Something Interesting to Read December 2016 - page 2

 

Understanding Price Action: practical analysis of the 5-minute time frame : Bob Volman


Understanding Price Action is a must read for both the aspiring and professional trader who seek to obtain a deeper understanding of what is commonly referred to as "trading from the naked chart". With hundreds of examples commented on in great detail, Volman convincingly points out that only a handful of price action principles are responsible for the bulk of fluctuations in any market session—and that it takes common sense, much more than mastery, to put these essentials to one's benefit in the trading game.

The power of the book lies in the exceptional transparency with which the concepts and trading techniques are put forth. Besides offering the reader a comprehensive study on price action mechanics, included within is a series of six months of consecutive sessions of the eur/usd 5-minute. Containing nearly 400 fully annotated charts, this section alone harbors a massive database of intraday analysis, not found in any other trading guide.

Written with a razor-sharp eye for practical detail, yet in a highly absorbable manner, Understanding Price Action breathes quality from every page and is bound to become a classic in the library of any trader who is serious about his education.


TABLE OF CONTENTS

Preface v
Part 1 Practical Analysis
Chapter 1 A Time to Trade and a Time to 3 (2)
Study
Chapter 2 Price Action Principles---Theory 5 (28)
Double pressure 6 (2)
Support and resistance 8 (3)
False breaks, tease breaks and proper 11 (5)
breaks
False highs and lows 16 (4)
Pullbacks reversals 20 (5)
Ceiling test 25 (5)
Round number effect 30 (3)
Chapter 3 Price Action Principles---Practice 33 (34)
Chapter 4 Orders, Target and Stop 67 (6)
Chapter 5 Trade Setups 73 (70)
Pattern break 76 (21)
Pattern break pullback 97 (11)
Pattern break combi 108(17)
Pullback reversal 125(18)
Chapter 6 Manual Exits 143(34)
News report exit 144(4)
Resistance exit 148(8)
Reversal exit 156(21)
Chapter 7 Skipping Trades and Trading 177(34)
Breaks for Failure
Chapter 8 Recap Part 1 211(34)
Part 2 Evaluation and Management
Chapter 9 Consecutive Intraday Charts 245(138)
March 250(22)
April 272(21)
May 293(23)
June 316(21)
July 337(22)
August 359(24)
Chapter 10 Trade Size---Compounding 383(8)
Chapter 11 Adapting to Low Volatility 391(30)
Chapter 12 Final Words 421(1)
About the Author 422(1)
Index 423



 

Charting and Technical Analysis : Fred Mcallen


To invest successfully or trade in Stocks, Options, Forex, or even Mutual Funds, it is imperative to know AND understand price and market movements that can only be learned from Technical Analysis. You should NEVER attempt Trading or Investing without it! My 25 years experience has taught me that 'every book on the market' regarding Charting and Technical Analysis is seemingly worthless. All seem to find yet another creative way to tell you to “Buy Low and Sell High.” And they offer NO in-depth understanding or analysis about WHO is buying and WHO is selling, and when. Point is, anyone, experienced or not, can show you a picture of a Chart and tell you to buy at the bottom and sell at the top. That is simple 'hindsight,' and is always 20/20. This book is different! It is IN-DEPTH – EXPLAINED and you WILL learn price movements and technical analysis from this information! You will understand and recognize tops and bottoms in the market and in particular stocks, AS they are forming. This is highly valuable information, and you should NEVER attempt to trade or invest without this knowledge. Mutual Funds? Most people think they do not need this information because the have a Mutual Fund. That could not be farther from the truth. Investing your hard-earned money should be done with your own knowledge of market direction, when to buy, and when to move your money to safety. Without this knowledge you are at the mercy of a salesperson hungry to earn a commission. Thus, invariably entering the market at the wrong time and in the wrong investment. No one else has your best interest in mind. So learn to protect your money or keep it in the bank. It's that simple. The next move is yours.

