, and open to new ideas.
It’s Time to Take Flight
My work is now done. I have given you systems, methods, indica-tors, analyses, rules, observations, insights, and understandings.The rest is up to you. Armed with my information and yourunderstandings, and equipped with sufficient starting capital,accurate price quotations, a good working relationship with a bro-ker, and motivation, you’re now ready to either step out on yourown for the first time, or you are prepared to step back into thetrading arena more confident, more protected, and more educated.
You can use what I have taught you, or you can integrate mytools into your trading style. I don’t claim to have all the answers,and I don’t give you any guarantees other than to tell you thatwith persistence, patience, and motivation you will succeed. If 1can help you on the road to success as a day trader or if I can clari-fy any of the information presented herein, then please don’t hesi-tate to contact me. You may wish to contact my Internet Web siteat http://www.trade-futures.com for more information and updateson my work.
I have learned enough about the markets in my more than 30years of trading to know that the more I learn, the more there is tolearn. And I also know more than ever before that what hasworked best for me is that which is both the most simple to doand the most simple to understand. I have shared this knowledgewith you in the hope that it can help you as well. If my writing,226 = Afterword
research, and observations can improve your results or changeyour point of view for the better, then I will have done my job andI will be happy.
Jake BernsteinIndexAccumulation and distribution,155-168A/D oscillator, 158-161, 168ADD method, 162-168ideal situation, 156, 157Accuracy, 214, 215Advance/decline derivative (ADD),162-168Advance/decline (A/D) oscillator,158-161, 168ADD method, 162-168ADX, 20, 21Afterword, 221-226Aggressiveness, 182, 183Appel, Gerald, 15Archimedes, 87Author:defending his position, 223-225postal address, 195web site, 225why book written, 221-223Average trade, 91, 92
Bad price fills, 38, 39
Balance of power, 155, 156
Bayer, George, 18
Behavior of Prices on Wall Street, The, 63
Beyond the Investor's Quotient, 101
Breakouts, 29, 30
(See also 30-minute breakout
(30MBO))
Brokers, 108, 211, 220
Capital requirements, 191, 216Chart patterns/ formations, 18, 19Clichés, 100
Index
Closings and openings, 119-134COR method, 123-134high/low/close relationships, 120,121open/close relationships, 122Coffee, 115Commissions, 38, 211Commodity spreads, 116, 117Compleat Day Trader, The, 2, 15, 72, 135,153Computers, 42Confidence, 181Contrarian attitude, 182, 194COR, 123-134Critical time of day (CTOD), 30Cycles, 21-23
Daily goals, 193, 194Daily seasonal tendencies, 64-67Daily sentiment index (DSI), 27Day of the week patterns, 63-76day preceding the holiday, 68-70dual breakout (DBO), 73-75key date seasonals, 64-67Monday pattern, 71, 72specific date price patterns, 68-70Day preceding the holiday, 68-70Day trading:advantages, 6,7combination of art/science, 33-36psychology (see Psychology of daytrading)realities of, 37-42rules for successful, 197-212why do it, 24DBO, 73-75Decisiveness, 181230
Index
Delayed data, 213
Delta, 40
Diary, 205
Discipline, 8-10, 34, 186-189Discount brokers, 108, 211
DMI, 20, 21
Don't Sell Stocks on Monday, 63, 71Drawdown, 89
DSL, 27
Dual breakout (DBO), 73-75
Edsel trading, 103Elliott, R.N., 18Emotions, 95-110positive suggestions, 107rules, 97-99wrong behaviors, 101-107(See also Psychology of day trading)Energy spreads, 118Equipment, 213, 214Excess of information, 42
Fame, 4
FAQs, 213-220
Fill-or-kill (FOK) orders, 171, 172,174
Flash fills, 175, 219
Floor traders, 216
FOK (see Fill-or-kill)
Forrester, Jay W., 21
FPO exit, 202
Frequently asked questions (FAQs),213-220
Full-service brokers, 211
Futures options, 25, 39, 40, 107
Gann, W.D., 18Gap down, 136Gap methods, 135-153buy signal, 139, 140gap penetration size, 144, 145gap size, 144multiple-day gap signal (multigap),145-153pragmatic considerations, 143psychology, 140, 142
Gap methods (Cont.):sell signal, 139, 140stop loss size, 145stop losses, 143trading rules, 142trailing stop loss, 153
Gap up, 136
Globex market, 74
Good-till-canceled (GTC) orders, 172,
173Granville, Joe, 106GTC orders, 172, 173
Hirsch, Yale, 63, 71Homework, 206, 207Horatio Alger story, 104
ID breakout method, 81-86
Idiosyncratic difficulties, 195
Imperviousness, 181, 182
Inactive markets, 209, 210
Inside day (ID), 81-86
Insiders, 41
Intuition, 36
Intuitive seat-of-the-pants trader, 80
Investor’s Quotient, The, 5, 101, 185
Investor’s Quotient - Second Edition,The, 5
Key date seasonals, 64-67
Lane, George, 16
Largest single losing trade, 90Largest single winning trade, 90, 91Liquidating positions, 193, 194Log, 205
