<s> Dynamic Trading™Dynamic Concepts In Time, Price and Pattern Analysis
Robert C. Miner
Dynamic Traders Group, Inc.Tucson, Arizona
Dynamic TradingBy Robert C. Miner
Contents
Chapter 1 - Introduction To Dynamic TradingWhat You Will Learn In This Chapter 1-1Where We Are Going and What We Will AccomplishIt's Time You Made A Change 1-3
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Chapter 2 - Getting Started With Dynamic TradingThe Three Dimensions of Market ActivityThe Objective of Technical Analysis
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What A Trader Must Know To Be Successful
Waves or Swings of Similar Degree
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Chapter 3 - Pattern and Practical Elliott Wave AnalysisWhat You Will Learn In This Chapter 3-1Elliott Wave Basics 3-5Wave Labeling and Notation Conventions Used In This BookA Summary Of The Elliott Wave Principle 3-10The Rules and Guidelines Illustrated 3-11Trading Implications of the Rules and Guidelines 3-19Impulse Waves 1, 3 and 5 3-23Impulse Wave One 3-24
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Impulse Wave Three3-26Impulse Wave Five 3-28Corrective Waves 2 and 4 3-30Corrective Wave Two3-44Waves A, B and C 3-48Parallel Channels 3-50And Now For Another Opinion 3-51Elliott Wave Chan Examples 3-59Wave Structure Checklists 3-88
Chapter 4 - Dynamic Price AnalysisWhat You Will Learn In This Chapter 4-1Be Prepared In Advance For Support and Resistance Price Zones 4-4Price Retracements 4-6Internal Price Retracements 4-7External Retracements 4-14Alternate Price Projections 4-20Price Projections By Percentage Change 4-37Price Projections By Close-Only Data 4-38Price Projections By Three Degrees Example 4-42Intraday Data Examples445Individual Stock Examples 4-60Price Overbalance 4-66Dynamic Price Projections, Summary4-70Review of the Most Important Price Ratios 4-71A Summary of the Most Important Price Projections Ratios By Wave
Chapter 5 - Dynamic Time AnalysisWhat You Will Learn In This Chapter 5-1Market Timing Based On Reality 5-4Projecting The Time Of Trend Change 5-8Time Cycle Ratios™ 5-9Time Retracements 5-10Other Time Cycle Ratios
Anniversary Dates
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Short-Term, Fixed-Length Time Cycles
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Dynamic Time Projections, Summary 5-61A Summary of the Most Important Time Ratios and Counts By Method
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Chapter 6 - Trade Strategies and Trade ManagementWhat You Will Learn In This Chapter 6-1Trading Strategies 6-2Entry Strategies and the Initial Protective Stop-Loss 6-5Trend-Reversal Entry Triggers 6-6Reversal Day 6-7Signal Day 6-8Snap-Back Reversal Day 6-9Reversal-Confirmation Day6-12Trend-Continuation Entry Strategies6-18Inside-Day Trade Set-Ups 6-18Outside-Day Trade Set-Ups 6-23Outside-Day Plus One Entry Set-Up 6-24Gann Pull-Back Entry Set-Up 6-28Protective Stop-Loss Adjustment-Protecting Unrealized ProfitsThree-DayHigh or Low 6-36
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Trading Log - An Important Key To Success 6-49Trade Preparation and Initiation Worksheet 6-51Trade Management Worksheet 6-54Closed Trade Critique Worksheet6-56
Chapter 7 - Putting It All TogetherWhat You Will Learn In This Chapter 7-1Organizing The Dynamic Trading Technical Analysis Information 7-3Trading Philosophy, Plan and Rules For Chapter 7 Examples 7-5Bond Trading Example 7-9
Chapter 8 - The Real World of Dynamic TradingTrade Market Behavior, Not Forecasts8-1Dynamic Trader Reports Format and ExamplesS&P (July 1996 - March 1997) 8-5
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Nikkei (June 19%) 8-23Strait Times (Nov. 1996) 8-25Cattle (Nov. 1996) 8-27Gold (Nov. 19%) 8-30Bonds (Sept. 1996 - Jon. 1997) 8-33Corn (Dec 19%) 8-50British Pound (Jan. 1997) 8-51Crude Oil (Feb. 1997)8-53Orange Juice (Aug. 1996) 8-55Copper (Feb. 1*97) K-56Gold (March 1997) 8-5S