 

The Art and Science of Technical Analysis: Market Structure, Price Action and Trading Strategies : Adam Grimes


A breakthrough trading book that provides powerful insights on profitable technical patterns and strategies The Art and Science of Technical Analysis is a groundbreaking work that bridges the gaps between the academic view of markets, technical analysis, and profitable trading.

A breakthrough trading book that provides powerful insights on profitable technical patterns and strategies The Art and Science of Technical Analysis is a groundbreaking work that bridges the gaps between the academic view of markets, technical analysis, and profitable trading. The book explores why randomness prevails in markets most, but not all, of the time and how technical analysis can be used to capture statistically validated patterns in certain types of market conditions. The belief of the book is that buying and selling pressure causes patterns in prices, but that these technical patterns are only effective in the presence of true buying/selling imbalance. The Art and Science of Technical Analysis is supported by extensive statistical analysis of the markets, which will debunk some tools and patterns such as Fibonacci analysis, and endorse other tools and trade setups. In addition, this reliable resource discusses trader psychology and trader learning curves based on the author's extensive experience as a trader and trainer of traders. * Offers serious traders a way to think about market problems, understand their own performance, and help find a more productive path forward * Includes extensive research to validate specific money-making patterns and strategies * Written by an experienced market practitioner who has trained and worked with many top traders Filled with in-depth insights and practical advice, The Art and Science of Technical Analysis will give you a realistic sense of how markets behave, when and how technical analysis works, and what it really takes to trade successfully.


TABLE OF CONTENTS


Preface xi Acknowledgments xv

PART I The Foundation of Technical Analysis

CHAPTER 1 The Trader s Edge 3 Defining a Trading Edge 4 Finding and Developing Your Edge 7 General Principles of Chart Reading 8 Indicators 12 The Two Forces: Toward a New Understanding of Market Action 13 Price Action and Market Structure on Charts 15 Charting by Hand 28

CHAPTER 2 The Market Cycle and the Four Trades 31 Wyckoff s Market Cycle 32 The Four Trades 40 Summary 45 PART II Market Structure

CHAPTER 3 On Trends 49 The Fundamental Pattern 49 Trend Structure 51 A Deeper Look at Pullbacks: The Quintessential Trend Trading Pattern 65 Trend Analysis 77 Summary 95

CHAPTER 4 On Trading Ranges 97 Support and Resistance 97 Trading Ranges as Functional Structures 113 Summary 120

CHAPTER 5 Interfaces between Trends and Ranges 121 Breakout Trade: Trading Range to Trend 122 Trend to Trading Range 134 Trend to Opposite Trend (Trend Reversal) 137 Trend to Same Trend (Failure of Trend Reversal) 143 Summary 145 PART III Trading Strategies

CHAPTER 6 Practical Trading Templates 149 Failure Test 150 Pullback, Buying Support or Shorting Resistance 154 Pullback, Entering Lower Time Frame Breakout 162 Trading Complex Pullbacks 165 The Anti 170 Breakouts, Entering in the Preceding Base 174 Breakouts, Entering on First Pullback Following 181 Failed Breakouts 183 Summary 186

CHAPTER 7 Tools for Confirmation 189 The Moving Average The Still Center 190 Channels: Emotional Extremes 195 Indicators: MACD 202 Multiple Time Frame Analysis 213

CHAPTER 8 Trade Management 231 Placing the Initial Stop 232 Setting Price Targets 235 Active Management 240 Portfolio Considerations 251 Practical Issues 253

CHAPTER 9 Risk Management 263 Risk and Position Sizing 263 Theoretical Perspectives on Risk 279 Misunderstood Risk 282 Practical Risks in Trading 283 Summary 290

CHAPTER 10 Trade Examples 291 Trend Continuation 293 Trend Termination 313 Failure Test Failures 319 Trading Parabolic Climaxes 323 The Anti 327 Trading at Support and Resistance 336 Summary 343 PART IV The Individual, Self-Directed Trader