MA-based indicators, 14-16
MAC, 15, 16
MACD, 15
Market homework, 206, 207
Market-if-touched (MIT) orders, 171,174
Market myths, 208, 209Market-on-close (MOC) orders, 170,173Market orders, 170Market personality, 94Market sentiment, 194, 210Market sentiment indicators, 27-29Market timing indicators, 13-31ADX/DMI, 20, 21breakouts, 29, 30 (See also 30-minutebreakout (30MBO))chart patterns /formations, 18, 19cycles, 21-23MAC, 15, 16MACD, 15market sentiment indicators, 27-29momentum/rate of change, 26, 27parabolic indicator, 19seasonals, 23-25SI/RSI, 16, 17traditional MA indicators, 14, 15Market Vane, 27Markets, 111-118changing conditions, 115, 116commodity spreads, 116, 117inactive, 209, 21030-minute breakout, 53-55trading volume, 112-115volatility, 114, 115Maximum consecutive losses, 89, 90Maximum drawdown, 89MBH Commodity Advisors, Inc., 195“Measuring Market Momentum,” 158Meekness, 183, 184Merrill, Art, 63, 68Misinformation / disinformation, 39MIT orders, 171, 174Mob psychology, 210MOC orders, 170, 173Momentum, 26, 27Monday pattern, 71, 72Moving averages, 14-16Multiple-day gap signal (multigap),145-153
nth profitable exit, 202
New Commodity Trading Systems andMethods, The, 159
Newcomers, 190, 191
Index 231
News developments, 191, 192, 210, 219Nietzsche, Friedrich, 95
90/10 rule, 215
Note-taking, 7
OCO orders, 173, 174Odd lot short sales, 27Omega TradeStation software, 74One cancels the other (OCO) order,173, 174
Open orders, 172, 173Opening price gap, 135
(See also Gap methods)Openings (see Closings and openings)Optimization, 92-94Orange juice, 115Orders, 169-177
dos and don’ts, 173-176
FOK, 171, 172, 174
GTC, 172, 173
market, 170
MIT, 171, 174
MOC, 170, 173
OCO, 173, 174
open, 172, 173
stop, 172
stop limit, 172Overabundance of information, 42Overbought/oversold, 16, 17Overtrading, 189, 190
Parabolic indicator, 19Percentage winning trades, 91Persistence, 9, 181, 187Personality traits, 181-184Position trading, 179Preholiday behavior, 68~70Premium, 40Price surges /declines, 192, 193Profit potential, 3, 4Psychology of day trading, 179-195capital requirements, 191, 216daily goals, 193, 194discipline, 186-189idiosyncratic difficulties, 195liquidating positions, 193, 194market sentiment, 194Psychology of day trading (Cont.):news developments, 191, 192overtrading, 189, 190patience/importance/tempera-
ment, 180personality traits, 181-184price surges/declines, 192, 193self-control, 183-185specializing, 190, 191(See also Emotions)
Purely fundamental trader, 78, 79
Purely technical trader, 77, 78
Pyramiding, 106, 209, 218
Range breakout system, 30Rate of change (ROC), 26, 27Recordkeeping, 205, 207, 208Relative strength indicator (RSI), 16, 17ROC, 26, 27RSI, 16, 17Rules, 34, 35, 197~212
emotions, 97-99
gap methods, 142
90/10 rule, 215
30-minute breakout, 45-47
S&P trading, 39
Searching-for-a-good-trade syndrome,189
Seasonals, 23-25
Self-control, 183-185
Self-discipline, 8-10, 34, 186-189
Short-Term Trading in Futures, 17, 180
SI, 16, 17
SI “POP” method, 17
Software programs, 214
Soybeans vs. corn spread, 118
Specific date price patterns, 68-70
Spreads, 116-118
Statistics, 87
Stochastic indicator (SI), 16, 17
Stop limit orders, 172
Stop loss, 49, 143
(See also Trailing stop loss)
Stop orders, 172
Sugar, 115, 116
Swiss Franc vs. British pound spread,117, 118
Swiss Franc vs. D-Mark spread, 117
Swiss Franc vs. Japanese yen spread,117
System development, 87-94
System optimization, 92-94
Techno-fundamental trader, 79, 8030-minute breakout (30MBO), 45-61adjustments /adaptability, 61buy signal, 46, 47floor amount, 48hints/tips, 56, 57initial stop loss, 48markets, 53-55number of ticks penetration, 48percentage trail, 48risk/reward, 55rules, 45-47sell signal, 46, 47test results, 52, 53trades per day, 49what to expect, 49-51Thorndike, E.L., 13, 101Time decay, 40Timing (see Market timing indicators)Traders:new, 190, 191personality traits, 181-184types, 77-80Trading rules (see Rules)Trading systems:accuracy, 214, 215optimization, 92-94rule of thumb, 94testing, 87-94Traditional MA indicators, 14, 15Trailing stop loss, 153, 193(See also Stop loss)USDA Commitment of Traders Report, 27
Volatility, 41, 42, 114
Waters, James J., 158
Wheat vs. corn spread, 118
Williams, Larry, 136, 144, 158
Willingness to accept losses, 10, 188,189
Wrong behaviors, 101-107About the Author
Jake Bernstein is an internationally recognized author,trader, and researcher. He publishes the MBH Weeklycommodity letter and, as the author of some 30 booksand research studies, Bernstein’s influence and renownstretch across the globe. He has been a guest on
Wall Street Week and scores of other radio and televisionprograms, and is a popular speaker at investing andtrading seminars.<|end|>