fees, 66Rollover process, forex markets, 64Rule-based approach, importance of,6–7Russell 2000, 16, 222, 248Russell contracts, 130S-1 level, trading triggers, 139, 143,182S-2 level, 143, 178, 183, 232, 285, 313Scale-out position, 232–234, 250Scale-up program, 292Scaling out, 273–275, 277, 311Scared money, 314Search and destroy stop-loss order,246Seasonal markets, 301Seasonal stock system, 282–283Secondary signals, 153Secondary stochastics, 102–103Sector cycles, 21–22Sector leaders, 30Sector trading, 18–19, 36–37Securities and Exchange Commission(SEC), 24, 29Select stock account, 29Selling opportunities, 151Selling pressure, 120, 236Sell-offs, 61, 146, 148, 155, 246Sell signals, 46, 88, 90–91, 97, 99,102–103, 107, 137, 174, 178, 216,230–231, 237, 247, 275, 280,288Sell trigger, 101–102Semiconductors sector, 36Seminars, 205Separating lines, 193Settlement price, 95, 129–130, 160Shadows, 183, 190, 194–195
INDEX
Shooting star formation, 55, 109, 150,169, 171–172, 191, 195, 203–204,239, 260, 263Short position, 63, 71, 102, 150,167–168, 214, 261Short sales, 14, 24–25, 38, 60–63,231–232, 236–237, 240, 243, 249,265Short-term period, 88Short-term traders/trading, 7, 29, 103,169, 234Sideways market, 79–80, 82, 86, 164,169, 171, 177, 232, 239, 246, 255,264Signals, see Buy signals; Sell signalsacting on, 101frequency of, 99reliability of, 98short-term, 103strength of, 102Silver, 33, 52Simple moving average, 90, 161–166Simulated trading, 314–316Sixty-minute charts, 185Sixty-minute time periods, 214Size of candle, 190Slippage, 292Slope, 162–164, 168, 171Slow stochastics, 99Small investors, 7, 63Smitten, Richard, 6Soros, George, 61Soybean market, 48–50, 52Speculation, 4, 10, 24, 29, 56, 61, 129,148Spike pattern, 261Spot currency rate, 64Spot euro currency, 90, 107Spot foreign exchange (forex)characteristics of, 16, 64–65, 70–71,94, 132, 140, 143, 147–148, 162,166, 175, 207euro, 90, 107Japanese yen, 172sample analysis, 288triggers, 216–219, 241–242Spot reversals, 55
Index
Spreadsheet applications, 161, 231Spreads tradingcharacteristics of, 23–29, 46, 58, 64foreign exchange market, 18Standard & Poor’s (S&P) 500 StockIndex, 16, 34, 65, 104, 127, 222Standard & Poor’s Depositary Receipts(SPDRs), 34, 285Standard deviation, 5, 260Starbucks, 28, 117Star formations, 205, 210Starting a business, 7–8Statistical analysis, 293–294Steady trending, 171STMicroelectcronics NV, 44Stochasticsapplications of, 183benefits of, 94characteristics of, 94–96, 189, 227convergence, 185fast, 99forex market, 218patterns, 100–101slow, 99trading rules, 96–97, 102–103trading triggers, 229, 247, 251Stock index, 14Stock index future, 16Stock investmentscharacteristics of, 12, 14, 16commodities and, 53, 58core position, 16forex trading compared with, 65–66trading volume, 78Stock market crashes, 3, 21Stock ownership, 42Stock selection, 22–24, 42–43, 46, 48Stock Trader’s Almanac(Hirsch/Hirsch), 282–283, 286,294Stock tradingcompany analysis, 28disadvantages of, 19–21long-term investments, 28–31pivot point analysis, 121–122risk/reward analysis, 22–23, 29spread trading tips, 24–29
351strategies for, 22–23triggers, 225–229, 241–242, 252Stop close-only (SCO), 10, 185, 231,244, 262–266Stop level, 250Stop-loss orders, 6, 17, 23, 60, 246, 294Stop-loss system, 257Stop orders, 10, 203, 216, 234streetTRACKS Gold ETF (GLD),40–41, 47Successful traders, characteristics of,6–9, 17, 32, 79–80, 176, 217, 307,310Sugar, 52, 55–57Supply and demand, 15, 57–58, 190Support and resistancecandle formations, 190, 193, 201candlestick charting, 188confluence, 157entry and exit strategies, 276–277forecasting, 185implications of, 6, 46, 75, 151–152,154–155, 316pivot point analysis, 121–125,127–131, 139, 143–144, 161, 178,182–184, 203, 215, 222, 228, 248,255sample analysis, 283, 286trading triggers, 219, 233, 248–249Support level, 82, 86, 96, 160Swing traders/swing trading, 10, 16–17,34, 75, 77, 94, 103, 165, 177, 240Swiss franc (CHF), 64, 210Tails, 190Tandem markets, 177Tandem trading, 50–53Tangent trends, 169Target exit, 97Target Key, 134Taxationcapital gains, 34home office deductions, 7mutual funds, 34Technical analysis, 4–5, 24, 58, 60, 63,65–66, 75, 77–78, 93, 122, 127,146, 161, 184, 188