Appendix - Dynamic Trading GuidelinesGlossaryBibliography
Short-Term, Fixed-Length Time Cycles
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Time Overbalance 5-55Dynamic Time Projections, Summary 5-61A Summary of the Most Important Time Ratios and Counts By MethodMore Time, Price and Pattern Examples 5-64Time Rhythm Zones 5-72
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Chapter 6 - Trade Strategies and Trade ManagementWhat You Win Learn In This Chapter 6-1
Trading Strategies 6-2Entry Strategies and the Initial Protective Stop-Loss 6-5Trend-Reversal Entry Triggers 6-6Reversal Day 6-7Signal Day 6-8Snap-Back Reversal Day 6-9Reversal-Confirmation Day 6-12Trend-Continuation Entry Strategies 6-18Inside-Day Trade Set-Ups 6-18Outside-Day Trade Set-Ups 6-23Outside-Day Plus One Entry Set-Up 6-24Gann Pull-Back Entry Set-Up 6-28Protective Slop-Loss Adjustment-Protecting Unrealized ProfitsThree-Day High or Low 6-36Multiple Contract Positions 6-41Trading Log - An Important Key To Success 6-49Trade Preparation and Initiation Worksheet 6-51Trade Management Worksheet 6-54Closed Trade Critique Worksheet 6-56Trading Philosophy, Trading Plan and Trading Rules 6-59
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Chapter 7 - Putting It All TogetherWhat You Will Learn In This Chapter 7-1Organizing The Dynamic Trading Technical Analysis Information 7-3Trading Philosophy, Plan and Rules For Chapter 7 Examples 7-5Bond Trading Example 1-9
Chapter 8 - The Real World of Dynamic TradingTrade Market Behavior, Not Forecasts 8-1Dynamic Trader Reports Format and ExamplesS&P (July 1996 - March 1997) &-5
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Chapter 1Introduction To Dynamic Trading
In Dynamic Trading, you• Learn what it takes to be a successful trader or investor.• Learn how to understand the pattern position of thecurrent trend of the market including the conditionsnecessary to signal when a market is reaching thecompletion of the trend using the practical applicationof Elliott Wave analysis.• Learn how to project well In advance the price zoneswhich have the greatest probability of support, resistanceand trend change.• Learn how to project well in advance the time periods withthe greatest probability of trend change.• Learn how to integrate the time and price projectiontechniques and pattern analysis into a practical tradingplan.• Learn how to distinguish the high probability trade set-upsthat will provide you with the best opportunity for success.
Introduction To Dynamic Trading
Where We Are Going and What We Will AccomplishDynamic Trading will teach you how to confidently consider a marketposition and make a trading or investing decision. Every financial andcommodity market is constantly in a process of dynamic change. Whenyou have mastered the material in this book, you will not only be preparedfor trend change before it happens, but will be prepared for the probabletime and price extent of each trend and counter-trend swing.One of the important objectives of Dynamic Trading is to projectthe extent of trends and the time and price of trend reversals in advance.The chart below is an example of the power of dynamic marketanalysis. A bond top was projected to be made in the Nov. 20-Dec. 9.1996 period, ideally Dec. 4-9. The top was projected to be in (he pricezone of 115.29-117.05. The top was made Dec. 3.1996 at 116,28,precisely within the time and price zones projected for the terminationof the rally.
After-the-fact analysis? Absolutely not. The exact projectionsdescribed above were made weeks in advance and published in theDynamic Trader Report prepared by the author. By learning DynamicTrading analysis and trading strategies, you will be prepared in advancetor the extent of trends and counter-trends, the time and price with thegreatest probability of trend reversal and low-risk trading strategics.
