Something Interesting to Read August 2014

Point and Figure charts are one of the great secrets of the Technical Analysis world.  Highly sophisticated and with a thoroughbred pedigree, they can, however, be overlooked by traders today.

Jeremy du Plessis - one of the foremost Point and Figure experts in the world - returns with a fully updated second edition of this definitive guide in an effort to redress this imbalance. This second edition, with an extensive revision to the text and introduction of brand new techniques, demystifies the world of Point and Figure charting. It includes a detailed explanation of the history and development of the technique from its invention to the modern day, and covers the makeup of the chart patterns, why they are created, and how to interpret them.

Throughout, readers are encouraged to understand Point and Figure charts from first principles, rather than just remember the names of a series of patterns. It is the first major work for 50 years to discuss in depth the original 1-box reversal method of Point and Figure charting and contrast it with the more popular 3-box reversal method.

Further, the explanation of how to use Point and Figure charts to project targets and calculate risk-reward ratios is the most comprehensive ever seen. Also featured in the second edition are:

• A step-by-step analysis of the FTSE 100 Index using the 3-box method, as well as the NASDAQ Composite Index, using the 1-box method
  
• A detailed discussion of optimising techniques
  
• An in-depth chapter on Analysing Point and Figure charts, extensively rewritten from the first edition
  
• A new explanation of how Point and Figure parameters are chosen and the implications of choosing them
  
• Two new Point and Figure construction methods never seen before
  
• Point and Figure's contribution to market breadth, with a look at bullish percent and two brand new indicators
  
• Full discussion of Point and Figure gaps and how they provide valuable information about the chart
  
• Lesser known, more advanced techniques such as the use of moving averages, parabolic SAR and Bollinger Bands on Point and Figure charts
  
• Price and volume activity histograms and how they provide information about support and resistance
  

All this is illustrated with numerous colour charts and observations from years of trading experience. According to du Plessis, Point and Figure charts are the 'voice of the market'. This book helps you listen to, and understand, that voice. Part of the Market Technicians Association (MTA) Required Reading list.

A Three Dimensional Approach To Forex Trading : Anna Coulling

If you aspire to becoming a full time forex trader, then this is the book for you. Even if your dream is perhaps more modest, and you simply want to have a second income trading the forex markets, then again, this book is for you. It has been written with one clear objective in mind. To explain how and why currencies move in the way that they do, using the combined power of relational, technical and fundamental analysis. Combine this with a three dimensional approach to trading itself, using multiple time frames and multiple chart analysis, and the world of foreign exchange will become crystal clear. Many aspiring traders, simply do not realize that the forex market sits at the heart of the financial world, which, when you think about it logically, is really common sense. After all, this is the biggest money market in the world, and if the financial markets are about one thing, they are about money. Making it, protecting it, or increasing the return. It’s no surprise therefore, that the forex market connects all the others. It is the central axis of the financial world, around which all the others spin. In the book, you will discover how changes in market sentiment in the primary markets of commodities, stocks, bonds and equities, are then reflected in the currency markets. This is something which often surprises novice traders. After all, why look at a stock index, or the price of gold, or a bond market? The answer is very simple. It is in these markets where you will find all the clues and signals, which then reveal money flow. After all, the financial markets are all about risk. In other words, higher returns for higher risk, or lower returns for lower risk. It really is that simple. And yet, how many forex traders ever consider associated markets. The answer is very few. You will be one of those enlightened traders who truly understands money flow and risk, and your confidence as a trader will grow exponentially as a result. And in case you were wondering, this is NOT another book explaining forex trading strategies. In fact there are none at all, surprising given the book's length. If this is what you are looking for, please DO NOT buy this book. It has been written for two specific audiences. The first is the novice forex trader, for whom this is a new market. The second is the forex trader who has attempted to trade in foreign exchange, but failed, and has been left confused by the apparent random and chaotic behavior of this volatile market. Reading this book will provide you with a deep understanding of how and why the markets move in the way they do. Whilst the forex market is a complex mix, it is not complicated, once you understand the people, their motives and the currencies themselves. Each chapter builds on the last in a logical sequence, and every topic is explained in a simple and clear way. Even those markets such as bonds, which few traders ever understand, are explained very simply. Every topic is illustrated with clearly annotated charts, to help and guide you as you learn. Equally important is the concept of change. Indeed you may have other books on your bookshelf written many years ago and explaining how the forex market works. Well, as you will discover, the rule book has been torn up. No longer is this a simple market of trending currency pairs. This all changed in the financial tsunami which engulfed the world in 2007/2008, and with it the forex world changed too! If this is news to you, then yet another reason to buy the book. Long gone are the days when currency pairs meandered their way higher and lower in long term trends, driven by interest rate differentials. To take advantage, you need to understand the forces which now drive the markets. A Three Dimensional Approach To Forex Trading will empower you with knowledge. Knowledge and confidence go hand in hand. Confidence breeds success, and success breeds money, which will then flow from reading the book - Anna

New Trading Dimensions: How to Profit from Chaos in Stocks, Bonds, and Commodities : Bill Williams

As today's market environment continues to change dramatically, more and more traders are discovering that traditional forecasting methods-pure technical analysis and fundamental analysis-just do not work. Sending out contradictory messages, these opposing schools of thought leave investors baffled about the future direction of the market, and consequently, at a loss as to how to tailor their trading systems. As a result, many practitioners have now turned to a new forecasting "cocktail" that combines traditional charting methodologies with chaos theory and human psychology. In this groundbreaking book, Bill Williams, a seasoned trader at the forefront of this dynamic new approach, explains exactly what it is, how it works in current stock and commodity markets, and how to use it to your advantage.

Based on human nature rather than the vagaries of the market, the new trading dimension works on the premise that we trade not the market, but our own belief system. By assessing what your personal biases are, you can determine how they influence your ultimate success-or failure-and then adjust your trading strategies accordingly.

Written by an expert in the field who has been featured in Futures, Worth, Success, and other prominent publications, New Trading Dimensions takes the latest in scientific knowledge about human behavior and applies it directly to the fields of stock and commodity investing and trading. With straightforward guidelines, it shows you how to adopt the right attitude toward the behavior of the market and use the right tools (ATTITOOLS) for profitable trading. Packed with practice exercises, specific applications to different types of investments, and a detailed review of important market signals, here's where you'll learn how to:
* Discover what the market wants and align your own beliefs with the direction of the market
* Apply chaos theory to trading and investing
* Use Williams' "Market Alligator" for analyzing and profiting from the markets
* Employ a multidimensional trading program that includes such tools and techniques as fractals, oscillators, AC signals, psychological zones, and balance lines
* Exit trades in a timely fashion to reap high returns

Drawing on the author's more than forty years of experience as both a successful trader and seasoned trainer, this invaluable guide offers a breakthrough method that has proven its ability to turn investors into consistent winners.

High Probability Trading : Take The Steps To Become A Successful Trader

Before he became a successful trader, Marcel Link spent years wading from one system to the next, using trial and error to figure out what worked, what didn't, and why. In High Probability Trading, Link reveals the steps he took to become a consistent, patient, and winning trader--by learning what to watch for, what to watch out for, and what to do to make each trade a high probability trade.

"Why do a select few traders repeatedly make money while the masses lose? What do bad traders do that good traders avoid, and what do winning traders do that is different? Throughout this book I will detail how successful traders behave differently and consistently make money by making high probability trades and avoiding common pitfalls..."--From the preface

Within 6 months of beginning their careers full of promise and hope, most traders are literally out of money and out of trading. High Probability Trading reduces the likelihood that you will have to pay this "traders' tuition," by detailing a market-proven program for weathering those first few months and becoming a profitable trader from the beginning.

Combining a uniquely blunt look at the realities of trading with examples, charts, and case studies detailing actual hits and misses of both short- and long-term traders, this straightforward guidebook discusses:

• The 10 consistent attributes of a successful trader, and how to make them work for you
• Strategies for controlling emotions in the heat of trading battle
• Technical analysis methods for identifying trends, breakouts, reversals, and more
• Market-tested signals for consistently improving the timing of entry and exit points
• How to "trade the news"--and understand when the market has already discounted it
• Learning how to get out of a bad trade before it can hurt you

The best traders enter the markets only when the odds are in their favor. High Probability Trading shows you how to know the difference between low and high probability situations, and only trade the latter. It goes far beyond simply pointing out the weaknesses and blind spots that hinder most traders to explaining how those defects can be understood, overcome, and turned to each trader's advantage.

While it is a cliché, it is also true that there are no bad traders, only bad trades. Let High Probability Trading show you how to weed the bad trades from your trading day by helping you see them before they occur. Packed with charts, trading tips, and questions traders should be asking themselves, plus real examples of traders in every market situation, this powerful book will first give you the knowledge and tools you need to tame the markets and then show you how to meld them seamlessly into a customized trading program--one that will help you join the ranks of elite traders and increase your probability of success on every trade.

Bubble Value at Risk: Extremistan and Procyclicality : Max C.Y.Yong

This is a story of the illusion of risk measurement. Financial risk management is in a state of confusion. The 2008 credit crisis has wreaked havoc on the Basel pillars of supervision by highlighting all the cracks in the current regulatory framework that had allowed the credit crisis to fester, and ultimately leading to the greatest crisis since the Great Depression. Policy responses were swift--UK's Financial Services Authority (FSA) published the Turner Review which calls for a revamp of many aspects of banking regulation, the Bank of International Settlements (BIS) speedily passed a Revision to its Basel II, while the Obama administration calls for a reregulation of the financial industry reversing the Greenspan legacy of deregulation. The value-at-risk risk measure, VaR, a central ideology for risk management, was found to be wholly inadequate during the crisis. Critically, this "riskometer" is used as the basis for regulatory capital--the safety buffer money set aside by banks to protect against financial calamities. The foundation of risk measurement is now questionable.

The first half of this book develops the VaR riskometer with emphasis on its traditionally-known weaknesses, and talks about current advances in risk research. The underlying theme throughout the book is that VaR is a faulty device during turbulent times and by its mathematical sophistication misled risk controllers into an illusion of safety. The author traces the fundamental flaw of VaR to its statistical assumptions--of normality, i.i.d. and stationarity--the "gang of three". These primitive assumptions are very pervasive in the frequentist statistics philosophy where probability is viewed as an objective notion and can be measured by sampling. A different school of thought, the Bayesians, argues for subjective probability and has developed an entire mathematical framework to incorporate the observer's opinion into the measurement (but this is a subject matter for another publication). We argue that the frequentist's strict mathematical sense often acts as a blinder that restricts the way we view and model the real world. In particular, two "newly" uncovered market phenomena-- extremistan and procyclicality--cannot be engaged using the frequentist mindset. There were already a few other well-known "market anomalies" that tripped the VaR riskometer during the 2008 crisis. All these will be detailed later.

In Part IV of the book, the author proposes a new risk metric called bubble VaR (buVaR) which does not invoke any of the said assumptions. BuVaR is not really a precise measurement of risk; in fact it presumes that extreme loss events are unknowable (extremistan) and moves on to the more pressing problem--how do we build an effective buffer for regulatory capital that is countercyclical, and that safeguards against extreme events. This book is an appeal (as is this preface) to the reader to consider a new paradigm of viewing risk--that one need not measure risk (with precision) to protect against it. By being obsessively focused on measuring risk, the risk controller may be fooled by the many pitfalls of statistics and randomness. This could lead to a false sense of security and control over events which are highly unpredictable. It is ultimately a call for good judgment and pragmatism. This book is intended to reach out to the top management of banks (CEOs and CROs), to regulators, to policy makers and to risk practitioners--not all of whom may be as quantitatively inclined as the specialized risk professional. But they are the very influencers of the coming financial reregulation drama. We are living in epic times and ideas help shape the world for the better (or for worst). It is hoped that the ideas in this book can open up new and constructive research into countercyclical measures of risk.

The Practical Guide To Wall Street : Equities & Derivatives

Money And Power : How Goldman Sachs Came To Rule The World

From the bestselling, prize-winning author of THE LAST TYCOONS and HOUSE OF CARDS, a revelatory history of Goldman Sachs, the most dominant, feared, and controversial investment bank in the world

For much of its storied 142-year history, Goldman Sachs has projected an image of being better than its competitors--smarter, more collegial, more ethical, and far more profitable. The firm--buttressed by the most aggressive and sophisticated p.r. machine in the financial industry--often boasts of "The Goldman Way," a business model predicated on hiring the most talented people, indoctrinating them in a corporate culture where partners stifle their egos for the greater good, and honoring the "14 Principles," the first of which is "Our clients' interests always come first."

But there is another way of viewing Goldman--a secretive money-making machine that has straddled the line between conflict-of-interest and legitimate deal-making for decades; a firm that has exerted undue influence over government since the early part of the 20th century; a company composed of "cyborgs" who are kept in line by an internal "reputational risk department" staffed by former CIA operatives and private investigators; a workplace rife with brutal power struggles; a Wall Street titan whose clever bet against the mortgage market in 2007--a bet not revealed to its clients--may have made the financial ruin of the Great Recession worse.

As William D. Cohan shows in his riveting chronicle of Goldman's rise to the summit of world capitalism, the firm has shown a remarkable ability to weather financial crises, congressional, federal and SEC investigations, and numerous lawsuits, all with its reputation and its enormous profits intact. By reading thousands of pages of government documents, court cases, SEC filings, Freedom of Information Act papers and other sources, and conducting over 100 interviews, including interviews with clients, competitors, regulators, current and former Goldman employees (including the six living men who have run Goldman), Cohan has constructed a vivid narrative that looks behind the veil of secrecy to reveal how Goldman has become so profitable, and so powerful.

Part of the answer is the firm's assiduous cultivation of people in power--dating back to 1913, when Henry Goldman advised the government on how the new Federal Reserve, designed to oversee Wall Street, should be constituted. Sidney Weinberg, who ran the firm for four decades, advised presidents from Roosevelt to Kennedy and was nicknamed "The Politician" for his behind-the-scenes friendships with government officials. Goldman executives ran fundraising efforts for Nixon, Reagan, Clinton and George W. Bush. The firm showered lucrative consulting or speaking fees on figures like Henry Kissinger and Lawrence Summers. Famously, and fatefully, two Goldman leaders-- Robert Rubin and Henry Paulson--became Secretaries of the Treasury, where their actions both before and during the financial crisis of 2008 became the stuff of controversy and conspiracy theories.

Another major strand in the firm's DNA is its eagerness to deal on both sides of a transaction, eliding questions of conflict of interest by the mere assertion of their innate honesty and nobility, a refrain repeated many times in its history, most notoriously by current Goldman CEO Lloyd Blankfein's jesting assertion that he was doing "God's work."

As Michiko Kakutani's New York Times review of HOUSE OF CARDS said, "Cohan writes with an insider's knowledge of the workings of Wall Street, a reporter's investigative instincts and a natural storyteller's narrative command." In MONEY & POWER, Cohan has marshaled all these gifts in a powerful and definitive account of an institution whose public claims of virtue look very much like ruthlessness when exposed to the light of day.