CHAPTER 11 The Trader s Mind 347 Psychological Challenges of the Marketplace 348 Evolutionary Adaptations 349 Cognitive Biases 353 The Random Reinforcement Problem 356 Emotions: The Enemy Within 357 Intuition 360 Flow 364 Practical Psychology 367 Summary 372

CHAPTER 12 Becoming a Trader 375 The Process 376 Record Keeping 385 Statistical Analysis of Trading Results 388 Summary 397

APPENDIX A Trading Primer 399

APPENDIX B A Deeper Look at Moving Averages and the MACD 409

APPENDIX C Sample Trade Data 425

Glossary 427

Bibliography 443

About the Author 447

Index 449

 

Systematic Trading: A unique new method for designing trading and investing systems : Robert Carver


This is not just another book with yet another trading system. This is a complete guide to developing your own systems to help you make and execute trading and investing decisions. It is intended for everyone who wishes to systematise their financial decision making, either completely or to some degree.

Author Robert Carver draws on financial theory, his experience managing systematic hedge fund strategies and his own in-depth research to explain why systematic trading makes sense and demonstrates how it can be done safely and profitably. Every aspect, from creating trading rules to position sizing, is thoroughly explained. The framework described here can be used with all assets, including equities, bonds, forex and commodities.

There is no magic formula that will guarantee success, but cutting out simple mistakes will improve your performance. You'll learn how to avoid common pitfalls such as over-complicating your strategy, being too optimistic about likely returns, taking excessive risks and trading too frequently.

Important features include:

- The theory behind systematic trading: why and when it works, and when it doesn't.
- Simple and effective ways to design effective strategies.
- A complete position management framework which can be adapted for your needs.
- How fully systematic traders can create or adapt trading rules to forecast prices.
- Making discretionary trading decisions within a systematic framework for position management.
- Why traditional long only investors should use systems to ensure proper diversification, and avoid costly and unnecessary portfolio churn.
- Adapting strategies depending on the cost of trading and how much capital is being used.
- Practical examples from UK, US and international markets showing how the framework can be used.

Systematic Trading is detailed, comprehensive and full of practical advice. It provides a unique new approach to system development and a must for anyone considering using systems to make some, or all, of their investment decisions.

 

Forum on trading, automated trading systems and testing trading strategies

Something Interesting to Read February 2014

Sergey Golubev, 2014.02.25 16:46

Cloud Charts : Trading Successful with the Ichimoku Technique by David Linton



David Linton, the author of Cloud Charts, had his interest in Ichimoku charts `sparked' during a presentation by Rick Bensignor at the 2004 IFTA conference in Madrid. David had heard of the method prior to the conference but credits Rick with presenting it in an `understable' way. David set out on a quest for Ichimoku knowledge. He researched the internet, questioned Japanese delegates at subsequent IFTA conferences, sought out Rick Bensignor at conferences and meetings and even flew to Tokyo. The fruit of that quest is the book, Cloud Charts.

The Ichimoku method is now fast becoming popular in Western trading rooms and is available on almost all technical analysis software. David must take some credit for turning what seemed to be an exotic and complicated method into an easily understandable and robust trading and analysis tool for non-Japanese speaking technical analysts.

So, what is Ichimoku? The full name of the method is Ichimoku Kinko Hyo which means 'at one glance balance bar chart'. Ichimoku charts were devised by Goichi Hosoda , a Tokyo journalist, who believed that once the method was fully understood, one could comprehend the exact state of a market at a glance. Most of the Ichimoku indicators represent equilibrium in one time frame or another and price action is generally analysed with regard to whether the market is in equilibrium, moving away from it or reverting back to it. By their nature, the various indicators also offer dynamic areas of support or resistance.

Cloud Charts is divided into three parts. The first is for the novice technical analyst and is designed to give them an understanding of many basic technical analysis concepts involved with not only Ichimoku analysis but also traditional techniques. More experienced technical analysts may wish to skip this part.

