resistance,74
characteristics of successful, 5-9, 197-206,211-219
defined, 13-14, 18
development of, 21-22
223224 Index
Day traders, 3-9 (Cont.):goals of, 4, 204-205, 213-214personality of, 22, 197-206responsibilities of, 4tall tales and, 5, 212-213Day trading:cardinal rule of, 13, 18defined, 13-14, 18markets for, 19, 218position trading compared with, 20-22psychology of, 22, 197-206reasons for, 19-22tips for, 211-219Declines, 204Delayed gap open signals (DGO), 58, 63-66,192Deutchmark futures, 54, 218Diary, trading, 196, 215Discipline, 198-199, 211-219Discount brokers, 2, 143Donchian, Richard, 74Dual MA crossovers, 37-39, 40-42
Economic climate, instability of, 3Edwards, R. D., 120Equity, maximizing, 19-20Eurodollar futures, 218European markets:defined, 207Globex system and, 147, 207-210Exiting positions, 20-21, 74, 80-82, 214(See also Orders)Expectations, 71-72, 212Exponential moving average (EMA), 31
Feedback, in day trading, 21Fill-or-kill (FOK) orders, 143in scalping, 133to test market, 145-146First derivative:of momentum indicator (MOM), 95of rate of change, 101, 105of relative strength index (RSI), 88-89, 92-93,1695-minute closing price, 170, 188Flag chart formation, 115Flash fills, 146Flexibility, 6Follow-up stop losses, 62Forced exit, advantages of, 20-21, 74Front-weighted (loaded) moving averages,31Futures options, 147
Gap methods (see Opening price gaps)Gap open signals (GO), 58-63, 192Gap size, 63-64, 71
Globex system, 147, 207-210Good-til-canceled orders, 144Government reports, 193
Grain futures, 169
Hadady, R. Earle, 175-176Heating oil futures, 55, 68, 202Hesitation, 215Higher buy point (HBP), 78Historical results, 10market sentiment and, 176, 185trading systems and, 25“Hit-and-run” technique, 52-53
Interest rate futures, 169
Intermediate-term trading, 15
International markets (Globex system), 147,207-210
International Monetary Market (IMM), 146
Investor’s Quotient, The (Bernstein), 197
Japanese yen futures, 152
Kaufmann, Perry, 23
Keltner Statistical Service, 108Key reversals, 117, 118
Key seasonal dates, 148-153
Lagging indicators, 32-33, 38Lane, George, 43, 44Liquidity, 19, 218Livestock futures, 169Long-term trading, 15Long Term Trading in Futures (Bernstein), 15Losses:accepting, 8, 200-201, 213analyzing, 8-9forced exit from, 20-21holding, overnight, 7, 8profits becoming, 214Lower buy point (LBP), 78, 81Lower sell point (LSP), 78-80Lumber futures, 55
McGee, J., 120Malkiel, Burton, 25Margins, overnight, avoidance of, 19Market entry and exit, defined, 16-17Market-if-touched (MIT) orders, 142-143, 146Market-on-close (MOC) orders, 142, 145, 146Market orders, 141-142, 145Market profile technique, 137Market sensitivity, moving averages and, 33Market sentiment, 175~185contrarian approach and, 175, 205-206, 218critical time of day (CTOD) and, 184-185opening price gaps and, 69, 184Markets:changes in, 26-27day trading and, 19relationship with, 26for stochastic indicator (SI), 55MBH Commodity Advisors, Inc., 185, 206Merrill, Art, 148, 153Mid buy point (MBP), 78Mind Over Money (Dalton and Jones), 137Momentum indicator (MOM), 94-99Money management stops, 188Moving average channel (MAC) technique, 74-86Globex system and, 208-209market sentiment and, 184scalping and, 133-136Moving average convergence-divergence(MACD), 121, 122Moving average of highs (MAH), 75, 78, 80, 81,82, 184Moving average of lows (MAL), 75, 78, 80, 81,82, 184Moving averages, 30-42calculation of, 30-32, 33, 221-222momentum indicator and, 98with opens versus closes (O/C), 125-126of rate of change, 101-103, 105for support and resistance trading, 39-42Multiple positions, 82Myths, market, 217