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Dynamic Trading - Chapter 1
It's Time You Made A ChangeAre you ready to make some changes? To do something different than themajority of traders and investors who are unsuccessful?The majority of futures traders loose money. Some say the percentageis as high as 90%. The majority of stock and mutual fund investors underperform the stock indexes, year after year. How can this be when publications teaching trading, investing and technical analysis have floodedthe market in recent years? How can this he when powerful technicalanalysis software is available for for a few hundred dollars? In the pasttwenty years, since the flood of technical analysis and investing books,newsletters, trading workshops and software have overwhelmed themarket, the percentage of traders and investors who succeed has notgained at all! How can this be when the knowledge and tools seem tobe so easily and cheaply available?I believe it is because the vast majority of traders and investors havebought into the helief that the same overused and abused technical indicators actually provide an accurate assessment of market position. If themajority of traders and investors continue to loose or, at best, vastly underperform the market, it must be time for a change. It must be time to look atthe market from a new perspective and put into practice new analysismethods and trading strategies,My favorite definition of an insane person is someone who continuesto do the same thing but expects different results. Are you insane? Are youapproaching the market with the same popular analysis tools and tradingtechniques that have been used by the majority of traders and investors formore than the past twenty years'? That same group of traders and investorswho have consistently lost or under performed the market year after yearafter year?It's time to stop the insanity! It's time to do something different.Dynamic Trading provides both new techniques and new twists on someolder techniques that are integrated into a comprehensive analysis andtrading plan. If you want to be different than the 90% of unsuccessfultraders and investors, you must do something different than what the 90%are doing.1 have taught these techniques to new and experienced traders in overa dozen countries for almost ten years. It is rare that someone involved inthe business of market analysis and education has any trading experience.In order to demonstrate the value of these methods, in 1993 I entered andwon first place in the Robbing Trading Company World Cup Championship of Futures Trading with a return of over 118% on account for theyear. This annual trading contest is real-money, real-time. Not some silly
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Introduction To Dynamic Trading
hypothetical trading contest. In case you didn't know, less than 5% oftrading and investing authors, newsletter writers and software developershave ever successfully traded ot invested. All of their information isstrictly from an academic or hypothetical viewpoint and is usually notapplicable to practical analysis, trading or Investing.While I continue to trade futures and options and invest by mutualfund switching, my primary occupation is as a trading and investinganalyst and advisor through my monthly and weekly Dynamic TraderAnalysis Reports. These reports and their predecessors have provided acomprehensive analysis of the major financial and commodity marketssince 1986. Each report is an education in itself with regular tutorialson dynamic technical analysis and trading strategies.The monthly and weekly advisory reports have provided a ten yearrecord of the value of the analysis, forecasts methods and tradingstrategies taught in this book. Throughout this period I have becomeespecially known for my comprehensive and unique timing methods, Athree year period of reports was examined and it was found that 89% ofthe trend changes made by the markets that were followed in the reportwere made within one trading day of any Projected Turning Point Periods,I´m sure you can see how valuable this kind of dynamic time analysis canbe to you.Of the hundreds of market analysts and newsletter publishers, the1997 Supertraders Almanac named me the 1996 "Market Guru of theYear", primarily for my technical analysis of market position and time andprice projections for the stock indexes. The same analysis techniques thatallowed me to so accurately determine the position of the stock marketand time and price targets for the bull trend are taught in this book. Thetechniques are not difficult to understand or apply, but it will take workon your part.This is the first comprehensive book 1 have offered to the public inten years. In the past, a trader or investor had to either purchase my $900home study course or attend a weekend workshop at a similar price toreceive this information. Why have I put this information together in abook and made it available for less than $100? You're probably expectingme to humbly say it's for the benefit of the little guy or something likethat- Not at all I hope to reach a much wider audience of traders andinvestors who are ready to make a change. Some of you will want tocontinue your studies by subscribing to my monthly or weekly advisoryservice. Others may be interested in the unique software I have developedfor traders and investors.Whether you continue your study and application of Dynamic Tradingbeyond the material in this book or not, I promise you this: You will get
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Dynamic Trading - Chapter 1
more than your money's worth from the material in this book alone. Youwill learn new analysis and trading techniques that you can immediatelyput into practice as a complete approach by themselves or as a complement to an approach you already use. I have been in the business ofadvising and educating traders for over ten years. 1 have built a steady andloyal customer base over that time primarily from word of mouth. I havedone that by offering a quality product and service in everything I do in anindustry that is known for a decided lack of quality and integrity. If forany reason you feel the material in this bock is not worth the price youpaid, send it back within sixty days and I will be glad to refund yourpurchase price. I'll bet you've never had a money back guarantee made toyou in the introduction to a book.The other reason I have made this material available in a low costbook formal is that over the past few years, many of the techniques 1have been teaching for many years are being taught by others andincorporated into software programs without any reference to thesource. They are often being taught at extraordinary high cost likeseveral thousand dollars for weekend workshops or telephone conferencetutorials. Unfortunately, many of the techniques are often taughtincorrectly. Probably because the teacher did not develop the methodsand had no actual experience putting them into practice.In late 1993, I gave a lecture at the Trader's World technical analysisconference in Chicago and described the relationship of market timing andatomic energy structure. I explained this analogy and the practical application to time analysis and trading strategies. By the way, it is not as weirdor esoteric as it may sound! Within about thirty days, a technical analysissoftware developer who was at the conference had not only included someof the timing techniques I taught at the conference into his software, buteven called it something like Energy Pivots, exactly as I described them atthe conference. I didn't even get a copy of the software as thanks fordesigning the routines!While imitation is the highest form of flattery, I decided then todiscontinue my public appearances at conferences and my educationalcontributions to technical analysis magazines until 1 had produced a bookfor the general trading and investing public that set forth my methods. It isalmost four years later and here it is!I have long since accepted that what ever you place before the publicwhether through articles, books or workshops becomes public domain andno one who appropriates the material is required to reference the source oftheir instruction except in the case of copyrighted or trademarked material.At least now I know this material will be properly presented in its entiretyat a fair price.
