Strategies for Profiting on Every Trade
Many of these lessons have been taught to students worldwide over a span of 4 years. These lessons contain powerful information that goes far beyond the basics you may find in many introductory trading books.
– Paul Lange
This book is a must-read for anyone seriously interested in making profitable trades. Oliver is a staple in the investment education field. His expertise in the market along with his uncanny ability to impart his knowledge to the willing mind sets him aprt as a truly effective instructor.
– Conal Thompson, CEO, Equis International, Makers of Metastock Software
One measure of writing for traders and investors (as perhaps with writing for all others), is the ah ha! factor-a sentence or thought that provokes a feeling of enlightenment or deep understanding with the reader. Our hope is for numerous ah ha! moments to occur in these pages.
Trading is a somewhat difficult subject to write about. As you learn and assimilate certain truths, these truths often can and should change for you later. What seemed quite profound to you at one time might seem a year later to be obvious-and no longer worthy of being mentioned. What has happened is that you have moved beyond this particular truth to a newer truth, a higher truth. In such fashion, the growing trader keeps moving beyond his own knowledge, outdating it.
At the same time, to someone new to the game of trading, these are still new truths, capable of changing one's thinking and approach, so in that sense, one is wrong not to include them. The bottom line is that a trader's approach continuously changes and evolves. Aside from the very newest beginners, and the most experienced traders, almost everyone in the market is at a different level of knowledge.
While I can't honestly say that Strategies for Profiting on Every Trade was written as a companion volume to my earlier book, Tools and Tactics of the Master Day Trader (McGraw Hill 2000), the reader of that earlier work will undoubtedly see a continuation of some of the ideas expressed in that book. Tools and Tactics dealt more with the psychology of the trader-his emotions, motivations, and frustrations-Strategies for Profiting focuses more on the game or activity itself.
This book is designed to address the needs of both income and wealth producing traders. There is a strong tendency to separate these two styles of trading into completely independent skill sets and approaches. But it is our view that not only can they not be split, but any attempt to do so would result in automatically curtailing your progress as a trader. In the same way that it is commonly understood that both your left and your right hand play equally crucial roles in everyday life, so do income trading and wealth trading play equally important roles in the daily lives of most successful traders. In other words, one should never chose whether the income producing style of trading is better than the wealth generating style, or visa-versa. Rather one should look to become adept at both styles. This book will teach you just how to accomplish that.
In chapter 1, Lessons on Getting Ready, you'll be guided in how a trader should prepare for each day and week. How you start will largely determine how you end in this business. I have witnessed far too many traders sloppily enter each week and each day without a plan and without a proper list of stocks to watch. This will not be you, after this chapter is assimilated.
In chapter 2, "Lessons on Some Basics," you will learn some very crucial things, such as how to deal with the all-important first hour of trading. Not many traders know that the pent up demand or accumulated supply built up overnight often make the first hour of trading the most volatile. The first 30-minutes of trading in particular are very tricky. You'll learn how to deal with this all important time period and turn it into opportunity. Did you know there are nine other times during each day of which every trader should be acutely aware? These nine reversal times, as we like to refer to them, offer some unique opportunities for watchful traders. You'll also be taught how to deal with the vagaries of news and how it can affect your stocks for the positive and negative.
Chapter 3 deals with two of the most crucial aspects of proper trading, trade management and money management. The correct management of your position always hinges on several things: a favorable risk/reward ratio, a proper entry, and an intelligently selected price target. Each aspect of a properly executed trade will be reviewed in detail in this chapter.
The psychological aspect of trading represents 85 percent of the game, in my opinion. As market participants, we don't really trade stocks, options, bonds, futures, currencies or any other financial instrument, for that matter. In reality, we trade people, the people who own those things I just listed. For any of the above items to move, people have to make buy and sell decisions, and the peoples' buy and sell decisions are incited by emotions, namely greed and fear. In chapter 4, we talk about how a trader is to cope with these two dominant emotions and how he can use them for profitability. We also delve into the challenge of always needing to be right and explain how the loss of trades can be turned to your best advantage.
Chapters 5, 6 and 7, get to the meat and potatoes of our trading method. We'll delve deeply into the many chart patterns that we rely on every single day in the market. You'll learn about several highly reliable trading events that happen over and over again, the same way each time. We'll show you how you can turn these events into consistent profits. In these sections, we'll equip you with many of the same trading techniques that we've taught to major Wall Street firms and some of the country's top traders.