

in the broader scope of Goodman studies.

I’ve included several examples from both the FOREX markets and futures markets to

give you food for thought. These charts are only to show example of the Return, and are

not considered in any other Goodman context..

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I want to thank everyone for the enormous response to Goodman. Charlie would certainly

be most gratified, and so am I! Regrettably I simply don’t have the time to finish Parts 2

and Parts 3 - at least for gratis distribution. Frankly, I use Goodman in my own trading

and am not particularly keen on disseminating the entire corpus of theory to a wide

audience.

I am considering tutoring perhaps 25 serious traders in a sort of Goodman Trading Club

(with apologies to the Turtles) so if that might be of interest, please email me at

If it happens I will teach everything I know about GSCS -

Ordinal, Cardinal, Trading Formations and Rules as well as the Goodman Notational

Calculus and Goodman Charts.

Finally - I have been asked what other linear methods I find useful. The answer is: Not

many. If there is a secret to the markets (and I think there is) then it is almost certainly in

a non-linear approach; mostly likely an application of cellular automata or catastrophe

theory.

Nonetheless, linear methods are useful, especially as filters or as broader system

‘checks’. I believe Contrary Opinion, Point and Figure and CommTools’ own Mercury

Charts (for Futures) may be very useful to the trader.

If you trade FOREX (especially) I recommend an early edition of Technical Analysis of

Stock Trends by Magee. The currency markets, in terms of ‘efficiency’ are about where

stocks were in the 1950’s and these patterns seem to really hold up in FOREX right now.