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Introduction To Dynamic Trading
I know the value of this material as do hundreds of traders fromarround the world who have studied it and pat it into practice- What everyour level of trading or investing experience, you will find great value inthis material. I have taught this material to brand new traders and Investorswho hardly knew the difference between long and short as well as experienced fund managers who are responsible for millions of dollars ofcustomer funds. Many of them have made these techniques their soleapproach to analysis and trading. Others have integrated one aspect oranother into their trading approach and trading plans.Whatever your current level of experience or expertise, it is now yourtime to make a change and learn to be a Dynamic Trader.
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Chapter 2Getting Started With Dynamic Trading
Use all of the tools, all of the time.W. D. Gann
The Three Dimensions of Market ActivityEvery aspect of the market must be taken into consideration for consistently successful trading and investing decisions- There are two criteriathat should be met for any technical analysis methodology to be includedas pan of the decision making aspect of a trader's trading plan:1. The analysis technique must be simple and easy to understand both inregards to theory and application.2. The analysis technique must provide the critical information well inadvance that is needed to make a trading decision. In other words, weare primarily concerned with leading indicators of market activity, notlagging indicators. There are a thousand indicators that will tell us whatthe market has done, WE want to know with a high degree of reliabilitywhat the market should do in the immediate future.The three important dimensions of market activity - time, price andpattern - meet the two criteria described above. Most trading plans onlyinclude one, or at the most, two of these important market factors. Acomprehensive trading plan that is concerned with having the greatestprobability for success will include information from all three dimensionsbefore a trading decision is made.TimeWe must have a time projection methodology that allows us to projectwith a high degree of consistency the future periods of time that have
Getting Started With Dynamic Trading
the greatest probability of trend change. Typical time-cycle analysisprovides for wide "windows" of time of as much as several weeks for apotential trend change. This is of little use to the trader or investor. Whenusing daily data, dynamic time projections focus in on periods of just atew days which have a very high probability of trend change. When usingintraday data, the focus may be on just a few hours- These relativelynarrow time ranges provide the trader or investor with a highly usefulpiece of information from where to make a decision. Dynamic timeprojection techniques also project the high probability minimum andmaximum time targets for any trend or counter-trend.PriceWe must have a price projection methodology that allows us to projectwith a high degree of consistency price levels that have the greatest probability of support and resistance. Our price projection methodology mustnot only project temporary support and resistance zones, but must allowus to project zones that have the greatest probability of terminating thetrend. Dynamic price projections provide a very narrow price zone whereimportant trend changes usually unfold. A dynamic price projection technique also projects the high probability minimum and maximum pricetargets for any trend or counter-trend.PatternOur pattern recognition analysis must consistently represent the positionof the market in relation to trend, counter-trend, trend termination andtrend confirmation. In the chapter on pattern, we will see how to simplifyElliott wave analysis so we can quickly recognize the position of themarket related to Elliott wave guidelines. There are certain rules andguidelines associated with Elliott wave analysis that usually reveal theposition of the market relative to trend or counter-trend. When thatposition is not clear, we may choose to ignore that particular market andonly consider trading those markets where the pattern clearly reveals theposition.Holistic Technical AnalysisWithout a comprehensive analysis procedure, an important decisionmaking element may be missing. It is critical to view the market from allperspectives. Each dimension of market activity must be viewed in thecontext of the other dimensions. Failure to be aware of all dimensions ofmarket activity may result in a trading decision arrived at by an isolatedview of the market that ignores an important market factor. Another
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Dynamic Trading - Chapter 2
dimension of market activity may contradict the isolated view. The marketmust be viewed from the whole of its activity.Buy The Bottom, Sell The TopAn important part of dynamic trading analysis is to be prepared in advanceand recognize important trend changes as they occur. The lowest risk andlowest capital exposure trade and investment set-ups are often at thesignificant trend change pivots. I know, I know. Most of the trading andinvesting books teach never to try to buy the low or sell the high. Whatnonsense. Those books were written by academics and other non-traderswho know little about technical analysis except for lagging indicatorswhich only provide information well after the trend is established. Theyteach this bit of nonsense because most analysts do not have an analyticalmethod that projects in advance when and where marker reversals willtake place. Buy the bottom and sell the top is an important