Part two introduces the reader to the basic indicators used in Ichimoku charts (David calls them cloud charts). This section deals with the derivation and interpretation of:
1. The Turning Line (also called the Conversion Line)
2. The Standard Line ( also called the Base Line)
3. The Cloud Span A ( also called the Cloud Span 1)
4. The Cloud Span B (also called the Cloud Span 2)
5. The Lagging Line ( also called the Lagging Span)

Part two offers a guide to applying Ichimoku charts in a multiple time frame sense, as well as the often overlooked Wave Principle, Price Targets and Time Span Principle. However, the application of Ichimoku charts to price and time projection is very subjective and for that reason alone the projections are quite often not utilised by even experienced analysts.

Looking at an Ichimoku chart, it's no surprise that analysts are sometimes turned off by the busyness of the chart. It can look like chaos to the uninitiated but the key to getting past that is understanding the formula to each indicator, how they combine with each other, how they represent a consensus of price action in different time frames and colour-coding. In part two David explains construction and interpretation of the charts in a manner that is easy for any newcomer to technical analysis let alone a professional on a trading desk.

Part three, is where we are encouraged to think outside of the box. Here, the use of Ichimoku charts are combined with other technical analysis techniques, alternative time inputs into the indicators are suggested and the application to market breadth analysis is considered. There is also a chapter on back testing for the quantitative traders to consume.

Overall, this book, in an easily read manner, brings together the body of knowledge of a Japanese technical analysis method which was once thought of as exotic and over-complicated. It has potential to become the definitive English language text on the Ichimoku Kinko Hyo technical analysis method.


 

Trading The Trends : Fred McAllen

Trading the Trends is what every investor and trader has been waiting for. Learn to make money in any market. McAllen, a retired stockbroker, best selling author, and active investor/trader leads you through every aspect of recognizing market trends early, how to avoid losses, and shares numerous strategies to profit in any market. Understanding how to invest and trade in the stock market trends and cycles is paramount to the success of every individual trader and investor. Experiencing the losses of the past does not have to repeat itself over and over. By recognizing the changes in trends as they are occurring, the trader and investor can protect and preserve their capital while profiting in any market environment. To give the investor and trader the most comprehensive learning experience, this book encompasses the actual trading decisions and strategies used in both up and down markets. Bear market and sideways market strategies are traded, including trading the bull market beginning in 2009 and exiting at the highs in 2011. The decisions for each entry and exit are shared in detail to give the investor and trader a broad understanding and valuable knowledge for future market cycles. "The greatest investors, traders, and speculators of all time have one thing in common. They understand the market does not always go up; they recognize the market moves in trends and cycles, and they capitalize on that knowledge." ~ Fred McAllen

 

The New Trading for a Living: Psychology, Discipline, Trading Tools and Systems, Risk Control, Trade Management : Alexander Elder

Description

The best-selling trading book of all timeupdated for the new era

The New Trading for a Living updates a modern classic, popular worldwide among both private and institutional traders. This revised and expanded edition brings time-tested concepts in gear with today's fast-moving markets, adding new studies and techniques for the modern trader.

This classic guide teaches a calm and disciplined approach to the markets. It emphasizes risk management along with self-management and provides clear rules for both. The New Trading for a Living includes templates for rating stock picks, creating trade plans, and rating your own readiness to trade. It provides the knowledge, perspective, and tools for developing your own effective trading system.

All charts in this book are new and in full color, with clear comments on rules and techniques. The clarity of this book's language, its practical illustrations and generous sharing of the essential skills have made it a model for the industry—often imitated but never duplicated. Both new and experienced traders will appreciate its insights and the calm, systematic approach to modern markets.