352Technical indicators, 1, 24, 93Technician, defined, 4Technology Analog Devices, 44Technology sector, 36Telecom sector, 3610–day moving average, 161Texas Instruments, 44Thirty-minute charts, 185Three crows formation, 193Three-period moving averages, 183Three-period pivot point, 169–171,173–175Three river formations, 193Three white candles, 200Time frames, 161, 185, 242. See alsoTime periodTime horizon, 60Time period, 15, 188–189, 207, 214, 307Toll Brothers, 35, 241Tomorrow/next (Tom/Next), 64Top patterns, 77, 99, 114, 136, 138,145–158, 171, 184, 187, 193, 197,201, 205, 230, 233, 241Towers formation, 193Trade Like Jesse Livermore (Smitten),6, 10, 123Trade trigger strategy, 166–168Trading accountcharacteristics of, 6, 8forex market, 63size of, 293Trading diary, 311Trading equity, 11Trading opportunities, identificationof, 9, 22Trading plan, see Tradingsystem/trading plan, 151, 255Trading range, 127, 194Trading rules, 144, 230–231, 235,246–250, 254, 257–258, 266, 310,313, 316Trading signals, see Buy signals; Sellsignalsinterpretation of, 12, 14significance of, 309Trading software packages, 215Trading style, 15, 143, 176–177
INDEX
Trading system/trading planaccuracy of, 290back-testing, 290benefits of, 282best time to trade, 295–299consistency in, 312–313diversification, 12–16, 151, 155importance of, 254, 311–312investment vehicles, 16–18questions to ask, 9–11personal, 214personal toolbox, 255risk management, 11–12risk per trade, 11rule-based approach, 5–6sample analysis, 279–306testing, 254trading as a business, 7–8validity determination, 291–293,303Trading triggers, 13–15, 17, 67, 117,122, 153, 178, 185, 216. Seealso specific types of tradesTrading Triggers University, 169, 311Trading tuition, 66Trading volume, see VolumeTrailing stop, 263, 266, 274–277, 303Transaction charges, 66Transparency, 37Treasuriesinfluential factors, 3, 30short-term, 2Treasury bonds (T-bonds), 30, 144, 288Trend(s), see specific types of trendsanalysis, 68–69, 75, 79, 82–84, 174determination of direction, 160functions of, 159lines, 75, 82–84, 188reversals, 68–69, 80, 86, 106, 119,164, 173, 190, 243, 300strength of, 78types of, 79–80Trending markets, 85Trend Traders technical price break,55Triangles, ascending, 81Triennial Central Bank Survey, 210
353
Index
Turnarounds, 100, 106, 158Tweezer bottoms/tops, 20124–hour markets, 273–274200–day moving average, 88, 160Underlying stock, 23Unemployment rate, 3, 73, 301United Airlines, 19U.S. Department of Agriculture(USDA), 55–56U.S. dollarimplications of, 2, 18, 47, 51, 72, 74,143, 210, 276market rallies, 153spot forex, 148spread, 64strength of, 61–62United States Oil Fund (USO), 40, 47U.S. Real Estate Trust (IYR), 35U.S. trading session, opening of, 74Unleaded gasoline, 52Unleaded gasoline, 52Uptick rule, 24–25, 34Uptrends, 69, 79–81, 85, 87–88, 90, 93,95, 132, 162, 164, 166–167, 177,189–190, 192, 194, 243, 255, 262,283USD/CHF, 210USD/JPY, 210Valuation, currencies, 72Value, perception of, 160, 183Volatility, 44, 48, 65, 90, 98, 143–145,163, 188, 203, 205, 248, 263, 300Volatility index (VIX), 127
Volumeanalysis, 67–68candle formations, 194impact of, 14, 30, 61, 65, 75, 78, 94,112–113, 114–116, 119, 121, 169,193, 210, 230, 247, 281Wal-Mart, 29–30War, economic impact of, 2Warning signals, 172Weather conditions, market impact of,53–55, 57Wedges, rising, 81Weekly charts, 60, 178, 183, 185, 188Weekly pivot points, 141, 145, 150–151,153, 156Wheat, 52Whipsaw, 94, 163White candle, 169, 172, 189, 196,198–200, 201, 233, 241Wicks, 190Williams, Larry, 123, 214Winning trades, 205, 214, 266, 290WorldCom, 19, 28Wraps, 199Yang, 201Yield(s)curve, 2influential factors, 51Yin, 201Zero-line cross, 218, 281Zero-line oscillator, 103–104Zhengzhou Commodity Exchange, 58
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