factor of atrading plan. This book will give you the tools to do just that quite often.The Coincidence of Time, Price and PatternWhen time, price and pattern coincide, change is inevitable. When each ofthe three market dimensions project a high probability of trend change, thechange is at least very highly probable, if not inevitable. The coincidenceof time, price and pattern projections provide low risk/low capitalexposure trade set-ups. If the trend change is confirmed, the trader andinvestor will have the confidence of knowing the direction of the maintrend and the direction that market positions should he taken.The Objective of Technical AnalysisThe purpose of technical analysis is not to be able to accurately identifyevery market position. all of the time. While this may be the daydream ofsome analysts and most amateur traders, it is an impossibility. Everymethod of technical analysis has limitations and at times will providecontradictory information. Unless the analyst, trader or investor is willingto accept that some times his or her analysis1 will not provide a confidentopinion of the market position,he or she is doomed to failure.The objective of technical analysis is to identify thoseconditions and the specific trading strategies thatmarket condtiionshave a high probability of success.
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Getting Started With Dynamic Trading
There are three positions a trader may take at any one time: long,short or out of the market. The out-of-the-market position is taken whenthe technical analysis does not recognize that the market is in a highprobability profit position- Jim Rodgers has said that he "waits until themoney is just sitting there on the floor waiting to be picked up beforehe considers entering a position, in other words, Rodgers waits until hisanalysis recognizes the conditions that have a very high probability ofsuccess. If you want to be successful, so will you.Traders who demand action usually have no technical analysisapproach or trading plan and are doomed to the same fate as all otherjunkies - busted. Over the years, I have often had prospective customerscall to inquire about my newsletter advisory services, trading workshopsor software program. If one of their first questions is something tike "howmany trades a month does this approach signal", I know they have neverhad success and never will until they change their objectives. Thesetrading junkies are more concerned with activity than profitability. Theonly objective of a trader or investor should be net profitability, not theamount of activity.Once you recognize that the purpose of technical analysis is to identifyhigh probability trade set-ups, patience and discipline should follow.Analyst, Investor or TraderBoth investors and traders must be good technical analysts to besuccessful. The technical analysis methods provide the informationto make a trading or investing decision. But many analysts are notnecessarily good investors or traders. For the purposes of this book,analyst includes everyone interested in the technical analysis of themarkets including both trader and investor. The same methods applyto all time frames whether a 15 minute chart or a monthly chart.What Markets Do These Techniques Apply?The Dynamic Trading techniques apply to all actively traded marketsincluding all of the major futures, stocks, mutual funds and indexes. Thesetechniques have been used by short-term futures traders who consider athree hour trade a long-term position to mutual fund switchers who makeonly two or three switches each year.System TradingThe myth that a so-called mechanical Wading or investing "system" maybe purchased that will provide great profits over time is a sad reminderthat a significant portion of the population has more money than brains
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Dynamic Trading - Chapter 2
or at least some money and few brains. What is a "mechanical tradingsystem" It is a specific and objective set of rules that signal when to buyand sell. The rules may he programmed Mo software or simply writtendown. The basis of all these systems is that the user does not have to knowanything about the market or trading and investing and will profit bysimply following the rules or system signals.As long as there has been trading and investing, there have beentrading and investing systems sold to the public for anywhere from a fewhundred dollars to many thousands. I don't believe there has ever been asystem sold to the public that the purchaser has profited from over aperiod of more than one or two years which always seem to be followedby consistent losses that wipe out any accumulated profit in a shortamount of time. The majority of "systems" sold are nothing but scams.Some probably have value in the hands of the developer who knows [hemarket conditions under which the system was developed and wouldrecognize when the conditions have changed and the system is no longerapplicable.Not long ago, I challenged all of the readers of the Club 3000newsletter to provide any evidence of ever having had a single, profitableyear from taking every signal of a system that they had purchased. TheClub 3000 newsletter was originally begun to provide comments andreviews by system purchasers. I am sure just about every system purchaserand developer in the trading and investing universe subscribes to thisnewsletter. Not a single system purchaser or developer was able to provideany evidence of a profitable year trading a purchased system! Surprised?I'm not.Why does the trading system illusion continue? I believe there are tworeasons. The first is that many of us want to believe that there really is aneasy way. Many of us want to believe that mere is a formula that can bepurchased and will guarantee success. Whole industries are built on thisillusion. Stay up late at night and channel surf and you will see how aliveand well is this illusion. Success cant be purchased. It must be earned.Trading and investing is the same as any other business. You must gain acertain amount of knowledge and make decisions. Judgment will alwaysbe required for success.The second reason for the perpetuation of the successful systemillusion is the recent plethora of system testing software. Most of diepopular and inexpensive technical analysis software programs make itrelatively easy to test the profitability of a set of trading rules. The leftbrain junkies have afield day with the system testing software. Moat ofthese users do not understand that a set of rules may be developed to showa profit on any set of data? Even data randomly generated. Bur wait until
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Getting Started With Dynamic Trading
you apply those rules to a new set of data generated under different marketconditions. Software promoters feed on the system illusion by heavilypromoting the system testing routines in then software. Tradingmagazines continually have articles on system development written byacademics or professional writers with no actual trading experience.Still interested in system trading? Futures magazine tracks the resultsof most of the public futures trading funds. Public trading funds are allsystem traders. For practical purposes, they have unlimited financial,computer and brain power resources to develop trading systems. In 1995,the S&P was up 35% for the year. In 1995, the average gain of the 205funds tracked by Futures magazine was just 12.11%. About one quarter ofthe funds were down for the year- Only nineteen or less than one out of tenfunds beat the S&P for the year. Futures magazine does not report onmulti-year returns for these funds, but I will give very high odds that noneof them has ever beaten the S&P in each of three years in a row.Most of these public trading funds have more than ten million dollarsunder management Some a lot more. All together they represent severalbillions of trading dollars. And this is just a drop in the bucket comparedwith the private trading funds. How much do you think it would be worthto any one of these funds to purchase a system that is profitable? Can youcount that high? Given this information, do you really think that you canbuy a profitable trading system for a few hundred dollars? For a fewthousand dollars?Hopefully you are now well grounded in reality. Success cannot bepurchased. It's that simple.How This Book Is Laid OutIt is important to progress through the book in the order the material ispresented. Each chapter builds upon the previous material.Doesn't it aggravate you when you are reading in a book thedescriptive commentary about a chart illustration and the chart is not onthe same page as the commentary? You have to keep flipping back andforth to view the illustration and the commentary together? That won'thappen in Dynamic Trading. Care has been taken so that the descriptivechart commentary is on the same page as the chart illustration. This oftenresults in a good bit of blank space left at the bottom of a page. This"wasted" space aggravates traditional publishers to no end but is necessaryfor the best learning experience. The purpose of this book is to teach youthese techniques as well as possible, not to conform to the ideal layoutstandards of traditional hook publishers.
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Dynamic Trading - Chapter 2
It's Time To Get StartedWe will begin the Dynamic Trading journey with an understanding of"What A Trader Must Know To Be Successful."
What A Trader Must Know To Be SuccessfulBelow are a few definitions with the help of Webster's you must knowwith my brief comments.Forecast:
To predict a future condition, occurrence or event.No one at any time knows what the future outcomeof any event will be. All forecasts of future events canonly be an educated guess. The outcome of anycondition can only be a probability, never a certainty.
Probable: Having more evidence for than against, but notproven conclusively. All trading and investing activitydeals in probabilities, never certainties. The objectiveof all market analysis and trading plans is to put theprobabilities of success on our side. This includeseliminating those activities with a low probability ofsuccess and only engaging in those activities with ahigh probability of success.Speculate: To engage in a risky business transaction in the hopeof making a large profit. All activities whose outcomeis in the future are speculative activities. The degreeof risk is relative. The only reason to accept greaterrisk is with the intention that the potential, futuregains will be far greater than relatively less riskyactivities.Chance:
The unpredictable element of an occurrence. A possibility or probability. Every possible occurrence of afuture event has a degree of unpredictability which iswhy no method of attempting to predict the future iswithout risk.
Risk: To expose to the chance of loss. The probability of anevent occurring. If the success of any activity is contingent on a Mure event occurring, that activity isalways risky. The objective of the trader and investor
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Getting Started With Dynamic Trading
is to reduce the inevitable chance of loss by onlyengaging in those activities (trades or investments)that reflect the greatest probability of success relativeto all of the choices available,CapitalExposure: The minimum dollar risk to see if your guess of thefuture is correct or not. You've got to pay