The New Trading for a Living will become an even more valuable resource than the author's previous books:

  • Overcome barriers to success and develop stronger discipline
  • Identify asymmetrical market zones, where rewards are higher and risks lower
  • Master money management as you set entries, targets and stops
  • Use a record-keeping system that will make you into your own teacher

Successful trading is based on knowledge, focus, and discipline. The New Trading for a Living will lift your trading to a higher level by sharing classic wisdom along with modern market tools.


Table of Contents

Preface xiii

Introduction 1

1. Trading—The Last Frontier 1

2. Psychology Is the Key 3

3. The Odds against You 5

ONE Individual Psychology 9

4. Why Trade? 9

5. Reality versus Fantasy 10

6. Self-Destructiveness 16

7. Trading Psychology 19

8. Trading Lessons from AA 21

9. Losers Anonymous 23

10. Winners and Losers 27

TWO Mass Psychology 31

11. What Is Price? 32

12. What Is the Market? 33

13. The Trading Scene 36

14. The Market Crowd and You 39

15. Psychology of Trends 43

16. Managing versus Forecasting 46

THREE Classical Chart Analysis 49

17. Charting 50

18. Support and Resistance 55

19. Trends and Trading Ranges 60

20. Kangaroo Tails 65

FOUR Computerized Technical Analysis 69

21. Computers in Trading 69

22. Moving Averages 74

23. Moving Average Convergence-Divergence: MACD Lines and MACD-Histogram 80

24. The Directional System 89

25. Oscillators 95

26. Stochastic 95

27. Relative Strength Index 99

FIVE Volume and Time 103

28. Volume 103

29. Volume-Based Indicators 107

30. Force Index 112

31. Open Interest 117

32. Time 121

33. Trading Timeframes 126

SIX General Market Indicators 133

34. The New High–New Low Index 133

35. Stocks above 50-Day MA 139

36. Other Stock Market Indicators 140

37. Consensus and Commitment Indicators 142

SEVEN Trading Systems 149

38. System Testing, Paper Trading, and the

Three Key Demands for Every Trade 151

39. Triple Screen Trading System 154

40. The Impulse System 162

41. Channel Trading Systems 166

EIGHT Trading Vehicles 173

42. Stocks 175

43. ETFs 176

44. Options 178

45. CFDs 186

46. Futures 187

47. Forex 194

NINE Risk Management 197

48. Emotions and Probabilities 197

49. The Two Main Rules of Risk Control 202

50. The Two Percent Rule 203

51. The Six Percent Rule 208

52. A Comeback from a Drawdown 210

TEN Practical Details 215

53. How to Set Profit Targets: “Enough” Is the Power Word 215

54. How to Set Stops: Say No to Wishful Thinking 219

55. Is This an A-trade? 225

56. Scanning for Possible Trades 230

ELEVEN Good Record-Keeping 233

57. Your Daily Homework 234

58. Creating and Scoring Trade Plans 238

59. Trade Journal 243

A Journey without an End:

How to Continue Learning 249

Sources 253

Acknowledgments 257

About the Author 259

Index 261


 

Forum on trading, automated trading systems and testing trading strategies

Something Interesting to Read December 2015

Muhammad Syamil Bin Abdullah, 2015.12.05 09:30

The Simple Strategy - A Powerful Day Trading Strategy For Trading Futures, Stocks, ETFs and Forex

A profitable trading strategy is the most important tool for a trader.

This book explains a powerful trend-following day trading strategy for trading futures, stocks, ETFs and Forex.

The Simple Strategy is very popular amongst traders for the following reasons:

  • Clear Entry Rules

    When trading "The Simple Strategy", there's no second-guessing. As you will see, the entry rules are based on indicators - and these rules are black and white. Either the MACD is above the zero line or it isn't. And either the RSI is above 70 or it isn't. The entries are easy to identify and execute. That's why this strategy is called "The Simple Strategy"

  • Clear Exit Rules

    When trading "The Simple Strategy" you'll know when to exit even before you enter the trade. So, you know exactly how much to risk on any given trade which is essential for precise position sizing and money management. Plus, you can put the trade on auto-pilot once your entry order is filled. This keeps trade management to a minimum. It's easy and simple.