National Futures Association, 12Neural networks, 27-29News:international, 210overnight versus daytime, 20, 193using, to advantage, 193, 203-204Normal distribution day, 137
Oat futures, 68
Offer price, 131, 133
One cancels the other (OCO), 144, 146Open orders, 144
Index
Opening, orders on, 146Opening price gaps, 56-72daily preparation for working with, 193delayed gap open signals (DGO), 58, 63-66,192gap open signals (GO), 58-63, 192Globex system and, 207-210market sentiment and, 69, 184with moving average channel (MAC) tech-nique, 84-86teduced exposure to, 20Opens versus closes (O/C), 123-129Optimization, 17, 24Orange juice futures, 146Order numbers, 194, 195Order sheets, 147Orders, 141-147checking positions, 147, 194-195errors in, 147, 193-195placing, 147, 195prompt reporting of, 146trading diary for, 196, 215types of, 141-144(See also specific types)using, to advantage, 144-147written records of, 147, 193-195Oscillators, 142defined, 121Globex system and, 210market sentiment and, 185momentum indicator (MOM), 94-99moving average convergence-divergence, 121,122opens versus closes (O/C), 123-129rate of change, 100-105relative strength index (RSI), 87-93stochastic indicator, 43-55(See also Timing indicators/signals)Overbought conditions, 45-46, 47-48Overnight news, 20, 193Oversold conditions, 45-46, 47-48Overtrading, 201-202, 215
Patience, 7Penetration size, 71Pennant chart formation, 115Performance results, 12, 216-217Persistence, 199-200, 212Point and figure charting, 136, 137Political climate, instability of, 3Pork belly futures, 50, 53, 55, 86Position traders, 14Position trading:
day trading compared with, 20-22Index
Position trading (Cont.):
defined, 14
stochastic indicator (SI) and, 43Precious-metals futures, 69, 169Price gaps( (see Opening price gaps)Price orders, 142, 147Price targets, 82Price-versus-MA crossovers, 34-37, 38Pyramiding, 217-218
Rallies, 139-140, 204Random Walk Down Wall Street, A (Malkiel),25Random walk hypothesis, 25Rate change indicators, momentum indicator(MOM), 94-99Rate of change (ROC), 100-105Regression to the mean:problems of, 26-27trading systems and, 25Regulation, 12Relative strength index (RSI), 87-93with momentum indicator (MOM), 95rules for day trading with, 89-93spread day trading and, 164-169Research, 10-11, 216(See also Technical analysis)Resistance, 73-86, 192buying breakouts above, 113daily preparation for working with, 193defined, 39, 73market-if-touched (MIT) orders and,142-143moving average trading and, 39-42, 74-86price breakouts below, 106-110scalping and, 139-140selling at, 113spread day trading and, 164Resistance lines, 112Risk management:developing style of, 25-26stop orders and, 60, 72trading systems and, 25Risk of loss, 12, 20Rounding top or bottom chart formation,115-117Rules, 15for channel breakout (CBO), 108-109for gap open signals (GO), 58-63for key seasonal dates, 150for relative strength indicator (RSI), 89-93for scalping, 132simplification of, 217for stochastic pop, 48-51
S&P futures, 37, 39, 52, 53, 55, 59, 60, 69, 71, 76,78, 79, 84, 92, 95, 96, 101, 102, 104, 109, 124,127, 128, 134, 135, 145, 153, 154-156,177-178, 179-184, 202, 211, 218
Scalping, 130-140, 141
Seasonality, 148-162
Self-control, 7
Sell signals:
critical time of day (CTOD), 188delayed gap, 65-66gap open, 60-62
Sentiment( (see Market sentiment))
Settlement, 57
Short position, 81
Short-term trading:
defined, 14-15moving averages in, 34stochastic indicator (SI) and, 43
Short Term Trading in Futures (Bernstein), 15, 139
Silber, Mark, 43
Silver futures, 202
Simple moving average (MA), 30-31
Simulated results, 12
Slippage, 15
Smoothed moving average (SMA), 31, 221-222
Software, computer, 2, 27-29, 217
Soybean futures, 55, 202
Specialization, 202
Spread day trading, 133, 142, 163-169
Steidimayer, J. Peter, 2, 137
Stochastic exit signals, 82
Stochastic Fantastic (Silber and Bernstein), 43
Stochastic indicator (SI), 43-55, 220-221
fast mode, 44-45, 220
intraday stochastic pop (SP), 44, 47-55, 184,
192
with momentum indicator (MOM), 95, 96, 97
with rate of change, 104, 105
relative strength index (RSI) and, 93
slow mode, 44-45, 220-221
spread day trading and, 164, 165, 166Stochastic pop (SP) indicator, 44, 47-55, 192
market sentiment and, 184
markets for, 55Stop limit orders, 72, 144, 145
buy, 59
sell, 61Stop loss orders, 59-63, 80-81, 205
tules for using, 200-201
trailing, 53-54, 62, 63, 81-82, 174, 188Stop orders, 143-144
buy stop, 59, 64-65, 145
for opening price gaps, 56, 59-66, 72
opening price gaps and, 56, 72
sell stop, 61, 66Stress, 22
Sugar futures, 67, 97
Support, 73-86, 192buying at, 112daily preparation for working with, 193defined, 39, 73market-if-touched (MIT) orders and, 142-143moving average trading and, 39-42, 74-86price breakouts above, 106-110scalping and, 139-140selling breakouts below, 113spread day trading and, 164
Support lines, 112
Swiss franc futures, 36, 50, 55, 69, 98, 125, 134,
135, 150, 151, 152, 153, 160-162, 218
Tall tales, 5, 212-213Technical analysis, 40, 111-120chart formations in, 115-119point and figure charting in, 136, 137Three-bar stop losses, 63Tick value, 163Time frame, for moving averages, 37, 42Time stamping, 194Timing indicators/signals, 15defined, 16development of, 26importance of, 72momentum indicator (MOM), 94-99rate of change, 100-105relative strength index (RSI) as, 92-93reliability of, in day trading, 21(See also Oscillators)TradeStation, 109Trading cards, 194, 195Trading diary, 196, 215Trading style, development of, 25-26, 211-212Trading systems, 23-29alternatives to, 25-26artificial intelligence and, 27-29, 217back testing of, 23-24, 26-27, 54-55channel breakout (CBO), 106-110defined, 15-16, 24-25development of, 23-24, 26-27market changes and, 26-27moving averages and, 30-42opening price gaps, 20, 56-72, 84-86
227
Index
Trading systems (Cont.)stochastic indicator (SI) in, 43-55Trading techniques:consecutive closes system, 170-174critical time of day (CTOD), 184-185,186-190, 208defined, 16momentum indicator (MOM), 94-99moving average channel (MAC), 74-86spread day trading, 133, 142, 163-169Trailing stop loss orders, 53-54, 62, 63, 81-82,174, 188Treasury bond futures, 35, 36, 38, 39, 52, 55, 61,69, 71, 96, 97, 134, 151, 153, 157-159, 202,211, 218Trends:consecutive closes system and, 170contrarian approach and, 175, 205-206, 218determining, 78-80momentum indicator (MOM) and, 94-99moving averages and, 32-33, 78-80rate of change, 100-105relationship between market sentiment and,178, 181scalping within existing, 137-138sideways trend trading, 80, 82-83trend lines, 112-119Triangular moving average (TMA), 32
Upper buy point (UBP), 81Upper sell point (USP), 78-80, 81Upsiairs traders, 131
Volatility of futures markets, 1-3commissions and, 2computers and, 2-3extraneous input and, 195-196for gap trading, 69political and economic climate and, 3reasons for day trading and, 19-22stochastic indicator, 52
Weighted moving average (WMA), 31Wheat futures, 128Wilder, Welles, 87About the Author
Jake Bernstein is an internationally recognized trader, author,and researcher. He has written over 27 books and studies onfutures trading and has spoken at investment and trading semi-nars the world over. He has been a guest on numerous businessradio and television programs including Wall Street Week.<|end|>