High probability trading : take the steps to become a successful trader

Copyright......Page 5
CONTENTS......Page 9
PREFACE......Page 13
WHAT IS HIGH PROBABILITY TRADING?......Page 15
WHAT MAKES A TRADER GOOD?......Page 16
ABOUT THE BOOK......Page 17
A LITTLE BIT ABOUT ME......Page 18
A BRIEF PROFESSIONAL HISTORY......Page 19
PART 1 The Building Blocks......Page 21
CHAPTER 1 The Tuition of Trading......Page 22
THE LEARNING YEARS......Page 23
PAPER TRADING HELPS, BUT IT’S NOT THE REAL THING......Page 24
THE TUITION OF TRADING......Page 25
LEARNING FROM MISTAKES......Page 28
DON’T REINFORCE BAD BEHAVIOR......Page 29
THE CURSE OF MAKING MONEY FROM THE GET-GO......Page 30
PRESERVING PRECIOUS CAPITAL......Page 31
BLOWING OUT......Page 32
BEING COMMITTED......Page 33
KEEPING A JOURNAL......Page 34
THINGS TO INCLUDE IN A JOURNAL......Page 35
REVIEWING THE JOURNAL......Page 38
TRAINING PROGRAMS......Page 39
SOME PERSONAL THOUGHTS......Page 40
BECOMING A BETTER TRADER......Page 41
CHAPTER 2 Setting Realistic Goals......Page 44
SETTING REALISTIC GOALS......Page 45
DON’T FORGET ABOUT THE LOSING DAYS......Page 48
MINIMUM ACCOUNT SIZE......Page 49
MARKET GOALS......Page 50
PERSONAL GOALS......Page 56
STAYING REALISTIC......Page 57
MAKE TRADING YOUR BUSINESS......Page 59
MAKING A BUSINESS PLAN......Page 60
MY PERSONAL EXPERIENCE......Page 62
BECOMING A BETTER TRADER......Page 63
COMPETING WITH THE PROS......Page 66
LEVELING THE PLAYING FIELD......Page 67
DAY TRADING HAS BECOME EASIER......Page 68
ON INE TRADING......Page 69
THE TOOLS......Page 71
PROFESSIONALS VERSUS INDIVIDUALS......Page 74
BECOMING A BETTER TRADER......Page 75
PART II Using the News......Page 79
THE FUNDAMENTALISTS VERSUS THE TECHNICALISTS......Page 80
IF YOU KNOW IT, YOU’RE PROBAB Y NOT THE FIRST......Page 82
IF IT SHOULD GO LOWER BUT DOESN’T, IT’S GOING HIGHER......Page 85
THE MARKET WILL DO WHAT IT WANTS TO DO......Page 87
UNEXPECTED VERSUS EXPECTED NEWS EVENTS......Page 88
GETTING THE MOST OUT OF THE FUNDAMENTALS......Page 89
CHANGING ONE’S OPINION......Page 92
BECOMING A BETTER TRADER......Page 93
PART III Technical Analysis......Page 97
CHAPTER 5 Increasing Your Chances with Multiple Time Frames......Page 98
LOOKING AT MORE THAN ONE TIME FRAME......Page 100
SHORT-TERM VERSUS LONG-TERM PERSPECTIVES......Page 101
MULTIPLE TIME FRAMES: WIDENING PERSPECTIVES......Page 102
GETTING THE BIG PICTURE......Page 103
MONITORING THE TRADE: LOCATING SUPPORT, RESISTANCE, AND STOPS......Page 107
TRADING AROUND THE TIME FRAME THAT BEST SUITS ONE’S STYLE......Page 108
THE BENEFITS OF INCREASING TIME HORIZONS......Page 109
CONFIRM TRADES BY USING THE SAME INDICATOR OR SYSTEM ON DIFFERENT TIME FRAMES......Page 110
SCALING INTO TRADES IN DIFFERENT TIME FRAMES......Page 112
BECOMING A BETTER TRADER......Page 113
WHAT IS A TREND?......Page 116
THE TREND......Page 117
TRENDLINES......Page 118
CHANNELS......Page 119
GETTING THE BIGGER PICTURE......Page 120
DON’T CHASE THE MARKET......Page 121
DON’T FIGHT THE MARKET......Page 123
MOVING AVERAGES......Page 125
AVERAGE DIRECTIONAL INDEX......Page 130
RETRACEMENTS......Page 134
MEASURING TRENDS......Page 136
BECOMING A BETTER TRADER......Page 139
OSCILLATORS......Page 142
WHAT THEY DO......Page 144
OSCILLATOR BASICS......Page 145
RELATIVE STRENGTH INDEX (RSI)......Page 151
MOVING AVERAGE CONVERGENCE-DIVERGENCE (MACD)......Page 154
USING OSCILLATORS TO TIME TRADES......Page 157
MISUSING OSCILLATORS......Page 159
TRADING WITH OSCILLATORS......Page 160
DIVERGENCES......Page 161
TRADING WITH THE TREND......Page 163
MULTIPLE TIME FRAMES......Page 164
BECOMING A BETTER TRADER......Page 166
BREAKOUTS: TRADING ON THE SIDE OF THE MOMENTUM......Page 169
WHAT MAKES A MARKET BREAK?......Page 170
TYPES OF BREAKOUTS......Page 171
RANGE-BOUND BREAKOUT PATTERNS......Page 172
HOW NOT TO TRADE BREAKOUTS......Page 174
HIGH PROBABILITY TRADING OF BREAKOUTS......Page 176
USING VO UME TO CONFIRM BREAKOUTS......Page 180
BREAK OF A COUNTERTREND......Page 181
BREAK HIGH BREAKOUTS......Page 182
WHY MARKETS REVERSE......Page 183
MEASURING THE MOVE......Page 189
WHEN TO GET IN......Page 190
TYPICAL BREAKOUT SYSTEMS......Page 192
BECOMING A BETTER TRADER......Page 194
CUTTING LOSSES AND LETTING PROFITS RIDE......Page 198
GETTING OUT TOO SOON......Page 199
LETTING PROFITS RIDE......Page 200
EXIT STRATEGIES......Page 201
LOSSES ARE MORE IMPORTANT THAN WINNERS......Page 204
THE GOAL OF THE STOP......Page 205
STOPS ARE NOT FAIL-SAFE......Page 206
MISUSING STOPS......Page 208
TYPES OF STOPS......Page 211
FINE-TUNING EXITS WITH DIFFERENT TIME FRAMES......Page 217
WHY STOPS GET HIT......Page 223
STOPS AND VOLATILITY......Page 224
USING STANDARD DEVIATIONS......Page 225
BECOMING A BETTER TRADER......Page 227
SOPHIE THE CAT......Page 231
BECOME A HIGH PROBABILITY TRADER......Page 232
HAVING A PLAN......Page 233
TYPICAL HIGH PROBABILITY TRADING SCENARIO......Page 234
HAVING A REASON FOR EVERY TRADE......Page 237
DON’T OVERDO IT......Page 238
HAVING THE PATIENCE TO WAIT FOR THE BETTER TRADING OPPORTUNITIES......Page 239
RISK VERSUS REWARD......Page 240
POSITION SIZE......Page 241
LEARNING HOW A MARKET BEHAVES......Page 242
LOW PROBABILITY TRADING......Page 243
BECOMING A BETTER TRADER......Page 245
PART IV Trading with a Plan......Page 249
WHAT IS A TRADING PLAN?......Page 250
MAKING A TRADING PLAN......Page 251
WHY HAVE A PLAN?......Page 252
TRADING PLAN INGREDIENTS......Page 253
THE GAME PLAN......Page 258
DISCIPLINE......Page 259
BECOMING A BETTER TRADER......Page 260
WHAT IS A SYSTEM?......Page 263
WHY TRADERS SHOULD USE SYSTEMS......Page 264
BUYING OR WRITING A SYSTEM......Page 266
WHAT YOU SHOULD WANT IN A SYSTEM......Page 268
KNOWING WHAT TYPE OF TRADER YOU ARE......Page 270
THE DIFFERENT TYPES OF TRADING STYLES AND SYSTEMS......Page 271
ADAPTING TO MARKET CONDITIONS......Page 277
STOPS AND EXITS......Page 278
SYSTEMATIC VERSUS DISCRETIONARY......Page 280
A SAMPLE SYSTEM......Page 282
BECOMING A BETTER TRADER......Page 284
WHY BACKTEST?......Page 287
COMMON MISTAKES TRADERS MAKE WHEN BACKTESTING......Page 288
GETTING STARTED WITH BACKTESTING......Page 291
EVALUATING A SYSTEM......Page 295
BECOMING A BETTER TRADER......Page 301
THE GAMBLER......Page 306
THE IMPORTANCE OF HAVING A MONEY MANAGEMENT PLAN......Page 308
MONEY MANAGEMENT: WHAT ALL WINNING TRADERS HAVE IN COMMON......Page 309
THE GOAL OF MONEY MANAGEMENT......Page 310
WHAT GOES INTO A MONEY MANAGEMENT PLAN......Page 311
KNOWING HOW MUCH TO RISK......Page 312
DON’T BE INFLUENCED BY THE LAST TRADE......Page 313
HAVE ENOUGH MONEY TO TRADE WITH......Page 314
MAKE SURE YOUR STRATEGY HAS A POSITIVE EXPECTANCY......Page 315
BECOMING A BETTER TRADER......Page 316
MAKE SURE YOU ARE PROPERLY CAPITALIZED......Page 319
THINK DEFENSE......Page 320
SETTING RISK AND MONEY MANAGEMENT PARAMETERS......Page 321
THINGS TO INCLUDE IN A MONEY MANAGEMENT PLAN......Page 331
MONEY MANAGEMENT PLAN IDEAS......Page 335
BECOMING A BETTER TRADER......Page 337
PART V Self-Control......Page 341
SUCCESS TAKES DISCIPLINE......Page 342
HAVING THE DISCIPLINE TO WAIT FOR THE RIGHT TIME......Page 343
HAVING THE DISCIPLINE NOT TO OVERTRADE......Page 344
HAVING THE DISCIPLINE TO DEVELOP, BACKTEST, AND FOLLOW A TRADING SYSTEM......Page 345
HAVING THE DISCIPLINE TO MAKE AND FOLLOW TRADING RULES......Page 346
HAVING THE DISCIPLINE TO MAKE AND FOLLOW A TRADING PLAN AND A GAME PLAN......Page 347
HAVING THE DISCIPLINE TO DO YOUR HOMEWORK......Page 348
HAVING THE DISCIPLINE TO SET LOSS LIMITS......Page 349
HAVING THE DISCIPLINE TO EXIT A TRADE......Page 350
HAVING THE DISCIPLINE TO CONTROL EMOTIONS......Page 351
WORKING ON DISCIPLINE......Page 352
BECOMING A BETTER TRADER......Page 354
BE MORE SELECTIVE......Page 356
TRADING IS NOT CHEAP......Page 357
STAYING FOCUSED......Page 361
REASONS PEOPLE OVERTRADE......Page 362
EMOTIONAL OVERTRADING......Page 363
ENVIRONMENTAL OVERTRADING......Page 374
BECOMING A BETTER TRADER......Page 379
IF......Page 383
KEEPING A C EAR HEAD......Page 384
THE INNER CONFLICT......Page 385
TAKING A LITTLE BREAK......Page 387
THE BAD TRAITS......Page 388
GETTING BACK ON TRACK......Page 400
BECOMING A BETTER TRADER......Page 401
INDEX......Page 405
ABOUT THE AUTHOR......Page 415