  • Taking advantage of small intraday trends

    These days trends are short-lived. The times when you could enter the market in the morning and exit the market in the afternoon are over. These days the markets can turn on a dime. Low trading commissions and computerized trading have destroyed the nice and long intraday trends. However, with "The Simple Strategy" you can take advantage of the small intraday trends that we are seeing in today's markets.

  • You don't need a sophisticated trading software

    If you want to trade "The Simple Strategy", you only need a charting software with "basic" charting capabilities: Your charting software needs to be able to plot RANGE BARS, BOLLINGER BANDS, MACD and RSI. More than 90% of the charting software packages that are available today have these capabilities. There's no need to buy any proprietary indicators or expensive charting software!

In short: "The Simple Strategy" can greatly simplify your trading.

 

Forum on trading, automated trading systems and testing trading strategies

Something Interesting to Read February 2015

Sergey Golubev, 2015.02.16 10:11

Naked Forex: High-Probability Techniques for Trading Without Indicators
by Alex Nekritin




Most forex traders lose because they persist in believing three myths of successful trading:

  • Myth 1: successful trading must beindicator-based.
  • Myth 2: successful trading must be complex.
  • Myth3: successful trading is dependent on the trading system. Well, it's time to get over these misconceptions and start winning, sayauthors Alexander Nekritin and Walter Peters in Naked Forex.

Long before computers and calculators, trading was handledwithout complex technical analysis and indicators. Trading was old school - based on using only price charts - and it was simple, profitable, and easy to implement. In Naked Forex, they show you how to successfully trade this way.

This lively, three-part book lays out the authors' techniques indetail:

  • The first part walks you through the fundamentals of forextrading and establishes the ruling tenet of all naked forextrading: price is king.
  • In Part Two, the authors share methods thatlead to profits, including using resistance zones, price patterns,transitions, and such intriguing trade setups as Wammies, Moolahs,and the Last Kiss.
  • In the last part of the book, you'll learn tounderstand your own trading psyche. Mastering your own attitudestoward risk, says coauthor Peters, who is also a PhD in psychology,is how you finally become a true professional trader.

Engaging and informative, this practical guide touches on many provocative topics, including:

  • Is it possible to outwit some of the most determined,intelligent, and well-resourced traders in the world? Find out whatit takes

  • The concept of "zones" and the seven most important things youneed to know about them

  • Six key stages you must address for every trade

  • Are you a runner or a gunner? When it comes to exiting a tradewith money, it's important to know

  • The one secret expert traders all share, why boring is good, andsix steps to becoming an expert

  • Why understanding yourself is paramount. What is your attitudetowards money? What are your biases? Find out how to find out

Naked trading is liberating, exhilarating, and frees you to focus on markets, instead of the indicators, say Nekritin andPeters. Follow their proprietary techniques to profitability with Naked Forex.


 

Arbitrage: The authoritative guide on how it works, why it works, and how it can work for you : Chris Green

Arbitrage is the practice of taking advantage of a price difference between two or more markets, striking a combination of matching deals that capitalize upon the imbalance, the profit being the difference between the market prices. This is the complete, authoritative, and exhaustive manual outlining the Arbitrage business model. It has been compiled and made available to anyone interested in buying products to be resold online. In this book, Chris Green will give you the keys to the Arbitrage Kingdom with the mindset of unlimited opportunities and abundance and not one of scarcity. Empires are being built by using powerful new programs like ScanPower to source and evaluate items for resale. Pair this with Amazon's amazing fulfillment program called Fulfillment By Amazon (FBA) to outsource the storage, shipping, and customer service of your items, and you have a completely scalable, nearly risk-free business model with a near-zero entry cost. The techniques described in this book can be used by anyone, anywhere to build a small side business or large empire. The only limit is you imagination.

Reason: