Paul ‘Yogi’ Nipperess & P.J. Wells - AuthorsDen.com · Published by paul yogi nipperess ABN 50 467 610 663 Click here to view ebooks by the same author Email the author: [email protected]

Paul ‘Yogi’ Nipperess & P.J. Wells
http://easy-trading-tools.00cd.com

Copyright © 2003 Paul ‘Yogi’ Nipperess For best viewing, visit the Adobe Acrobat site and download a FREE copy of the latest Adobe Acrobat Reader, at:- http://www.adobe.com/products/acrobat/readstep2.html Introducing ‘Philo R. Froop’ Trader ‘Philo R. Froop’ Illustrations copyright by Dave ‘Firewood’ Walker. – Canada More ‘Froop Toons’ at:- http://fade.to/froop All other Illustrations copyright Australian Desktop Design Disclaimer Paul Nipperess makes no claim to being an investment advisor and does not warrant or endorse the accuracy or reliability of any content or information displayed or of views expressed by contributors to this workbook and forum or any other linked sites and advertisements. Any information displayed or views expressed remain the sole responsibility of the contributor from which such content originated. Use of any information or content contained in this service is at your own risk. Unless expressly stated to the contrary, contributors to this forum are not licensed investment advisers. You are encouraged to undertake all and any necessary research related to your own individual circumstances before acting on any information or content displayed and to consult a licensed adviser before trading in securities. The information presented in this site and workbook does not constitute a recommendation to buy or sell particular shares or futures contracts. We would strongly suggest that you seek professional advice prior to investing. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the written permission of the Publisher and the copyright owner/s. First Published 2000 - Reprinted 2003. ISBN 0 9577853 2 1 (eBook) Published by paul yogi nipperess ABN 50 467 610 663 Click here to view ebooks by the same author Email the author: [email protected] Printed in Australia

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TRADING FOR A LIVING ....

ARE YOU TRADING MARKE

HOPE & FEAR ...................

WHICH MARKET................

TECHNICAL ANALYSIS ......

CANDLES ..........................

HARAMI.............................

ENTRY STRATEGY.............

EXIT STRATEGY ................

MORE ISSUES THAT A TRA

MONEY MANAGEMENT.....

SETTING STOP LOSS LEVE

TIME STOPS ......................

DAY TRADING –TIME CYCL

DAY TRADING OR OVER TR

YOUR TRADING PLAN CHE

ELEVEN TRADING GUIDEL

WALKING THROUGH A TYP

MATHS AND THE MARKET

SOME FINAL THOUGHTS ..

TTT
AAABBBLLLEEE OOOFFF CCCOOONNNTTTEEENNNTTTSSS
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TS OR EMOTIONS............................................. 8

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DER NEEDS TO ADDRESS................................ 31

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LS ...................................................................... 34

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ES AND DIRECTION .......................................... 39

ADING?............................................................. 41

CK LIST.............................................................. 44

INES .................................................................. 46

ICAL TRADE ...................................................... 47

S There Is A Relationship – Time ........................ 49

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Trading plan…wozzat??

Page 4

Introducing – Supertrader FROOP

legend…in his own lunchbox

More FROOP ‘toons at http://www.beanbelly.com

http://www.beanbelly.com/

FFFOOORRRWWWAAARRRDDD

Hi Folks,

There's just so much to absorb from all the books, videos, websites & forums it is sometimes difficult for traders to sort the wheat from the chaff…and for new traders it can be especially confusing.

A lot has been written about having a trading plan, yet little has been presented in the form of a concrete trading plan. Why? Because anybody who has a successful trading system would be busy trading it, not sharing it or even selling it.

So from here, we'll look at the issues traders must address in developing a workable trading plan, from the ground up. Assuming that the traders have attained enough knowledge to realise the risks in trading and they have opened an account with a broker.

From there, between us, we will come up with a basic plan that individual traders can modify to suit their own trading personalities.

There are some notes we have prepared on different aspects of a trading plan that may be useful, so we will start with the topic, ‘Trading for a Living’.

Top trades all

P.J. Wells

$

$


TTTRRRAAADDDIIINNNGGG FFFOOORRR AAA LLLIIIVVVIIINNNGGG No matter what your background has been, nothing can prepare you for these markets properly – the only way to learn is by doing it – for real.

Before trading, have a plan. Not important whether it was developed by you or it came from a book, so long as you have a plan and you have the discipline to execute your plan, as you wrote it.

Your plan should address, which market to trade, risk/reward ratio, stop loss placement, time stops, entry and exit levels and money management techniques.

Expecting to ‘earn-while-you-learn’ places some stress on traders, even ththey may have deep pockets from the outset.

Looking from another angle, it probably took you 5 or 6 years to learn the of your first trade (job, career) and learning to trade the markets is no diffefor most traders. There have been a lucky few that are born traders, but fomost part, trading is a learned process and your losses should be considepaying your dues.

For most traders, the personal issues of overcoming their emotions, whilsttrading, are the greatest hurdles.

Emotions of hope, fear, greed, elation (and more ), all help to mould a proftrader into a disciplined individual, with mechanical trading habits.

Let's take look at some of these emotions and how they affect an undisciptrader.

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Page 7 More Trader FROOP ‘toons at http://www.beanbelly.com

http://fade.to/froop

$


AAARRREEE YYYOOOUUU TTTRRRAAADDDIIINNNGGG MMMAAARRRKKKEEETTTSSS OOORRR EEEMMMOOOTTTIIIOOONNNSSS??? Tuition in these markets can cost thousands of dollars in market losses and many hours of study, but learning to trade properly and profitably makes the investment worth the effort, in both time and dollar terms.

Here's a different approach to the markets and ‘knowing yourself’.

Trading these markets requires commitment to study and a realization thatraders are not successful overnight – just like learning your first trade. Mtook you 4-5 years to learn as an apprentice (mechanic, carpenter, painterso too it takes time (and effort) to learn the BASICS of trading successfullyif you want to be a good tradesman (trader) you must keep up with the lattechnology in your trade – again, this is an ongoing commitment to self-education.

Not everybody has a temperament suited to trading the markets. Most traare very emotional about their trades, especially in their early experience may well be the main reason for the high attrition rate amongst new trade

Overcoming emotions can only be done by experience, that means tradingtrading, trading...

Sorry, paper trading can only teach you about the methodology of your trasystem and the idiosyncrasies of the markets – to learn about yourself, yotrade for real.

Here's a discussion on HOPE and FEAR – just two of the emotions to affectraders daily.

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HHHOOOPPPEEE &&& FFFEEEAAARRR Posted by Noone on Sunday, 5 March 2000, at 4:31 p.m.

We all hear that hope & fear control the markets?

Can anyone explain one or both?

Can either one be seen on a chart?

Can either one be explained enough, to be able to write an indicator etc. to be shown on a chart, that will help in trading?

If it can be seen, is it too late to use, or would it be helpful to a trader?

Anyone have any ideas or explanations of Hope or Fear as far as trading?

Posted by Yogi-in-Oz on 06 March, 2000 at 18:58:06:

Hi Noone,

Not sure where you are going with this, but here goes:

1. HOPE is entering a market without a trading plan. HOPE is holding a position after it has blown through your stop (if you had one). HOPE is holding that 3-day trade for 3 months or more. HOPE is watching a market approaching your PRICE STOP, long after your TIME STOP has expired. FEAR of loss is not pulling the trigger, when your system posts an entry signal. FEAR of getting out too early is not pulling the trigger, when your system posts an exit signal. FEAR of missing a trade is being in a market before your entry signals have been confirmed. HOPE and FEAR are two of ten emotional words that should never be part of a trader's vocabulary. GREED, EGO, ‘Coulda, woulda and shoulda’ are five more negative trading words.

2. HOPE and FEAR can always be seen on the chart of any marketit's called the PRICE.

3. To represent traders' emotions (HOPE and FEAR being just two emotions) in an indicator, then that indicator would need to accurately reflect the variations in such emotions. This is measured by the Law of Vibration and the Law of Resonance, both of which are reflected in PRICE, so no need to write a new indicator – just use the one you have more effectively.

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4. PRICE (a measure of traders' emotions) can easily be seen and is never too late to use, in a well-laid trading plan, which is most helpful to all traders.

5. Control your emotions (including HOPE and FEAR) and become a better trader.

6. A portrait of FEAR can be seen in this chart of the Australian Gold Index, which reflects many traders' FEAR of LOSS as they sold out of physical gold from 1996 to 2000. Three moving averages have been used to confirm the general down-trend.

GOLD INDEX

Fig.2.1


WWWHHHIIICCCHHH MMMAAARRRKKKEEETTT??? What have we started here!!

This may help and you may well be able to add some different ideas to identify tradeable markets or indeed make it simpler – KISS is best.

$ WHICH COUNTRY?

$ WHICH EXCHANGE?

$ WHICH SECTOR?

$ WHICH COMMODITY OR STOCK?

In Australia, our choice is largely limited on the first two questions by olocation. However, with better communications and more secure moneyon the internet, trading on foreign exchanges will become more commoamongst traders in the future.

WHICH SECTOR?

Dead sectors tie your money up for extended periods, with little return.little research, open a chart on each of the market sectors and let the gtell the story.

For stock traders, a sector that has started to recover and is showing anhas started is what is basically required. Likewise for futures traders, tsectors, up or down, are needed before we select an individual commod

Sectors can trend down and bounce along the bottom for years before trecover.

Gold since 1996 would be a good example, where the gold price has beetrending down for four years and the gold stocks have followed suit. Oncouple of price spikes in recent times have eased the pain for long-termof gold stocks or gold bullion.

So now, you have identified a trending sector and it's time to evaluate sindividual stocks in that sector.
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WHICH STOCK or COMMODITY?

Watch for market clues in newspaper articles, on television, in company reports, on internet forums, by your own observation of a company's results and progress, market newsletters and other sources.

Some traders use seasonal trades and dates as a guide for entries and exits. There exists, a number of websites, where commodity traders can obtain detailed information on seasonal trades.

For share traders, seasonal trades would, for example, include diamonds stocks, where weather patterns affect the annual drilling and work programmes.

Whilst some brokers do have good information at times, be aware that they usually have a vested interested in the stocks that they are recommending – thank them for the information, but do your own thorough research and analysis, before you invest your money.

INFORMATION OVERLOAD.

Information overload, ‘analysis paralysis’ – call it what you will, affects each trader differently.

Some traders try to follow too many markets at one time & so the information load becomes overbearing, often resulting in poor trading decisions.

Remedy: Take a break and then trade fewer markets better.

Unfortunately, some traders use research as an excuse not to trade. Maybe they cannot pull-the-trigger or they have a fear of loss or ‘fear-of-some-other-trading-issue’ and to avoid facing that fear they dodge the issue by doing more ‘research’.

Remedy: Plan the next trade properly, take the trade, trade the plan and face the fear, armed with the confidence that you have in a workable trading plan.

Specialising in a sector can narrow the field, but being exposed too much to one sector can mean disaster. Gold is a typical example, there are traders who bought gold stocks in the last gold boom and are still holding them today, some 4 years after the last major peak in the sector.

Now that's dumb...but they are specialising in one sector. That's an extreme case, but it does highlight the need to trade in growing unrelated market sectors.

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Diversifying into a relatively small number of promising stocks or commodities, across a few healthy sectors is probably the safest way to trade – and less stressful.

By monitoring the local indices, it will soon become evident which market sectors are performing well. Some data providers will include this information in their daily download of market information, though it is also readily available in the financial press.

Some of us may trade only across a couple of sectors in the stock market, but will diversify into the futures markets to spread the risk. This is especially true of some stock traders who concentrate on only one or two sectors of the market

By specialising in one sector, say the oil stocks, then the amount of actual trading information to be absorbed on a daily basis is greatly reduced.

For example, there's about 60 oil stocks in the Australian market, with less than a dozen having current wells going down – so they are relatively easy to monitor.

Though the oil sector as a whole has not been a great performer over recent years, there is always a few companies with current drilling programs and lots of blue sky...take BPT, WON, NWE and more, drilling ahead as we speak.

One last point. Information overload is sometimes the motivation for traders to ditch fundamentals and rely on the charts.

Some chartists will disregard most of the fundamental hype and rely on their charting programs to explore the sector that interests them for signs of life. Their exploration will take minutes to narrow the field from hundreds of possibilities to maybe 5 or 10 markets that will deserve closer scrutiny. These explorations are programmable, so that markets are selected according to the trader's set parameters.

NOTES

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ALL ORDINARIES INDEX

TTTEEECCCHHHNNNIIICCCAAALLL AAANNNAAALLLYYYSSSIIISSS O.K. Now that we have identified some possible markets it is time to evaluate the short list, using some simple technical analysis.

All the evaluation here can be done by printing out the free charts from the internet and using a simple tools, like pencil, ruler, calculator and good price versus time analysis.


Fig. 4.1

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TRENDLINES and TRADING CHANNELS

Print out a free chart of a market that interests you and draw in the obvious current market trend, by joining all the price lows for an uptrend or join all the price highs to identify a downtrend. Easy, yes?

If that market is trending sideways, as many do, get on with the next one. Remember missing a bus is not a big deal , there's always another bus following – likewise, when trading the markets – there's always another chance, just around the corner.

Having identified the main trend of the market, maybe you can draw an obvious parallel line to your main trendline, across the price highs for the uptrend or scribe a line across the lows in a down trend. Now, we have a trending, trading channel that is often a very obvious feature on the chart.

In the chart of the ALL ORDINARIES INDEX refer fig.4.1, we have ruled in the obvious uptrend channel (in blue) and the countertrend channel too (in red).

Sometimes, there is no trading channel, but we still have that basic trendline, which is enough to execute trade entries and exits. A trending market, with a regular range and continuation signals is best.

With the price contained within the trading channel, we can now anticipate where our trade entries and exits should be executed, usually at trend channel extremes, either top or bottom +/- 5 points.

Sometimes, a chart will show price trending within a trend. In this case, we will trade in the direction of the main trend, especially when market is trading in a narrow channel.

Retracements bouncing off support or resistance lines are often good entries, when confirmed by subsequent price action.

Breakouts from previous trading channels, present another trading opportunity and we will trade with confirmed signals on a breakout from previous trend.

Remember, this is not rocket science, the only tools we have used is a chart, pencil, ruler and brains.

Another feature shown on free charts off websites may be moving averages.

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MOVING AVERAGES

Whilst, by nature they are a lagging indicator they are often used as confirmation of trend direction. This is clearly shown in the following chart, with the three moving averages confirming the uptrend from

November 98 through to May 99

Often good entries on the long side will be confirmed by converging moving averages, where the shorter term average will cross above the longer term average. This is known to chartists as a golden cross and can be seen in the chart below in early November 1998.

On the other hand, a negative signal will be evident when the shorter term moving average crosses below the value of the longer term average. This is known technically as a dead cross and can be seen in the chart below occurring in early August 1998.


Fig. 4.2

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Here the ALL ORDS shows us the lagging nature of moving averages. Mid April 1998 saw the index make a high and break down from the top of the up trending channel that had already been established .

In fact, the moving averages did not signal the down turn for another 6 weeks!! Then, the shorter average crossed down (dead cross) to usher in the countertrend.

Conversely, the moving averages made a golden cross, early in November 98, to signal a return to the major trend. More timely signals were given early in September 98, then again in mid-October 98, when the index bounced of the lower trendline of the up trending channel. Our trade would now be taken in the direction of the major trend – UP (long).

Often, 3 (or more) moving averages are used by traders to anticipate market moves, where the price span across all the moving averages is 5 points or less. This tight formation by the averages, combined with very small price ranges, will often be the precursor to an announcement or event that will result in a major market move. Be warned, this condition may remain in place for weeks before the news eventually hits the streets. It is just another technical tool that may forewarn of an impending market move, but should not be used in isolation from other indicators.

Conversely, three or more moving averages equally diverged (i.e. Equally spread) may also indicate an impending event or news that may move the market. This signal is harder to use however, as it is more difficult to judge the distances between the moving averages.

That leads us on to the next feature of our chart, which is volume.

VOLUME.

High volumes on breakout or bounce off support usually indicate renewed buying interest in that market. After the initial bounce off a trendline or breakout from a channel, a pullback to retest that trendline often occurs, with lower volumes on the retest. This is a good sign that less sellers are in the market and soon the market will rally off the trendline again.

Conversely, if the volume increase on a failed retest of the support after a bounce or a breakout, then it may indicate that the market is set to go lower, with more sellers fuelling the move. This action is known as a false breakout.

Now for the most well known tool for market evaluation – price.

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PRICE

There are too many price evaluation techniques to go into a lot of detail on each one, but suffice to say, a thorough understanding of market price action and its resulting patterns is a basic requirement for a serious trader.

Candlesticks and bar charts present the price action in a much more graphical way, than simple line charts that are limited to closing price details.

There is some excellent books and websites, listed at the end of this work, for further reference on candlesticks and other price analysis methods.

TIME

Time is probably not the best known tool for traders, but it is certainly the most important.

With correct trade timing, we can almost disregard price, using it only to calculate profits (or losses).

Time entries for action days i.e. Time by degrees, major announcements, natural disasters, wars, etc.

These events will often lead to significant moves in markets, particularly for commodity traders.

Time exits for slow days of uncertainty at trading channel extremes. Here we can see there is often plenty of time to exit trades at the top of a trading channel, where prices will slowly curl over. At the low side of the trading channel, it is not unusual to see sharp V-shaped patterns, so our entries near the price lows need to be more precise.

Some other indicators that may be helpful, if you have access to a charting package is a momentum oscillator and the popular Williams %R indicator.

Some of the above suggestions may help you to identify a possible market to trade.

So now, we have identified a particular market and we may even have some idea of where we are going to enter the trade. But is that enough? NO, we still have to address many other aspects, BEFORE we take the trade.

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SUPPORT and RESISTANCE

More traders prefer to go long , possibly because they started trading in the stock market.

So if the price has been at a particular support level, then falls away only to rise again, the traders that were long when that level was previously support are happy to get out – breaking even in their trade.

This also explains, why it takes several attempts to break through some areas of resistance. Extra supply will come on the market from these previous losing traders, in addition to new shorts who have seen that level as previous resistance.

To overcome this supply at these levels some of the big players will actually bid the market up over this resistance levels – this has three effects. First, we see it as a gap up, next the traders that were previously losing are now winners so that part of the supply is overcome and lastly, those traders short at the resistance level will now cover, adding fuel to the bull's fire. It also can happen to the downside, but to a lesser extent as less traders will short the market concerned.

NOTES

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CCCAAANNNDDDLLLEEESSS To assist with your evaluation of candlestick formations in your charts, the following details may help some:

LONG WHITE CANDLES

$ Very bullish.

$ Expect support at 50% level or candle low, including shadow.

$ Body length should be 3 times previous candle.

$ Height of long candles is important – the longer the candle, the stronger the signal.

OPEN and CLOSE is of most relative importance

$ Wait for a close under long white candle support to confirm break.

$ WEEKLY candle = Monday open and Friday close.

$ ***Look for tower tops & bottoms formed by opposite colour long candles.

$ Use any bounce to long candle support or resistance to enter or exit a trade.

$ THEN – Look for targets to exit at previous long candles.

$ For stocks – opening prices above or below 50% lines on long candles are significant.

HAMMERS and HANGING MAN

A hammer should appear after a significant downturn or in an oversold market. The first rally from a hammer may fail and then may test the hammer support with a double bottom. A hanging man must appear after rally, possibly after a consolidation at the top.

For confirmation the close after the hanging man should be under the hanging man's real body, as seen in the All Ordinaries Index Fig.5.1 on page 21.

555

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^Hammer at an extreme low.

^Doji shows day ofmarket indecision.

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Hanging man near the top of a rally, just before the next

decline in the market.


All Ordinaries Index Fig.5.1

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DOJI

Do not use doji as outright buy or sell triggers!

A doji should be considered as a transition or indecision signal – so wait for confirmation!

A doji shows that the market is in balance – Bulls = Bears.

The more overbought or oversold the market is, the more significant is the doji.

A Gapping Doji – in an uptrend or downtrend – wait for next session confirmation for a continuing trend or for the window to be broken for a trend reversal.

STARS

Stars are three-candle patterns.

Collapsing Doji Star – shows a doji gapping down from a long white candle in rally, with a third black candle gapping down from the doji.

Evening Star – three candle pattern – occurs after a long white candle in a rally – its small body should not touch the real body of the long white candle. Third candle in this pattern has a black body, not usually touching the second candle (star) body and closing well into the body of the long white candle.

If the second candle is a doji, then the pattern is called an evening doji star.

Shooting Star – should appear at the top of a rally and may form an upthrust through a previous resistance level.

DARK CLOUD COVER

Ideal dark cloud cover should occur after uptrend. A black candle (2nd in the pattern) should open above the high of the previous white session and close more than half way down into the previous session's trading range – if not, wait on confirmation!!

Dark cloud cover may become future resistance – so too, with congestion areas that have broken to the downside. Conversely, congestion bands breaking to the upside will form future support areas.

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PIERCING PATTERN – Opposite to Dark Cloud Cover

After downtrend:

$ 1st candle is long and black.

$ 2nd candle is white with a close above centre of previous black session.

ENGULFING PATTERN

These are similar signals to dark cloud cover & piercing patterns – except the second candle swamps the previous session with a higher high and lower low.

A bearish engulfing pattern following a doji is a strong bearish signal.

Last Engulfing Top – Bearish signal – occurs with a long white candle swamping a small black candle in prior session – usually at the top of a rally. By blending both candles in this pattern, a hanging man emerges.

Last Engulfing Bottom – Bullish signal – this pattern occurs at market bottoms, when a long black candle swamps a small white candle in the previous session.

Cautious traders may want next-day confirmation before switching to opposite trades.

High volumes with last engulfing patterns make these signals stronger.

NOTES

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HHHAAARRRAAAMMMIII $ 1st candle must be a long one.

$ The smaller the 2nd candle in a harami, the stronger the chance of a reversal.

After downtrend

White-Black...........more bullish than ............Black-Black

White-White ..........more bullish than ............Black-White

Likewise, after uptrend

Black-White...........more bearish than............White-White

Black-Black...........more bearish than............White-Black

If 2nd real body is in centre of the first body in the harami, then this harami is strongest as a reversal signal.

HIGH PRICE HARAMI.

In an uptrend, where the 2nd candle price range is at upper end of previous candle price range, the high price harami signals a consolidation of future prices at this level.

LOW PRICE HARAMI

In a downtrend, a low price harami (price range at lower end of previous candle range) signals a probable sideways shift rather than a reversal in prices.

High and Low Price Haramis may precede periods of low volatility in prices during periods of consolidation.

HARAMI CROSS – this is a long candle, followed by a doji

Haramis are usually an early warning signal and any close beyond the harami price range in the previous trend direction will prove that harami to be a continuation signal rather than a reversal signal.

This shows the importance of next-day confirmation of reversal of the trend before entering the market.

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^Hanging man at the top of a rally.

^Window or gap-up which provided significant support for this market for months.

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Ânother window.

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S&P 500 Ind55/00

S & P 500 Ind55/00

Fig.5.2

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WINDOWS – very strong continuation signals

Pullback from a trend will often stop at a window.

If a pullback closes past a window, then the previous trend can be considered broken.

An intraday puncture of a window is not a signal of a break in trend.

A rising window opened with a long white candle is called a running window.

After 3 rising or 3 falling windows, look for a change in trend soon after.!!

Two black candles after a falling window is very bearish and called 2 black gapping candles.

SUPPORT and RESISTANCE

The longer the base of support or resistance, the more solid that support/resistance area will be.

Accumulation $ High volumes and a spinning top at a market bottom signals an

imminent trend change – there should be little price movement here. Accumulation bands that break to the upside will form future support areas.

Distribution $ High volumes and frozen prices at market tops – this is the market

‘topping out’ Spinning tops are typical here. Distribution areas that break to the downside may become future resistance.

In flat markets count positive and negative candles and compare their size to determine overall sentiment in that time frame.

Blend a group of candles to determine overall sentiment from a SINGLE candle.

For stocks, opening prices above or below 50% lines on previous long candles are significant.

$


Pa

EEENNNTTTRRRYYY SSSTTTRRRAAATTTEEEGGGYYY GANN LINES

$ Identify channels and triangles of support and resistance.

$ Trade entries to be made at channel or triangle extremes.

$ Watch for changes in momentum.

MOVING AVERAGES

All moving averages should be confirming direction of MAIN trend.

Watch for reversal at three equally spaced moving averages in trending mar

Three converging moving averages may indicate trend change. $ Go SHORT under falling moving averages.

$ Go L-O-N-G above rising moving averages.

$ Trade with the MAIN trend.

Watch for action at a golden cross or dead cross of moving averages.

TIME CYCLES

Use Anglers' Almanac as a time cycle guide to time by degrees.

Project time and price targets – use previous ranges as a guide and watch f38%−50%−62%−80%−100% projected targets and retracements.

CANDLES

$ Watch for high-wave day, spring, upthrust, doji, rickshaw man, tweetc…

$ Wait for confirmation of reversal signal – dark cloud, piercing pattern, star…

$ Identify flagship reversal signals for each commodity. i.e. hammer, hanging man…

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$


Page 28

$ Check previous gaps to anticipate support or resistance. Double and triple bottoms or tops may signal a significant reversal.

VOLUME

Hi Volume as confirmation of trend reversal.

Lo Volume as indication of pullback.

Lo Volume retest of support or resistance.

WILLIAMS %R

Divergence predicting short tend.

Convergence of Williams, 29 M.A. and -80% or -20% lines is strongest signal.

Where possible apply all these techniques to underlying contract first!

Then evaluate the trading contract using the same techniques!

Remember BOTTOMS BOUNCE SHARPLY, while TOPS CURVE SLOWLY!

ENTRY

On extreme discount or premium.

By trendline target.

By CONFIRMED reversal signal.

On overbought or oversold Williams crossing its 29 unit moving average.

On CONFIRMATION, by momentum increasing in the direction of entry.

By acting upon a previously projected time and/or price that have been confirmed as a market turn.

$


P

EEEXXXIIITTT SSSTTTRRRAAATTTEEEGGGYYY GANN LINES

Identify long term trend channels and triangles of support and resistance.

Identify short term trend channels and triangles of support and resistance.

Trade exits to be made at channel or triangle extremes..

MOVING AVERAGES

All moving averages should be confirming direction of MAIN tr

Watch for reversal at three equally spaced moving averages in trending markets.

Golden cross or dead cross may be the LAST exit signal.

TIME CYCLES

Use Anglers' Almanac as a time cycle guide to time by degrees

Project time and price targets – use previous ranges as a guidewatch for 38%−50%−62%−80%−100% projected moves and retracements.

CANDLES

Watch for high-wave day, spring, upthrust, or star etc…

Wait for confirmation of reversal signal – dark cloud, piercing petc.

Identify flagship reversal signals for each commodity

Check previous gaps to anticipate support or resistance.

Double and triple bottoms and tops may signal a significant reversal.

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.

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$


Page 30

VOLUME

Hi Volume as confirmation of trend reversal.

Lo Volume as indication of pullback.

Lo Volume retest of support or resistance.

WILLIAMS %R

Divergence predicting short tend.

Convergence of Williams, 29 M.A. and -80% or -20% lines is strongest signal.

Where possible apply all these techniques to underlying contract first!

Then evaluate the trading contract using the same techniques!

Remember BOTTOMS BOUNCE SHARPLY, while TOPS CURVE SLOWLY!

EXIT

By stop.

By trendline target.

By CONFIRMED reversal signals.

On extreme premiums or discounts.

On overbought or oversold Williams crossing its 29 unit moving average.

On CONFIRMATION , by momentum increasing in the direction of exit.

By achieving projected price and/or time targets.

NOTES

$


P

MMMOOORRREEE IIISSSSSSUUUEEESSS TTTHHHAAATTT AAA TTTRRRAAADDDEEERRR NNNEEEEEEDDDSSS TTTOOO AAADDDDDDRRREEESSSSSS What other issues do we need to address in our trading plan?

Firstly, you need to understand that the best lager in the world comes from Western Australia and is called EMU – it is first chilled to the max, before letting it cascade over your tonsils. Ah,... mother's milk.

Do not get sucked in by imitations…

Participating in market-related discussions on the internet forums will heput together a trading plan.

A firm plan, that we have formulated and therefore we will feel comfortabltrading that plan on a daily basis.

Before we enter a trade, we will know:-

1. Exactly where our entry and exit points will be, with special regard and date (or time, if day trading).

2. How much of our risk capital will be assigned to this trade.

3. How much is the reward/risk associated with this trade.

4. Where our normal stop-loss is placed.

5. Where our ‘disaster stop’ will be placed.

6. Where our time stop is located.

7. How many contracts and where we will add or offload them.

8. What POP has said about entries, stops, adding to positions and exRead ‘Phantom of the Pits’ and his ‘Phantom's Gift’ – many times – hethe URL:http://www.futuresmag.com/library/phantom/phantom.h

9. Lastly, before dismounting from the soap box, enjoy your work.

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$ Page 32

999

MMMOOONNNEEEYYY MMMAAANNNAAAGGGEEEMMMEEENNNTTT So much has been written on this subject, that we feel compelled to leave a detailed discussion to the ‘experts’.

Suffice to say, for the purposes of our trading plan, that we have identified our total risk capital at say, $200,000. Since we recognise the risk of trading in the markets, we have invested some $120,000 in diversified investments away from the stock market or futures market. This leaves us with $80,000 to trade the markets.

Of that $80,000 trading capital, according to our trading plan, we will not risk more than 30% in the market at any given time and we will not risk more than 10% ($8,000) on any one trade. With $8,000 invested, we will not risk more than 10% of that money on a ‘disaster stop’ – absolute maximum – more likely we will use a 5% stop loss, that's $400, for most trades. More on setting stop losses later.

So initially, with total risk capital of $80,000 we may be exposed to a maximum of three markets at any given time, with an absolute maximum risk exposure of $800 in each market.

With this strategy in place, we know that we will be in the markets for the long haul, even if we have a string of losses, which frequently happens when trading. Money management is where the discipline starts for all traders-commit the funds, according to our trading plan and ‘pull-the-trigger’ at stop loss points, when they are reached. Sometimes, traders find this discipline the hardest part of trading, but once mastered, it becomes a routine part of our trading.

So now we have identified the maximum dollars we will commit to any one trade and the maximum dollar risk that we intend endure, in a worst case scenario. That dollar risk should also address the expected reward from our trade and should be adjusted accordingly.

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Reward/Risk Ratio

In setting our stop loss initially, we need to estimate the expected profit from the trade. For example, our market has been trading in a regular channel that represents a return of about $3200 from top to bottom. Since our trading plan is to take a chunk out of the middle, we will shoot for about $2400. But what is a fair amount to risk in achieving this end?

Depending on the market being traded and the trader’s aversion to risk, will determine the reward/risk ratio. In our example our expected profit is $2400 and our maximum stop (according to our money management is $800 or 10% of funds committed to the trade) represents a reward/risk ratio 2400:800 = 3:1.

If we can only see a potential of $1500 dollars profit in a trade, then to maintain our 3:1 reward/risk ratio, as per our plan, we will risk a maximum of $500 on that trade. If the trade moves against us $500, then we will exit the trade immediately.

PULL-the-TRIGGER , accept the loss, no questions asked.

Some traders will use a 2:1 or even a 1:1 ratio, depending upon the market being traded. What is important here is to recognise that the expected reward is worth risking the money, time and effort in taking the trade.

By trading our plan in the marketplace, we gain faith and confidence in our plan, that will help us to identify and manage risk of future trades, within our own comfort zone of trading.

NOTES


SSSEEETTTTTTIIINNNGGG SSSTTTOOOPPP LLLOOOSSSSSS LLLEEEVVVEEELLLSSS Comments on stops from here, may not be the conventional view espoused by those who have written reams & reams on this subject.

Stop losses may be refined by placing them outside of obvious and resistance levels.

As we already know our maximum risk as per our reward/risk, we can now check the charts to refine their placement further. Since we will most likely be entering the trade near a likely support level, it is important to allow the trade enough space to allow for normal trading volatility.

Some traders set stops a little more than 3 times the average true dathat market – this approach more than takes care of daily volatility. Otraders will simply have a set dollar amount, where their stops are sepercentage of the dollars invested or simply a stop set just beyond thpast three days or even a weekly low. A strategically placed moving aalso be a graphical way to show where our stop loss is placed.

No matter how the stop is set it will not exceed our maximum planneper our money management and risk/reward policies.

More exotic methods have been espoused, such as CBL and DGL meHowever, by keeping it simple, it is easier to understand and executesystem.

For day-traders, who keep a continuous watch on the market there sneed to set stops at all – except mentally – using ‘POP’S No.1 Rule’. Syou will take a trade and it will immediately move in your direction, bit will retrace the move and looks very negative. At these times, it is ga mental stop in place, should you wish to exit the trade early, befor‘disaster stop’.

Day-traders, with depth on their live feed can see stops ‘being run’ ebefore reversing and trending back into the original trend.

So why become a statistic, apply ‘POP's No.1 Rule’ and be out beforeyour ‘disaster stops’ are hit, then reposition at a better price, after the stops have been triggered and the market is even more in your fa

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Page 35

Using stops in less volatile markets, during short-term trades may also result in ‘stop running’ by the larger traders.

It is very obvious now to the large traders, where the weak traders will place their stops, that's why ‘springs’, ‘upthrusts’ and false breakouts occur at obvious support and resistance.

For position traders, this is not usually a huge problem, as they have long pockets and their stops are set wide anyway.

Some people could not sleep without placing a stop in any market they are holding overnight – those traders need to look at typical volatility and brief thrusts past support and resistance areas. Armed with this knowledge, a trader may then place ‘disaster’ stops outside the zones of natural volatility for that particular market. Make this part of your research, then incorporate it into your trading plan, if it makes you sleep better.

Popular trading systems, like 50% retracements, A-B-C, 1-2-3, all have stops placed at obvious levels, just beyond technical support or resistance. This makes easy pickings for the big players – so be out before these stops get triggered or suffer excess slippage while the masses try to bail out.

For day traders it is even more important to pull the trigger early, because once the rush is on, sometimes you can't even get through to your broker on the phone (or the internet) to place your order!

Even traders with longer term trading time frames need to have a stop – a predetermined point where we exit the trade. We DO NOT WAIT until the financial pain is too excruciating to bear any longer.

‘Buy and hold, no matter what’. Some traders look at markets like that – it's nothing short of masochistic! Why put yourself through that pain? If a trade is going against us, we risk no more than we figured in our trading plan – before we took the trade.

Traders will often let trades become ‘investments’ as the market moves against them. Why?

It's an ‘ego thing’ – traders would rather be proven right in the longer term, no matter how much pain they suffer in the short term.

Some stocks take years to recover – eventually the trader may be proven correct – but the stress and loss of working capital in the meantime can often take its toll.

Evaluate your losing trades in an effort to improve timing of your trade entries and exits. If you have your timing and direction right, price then becomes a means to calculate profits.

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Above all – do not let winning trades become losing trades – taking a small profit in the short term is surely better than accumulating losses over a longer period – and less painful.

Use both time and price stops – cut your losses early and get on with the next trade.

NOTES


TTTIIIMMMEEE SSSTTTOOOPPPSSS Trading futures has given us bulk experience with stop losses and one approach that we've found to work well is a TIME-based stop, rather than a price-based stop.

Essentially, what this means is – if a stock does not perform in a given time period, bail out. In trending markets this time-stop will be a shorter period than in a choppy, non-trending market.

For programming into spreadsheets time-based stops are much easier than price-based stops too.

Determining likely entry and exit dates can be done simply with cycle aand trendlines or channels.

Timing trade entries and exits requires the most skill on your part as athis includes the setting of your time stops.

One example for a channel trader may be:

Check the length of time that the price in the market usually hovchannel extremes, if the longest time we can see on the chart is days, then we may put a time stop in for 3 days hence. (given thaentered the trade when the price has been at the channel extremdays already). So, if at close in 3 days from our entry, the markeperforming for us, we exit the trade and get on with the next one

In recent times, simple mathematics have been developed to determineprice and time swings. This methodology can help us project our time atargets quite accurately, thereby helping us to determine likely ‘speed lthe market and our time stops as well.

Speed lines, Gann lines and Gann rays are tools incorporated into many charting packages, such as Metastock, Bourse Data, etc...

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TIME, time stops, timing of trades, new methods of time and price projections and lots more will all be covered in a new book by the author later this year.

A trader on an internet forum made comment about different patterns that emerge in every trade to seemingly wipe out small accounts – a variation on the ‘hunting-for-stops’ theme. To that we posted:

‘Your comments are typical of many traders – yes every trader has seen all those patterns in almost every market...What your post does, is to reinforce the need for most traders to get a handle on TIME – to enable them to place entry and exit orders more effectively.’

Many gurus will try to tell you not to pick tops and bottoms, but those 10% who make money at this game are doing just that – by timing their trades better.

If you watch live data in any market on any day, you will see huge volumes going through just before market tops and bottoms. This is the bigger players moving the markets – if you're not with them, you will be just one of the other 90% who fail in this game.

What POP has said about entries, stops, adding to positions and exits is especially helpful when planning our trades. This link to ‘Phantom of the Pits’ has a couple of small gems regarding time-based stops and may help some:

http://www.futuresmag.com/library/phantom/phantom.html

NOTES

http://www.futuresmag.com/futuresclassroom/phantom/phantom.html

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111222

DDDAAAYYYTTTRRRAAADDDIIINNNGGG TTTIIIMMMEEE CCCYYYCCCLLLEEESSS AAANNNDDD DDDIIIRRREEECCCTTTIIIOOONNN Market timing is one thing, direction is another...

In recent times, day traders have found another tool – time cycles. These are actual times of the trading day where intraday market turns may be expected and these times are particularly helpful to traders of currencies and indices. Some of these forecasts are amazingly accurate and can help traders fine-tune trade entries and exits.

Fortunately, with time you have a handle on the hardest part, no matter what time frame you are trading.

With direction, despite being able to move in two directions (or stay stationary), we can often get it wrong.

Disregard stationary, as our time stop will take us out of the trade, if it does not perform inside a given time frame or eventually price will breakout anyway – either up or down.

There's many methods on determining direction – take ten traders and you will have ten different methods.

Some of these will be included:-

Tossing a coin. Go with the COT crowd. Go against the COT crowd. Check your horoscope. Go with the main trend. Go with the reactionary trend.

Too many ways...

However, for intraday, if there has been a trend in place for at least 20 minutes, immediately before the predicted cycle time, then trade against this trend, especially if your other indicators confirm your action soon after.

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Here you will see a degree of anticipation is required – you will be right or wrong – it's that simple. Some traders will reverse at their stop, with double the contracts, in case their decision was wrong initially.

Having entered the trade on a time basis, give it a time limit to perform positively or exit the trade – again read ‘Phantom's Gift’ on this.

NOTES


14 21 28July

5 12

2920

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vA two-trade day

Â three-trade day or doji.

Â one-trade day


DDDAAAYYY TTTRRRAAADDDIIINNNGGG OOORRR OOOVVVEEERRR TTTRRRAAADDDIIINNNGGG??? If you look at the price action for any day, in any market, the optimum gain may be taken out in no more than three trades, in any one day. From the chart below we can see why this is so:-

ALL ORDINARIES Fig. 13.1
111333
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2920

2930

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3000

3010

3020

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ONE-TRADE day

Starts on its lows or highs and finishes at the other extreme – easy to do in hindsight – but can produce some high anxiety for day traders as price retraces intraday and bounces off support or resistance close to your stop. These days are likely to trend strongly from the start.

TWO-TRADE day

Where price moves from the open to a high or a low, then closes at the other extremity. This formation is often found at trend highs or lows.

THREE-TRADE day

Where price moves from the open to a high or low, then to the other extreme, only to turn again and it may even close where it opened to form a doji. These days are often found one or two sessions ahead of important news or holidays.

Now, rarely is a trader going to pick exact tops and bottoms in any market, pulling the ‘meat’ out of any trend is what we aim to do.

So, how do we know for sure, what type of day it will be ahead of time – we don't. But some days we can be reasonably assured of the general market sentiment and we should also know the general direction of the longer trend. When the daily and weekly trend are in agreement, there is only one way to trade – with the trend.

For some day traders, the use of pivot points in determining entry and exit levels can be a useful tool, since these points are determined before the market opens. Use the following formulas to determine likely support and resistance for the trading day ahead, where H, L, C are the previous day's high, low and close, respectively:

Pivot point (P) = (H + L + C) / 3 First resistance level (R1) = (2 x P) - L First support level (S1) = (2 x P) - H Second resistance level (R2) = P + (R1 - S1) Second support level (S2) = P - (R1 - S1)

Honing your entry skills by ‘timing’ the market better, is the easiest way to improve your entries (and exits).This is especially important on choppy trading days, where it is very easy to get whipsawed.

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Whether you do this by the clock or by support and resistance levels (or both] is not important, so long as you develop a routine that can easily be incorporated into your trading plan.

One aspect that is rarely mentioned is tracking live volume intraday. If you have access to course of trades and depth – this can also confirm support and resistance levels.

Regular day traders can see increases in volumes, due to the bigger players changing sides, then the small traders can also react accordingly. Wide spreads in the bid and offer may also signal a reversal as unwilling buyers or sellers enter the market. However, these techniques can only be mastered with live information and the need to be glued to the screen throughout the trading day.

Your risk management of breaking even as soon as possible is a good ploy. (Phantom's No 1 Rule).

Overtrading is an important issue. Besides, if we can stay in for a few points longer for less trades, that's less we pay the brokers...

NOTES


YYYOOOUUURRR TTTRRRAAADDDIIINNNGGG PPPLLLAAANNN CCCHHHEEECCCKKK LLLIIISSSTTT Basically, your plan will address the following topics:

MONEY MANAGEMENT TECHNIQUES

$ How much of your risk capital is committed to the markets?

$ How much capital is risked in the market at any given time?

$ How much capital will be risked on any one trade?

RISK/REWARD RATIO

$ From your evaluation of the market, does the risk justify th

WHICH MARKET TO TRADE?

$ Which country, which exchange, which sector and which m

WHERE IS THE ENTRY LEVEL?

$ How is it determined, by price, by time, by trendline or cycl

WHERE WILL WE ADD TO WINNING TRADES?

$ How do you determine where to add to your position?

WHERE IS THE EXIT LEVEL?

$ How is it determined, by price, by time, by trend line or cyc

$ Stop loss placement

$ How are your stops placed as a percent of capital, fixed doll

MENTAL STOP

$ Where is your intraday stop, to cut losses early?

TIME STOP PLACEMENT

$ When will you exit the trade, if it does not perform within your time stop?

111444

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$


Page 45

Some other issues that you may want to address in addition to your written trading plan:

What types of trading systems are available and which one should you use?

What size account should you start with; and can you be a successful trader starting with a small account?

Is your trading based on a fundamental or technical approach?

As a technician, what indicators should you use?

Should you buy a ‘black box’ trading system?

Emotions, how will they affect your trading?

Brokers, do they encourage overtrading and do we accept their tips?

Loss management, how do you manage a losing trade?

How do you manage a winning trade?

Preservation of capital – the 10% rule and stops, do you understand these concepts?

Do you understand fundamental indicators as predictors of price movement?

Do you understand technical indicators as predictors of price movement?

How are my trading accounts handled and who is responsible for recording the details?

Which accountant?

What are my responsibilities and rights regarding income tax?

NOTES

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EEELLLEEEVVVEEENNN TTTRRRAAADDDIIINNNGGG GGGUUUIIIDDDEEELLLIIINNNEEESSS

1. Always have a trading plan, knowing entry, planned exit, disaster stop-loss level and mental stop (to cut losses early).

2. Always use TIME CYCLES to anticipate trades and use other indicators as CONFIRMATION only. If you know WHEN, then price is almost irrelevant.

3. Always cut losses early, preferably before it hits your disaster stop.

4. Always trade with a clear head, with no outside distractions.

5. Always let profits run their course, within the scope of your trading plan.

6. Never make trading decisions upon broker’s advice, without doing more thorough research.

7. Always trade with money that will not affect your lifestyle substantially, if lost. Trade within your means.

8. Always keep accurate records of trades and review them to learn what you did right with the winners and what went wrong with the losers.

9. Always ‘pull-the-trigger’ when your system gives you a signal.

10. Always be gracious about wins and losses – be generous with your winnings and don't be too hard on yourself when you lose (because it happens often). Reward yourself first, when you win.

11. Continue to strive for market knowledge from books, videos and other traders' resources.

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WWWAAALLLKKKIIINNNGGG TTTHHHRRROOOUUUGGGHHH AAA TTTYYYPPPIIICCCAAALLL TTTRRRAAADDDEEE Once your overall trading plan has been established, execution of a typical trade may go like this:

1. PREPARATION OF INFORMATION

Evaluate the overall market and decide which sector to trade.

Analyse your end-of-day-data and decide on a particular market. Chartists will probably narrow the field by using exploration programs within their charting packages.

Fundamentalists may compare similar companies within a sector by comparing results of standard formulae run across the both historical and recent financial results of each company.

A simple mathematical approach of calculating pivot points may also reveal sensitive support and resistance levels.

2. MONITOR MARKET FOR ENTRY SIGNALS

As per your plan, you will monitor the market for a particular set entry signals from your indicators. Usually, this will be a number of unrelated indicators confirming each other, but KEEP IT SIMPLE.

One overbought/over old indicator, one momentum indicator, time cycles, price, volume and trendlines are probably more than enough to analyse any market.

Be patient and wait for the market to confirm the set-up, as per your trading plan.

3. PULL-THE-TRIGGER

Once you have confirmation of an entry signal from your indicators, pull-the-trigger. Call your broker, take the trade and maybe even put an order in at your exit target.

4. SET YOUR STOPS – NOW

While the broker is on the telephone – set your ‘disaster stop’. This is the maximum risk that you wish to be exposed to in this trade.

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Page 48

Throughout a trade you may wish to employ a trailing stop, to preserve a percentage of the profits, in the event of a sudden market reversal.

5. CHECK ON YOUR EMOTIONS

Control your emotions and you will be able to manage the trade better. Note in your trading diary how you feel – stressed, hopeful, fearful or in control of the trade.

Discipline yourself to trade mechanically, without emotions. Plan your trade, then trade your plan.

6. WATCH FOR EXIT SIGNALS

As trades move in your favour watch for exit signals, particularly at known areas of previous congestion or near your exit price or time targets.

7. EXIT THE TRADE

When your trading system signals an exit, just do it! Call your broker and pull-the-trigger !

On exiting the trade, feel good about taking a profit.

8. RECORD YOUR TRADE

Record, honestly, the following info in your trade diary for future review:–

$ Entry and stop loss

$ Exit

$ Trade analysis and how you rate the trade.

$ What went right?

$ What went wrong?

$ How did your emotions react?

By reviewing your trading diary periodically, your trading weaknesses soon become apparent and then you can take action to strengthen that area.

9. UPGRADE YOUR PAPERWORK

Complete entries in your running tally of trades, your trading diary and your trading accounts.

Balance your accounts against your broker's statements regularly, since they have been known to make mistakes.


MMMAAATTTHHHSSS AAANNNDDD TTTHHHEEE MMMAAARRRKKKEEETTTSSS TTThhheeerrreee IIIsss AAA RRReeelllaaatttiiiooonnnssshhhiiippp ––– TTTiiimmmeee In the future, a trader's ability to step back from the short-term noise and look at a larger trading time frame will probably help in making better trades. This will likely be aided by a software package that has a TIME AXIS orientation.

Looking ahead to the next generation of technical analysis packages,hard to see that more use will be made of computers' number-crunchcapacity, especially when utilised on advanced market timing packag

Mathematics can help approximate turn-times, dates and price levelwhere they can be integrated confidently into a trading plan.

It's also easy to understand some traders' negative views on Gann angiven that none of these approaches has ever really been reduced to system. In truth, this goal will probably never be achieved, due to ththe principles espoused by Gann, Fibo, Pascal, Rudhyar, etc, are onlstones to more accurate mathematical forecasting tools. As such, thebypassed in favour of more current views.

One aspect, that has brought Gann theory into disrepute, is the obsetraders to ‘square’ time and price. In researching this aspect, tradersthat it is a unique case and not the norm in most markets.

In view of the substantial progress made in most other technologies century, common sense must tell us that relying on any one of thesetheories is fraught with trading danger.

What all these past principles have done, is to provide a sound basisfor further research and development of more sophisticated forecastitools.

111555

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Page 50

As with all trading tools, they are not 100% correct at all times, but at today's level of understanding, they can be incorporated into a trading plan with more confidence.

Some examples of up-front forecasting can be given, where price levels or time frames have been accurately posted. To accurately forecast both price and time together requires a unique set of market conditions, hence it is rarely achieved.

By having a mathematical approximation of price levels and time frames, we can then tailor a simple trading system around these forecasts. In doing so, we will be shooting for an exit at about 80% of the projected move. This leaves some money on the table, but usually ensures easy entries and exits before the panic sets in.

As each market has it's own rhythm, it is necessary to identify the correct ratios to calculate the next swing.

Faraday said, ‘There is nothing in the universe, but the mathematical points of force’.

So let's throw the challenge back to the sceptics, please post a tradeable system that is NOT based on mathematics (remember, even charts are based on numbers).

NOTES


SSSOOOMMMEEE FFFIIINNNAAALLL TTTHHHOOOUUUGGGHHHTTTSSS In developing your overall trading plan, there are some more issues that need to be mentioned.

While the paperwork involved in trading is minimal, it is essential that traders have enough discipline to complete the details on a regular basis.

Use an individual trade plan for each trade to detail the mechanical parts of your trades. It will, at least, detail your anticipated entry, exit, price stop and time stop for each trade. Details on price and time targets, anticipated levels where you plan to add to a winning trade or take profits may aincluded.

Space for trade evaluation and review can also be added, so your finafor individual trades may look similar to that shown at the end of thi

Do not mistake this form for an overall trading plan, it only addressemechanical aspects of your trades.

Once a trade has been entered, you can stay abreast of market actionyour trades daily and updating them on a form similar to that in presend of this chapter. So, you can now see at a glance whether that traprofitable or not and it helps to make tracking of multiple trades eas

Similarly, each trade entry and exit is entered on a running tally of aAgain, there is a sample of such a form at the end of this chapter. Thused as a simple trading record to balance your trades against your statements.

This record may be sufficient for your accountant and the taxation o

We have deliberately omitted addressing the issues of accountants atax, as they are covered by a myriad of laws in every country. Sufficeare two issues that you should also address as part of your overall t

For some traders, paper trading their plan for a short period of time help them to become more familiar with the mechanics of the markeIf a trader is not comfortable trading after six weeks of paper trading, then maybe trading markets is not a suitable occupation.

111666

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Let's face it, trading the markets is not rocket science, so the mechanics should be mastered easily in a about a month.

Be warned that paper trading offers none of the emotions that you feel trading real money in real markets. That's when you really know, if you are suited to trading the markets as a career. Emotions, self-discipline and many other personal issues are brought to the fore, when you trade real money in real markets.

One suggestion that is useful for most traders is the regular recording of trades in a personal trading diary. By diligently recording all aspects of how you feel about each trade, you can very quickly reveal some interesting, and sometimes unexpected emotional issues within yourself whilst trading. By reviewing your trading diary on a weekly or monthly basis, you may be able to pinpoint weak spots in your personality or trading plan. In this way, you can apply a special focus on continual improvement of your overall trading plan.

Please feel free to post comments or suggestions about this trading plan overview on our website.

http://www.egroups.com/group/trading_plan_wozzat

Top trades all

Yogi

http://groups.yahoo.com/group/TradingPlan/

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Order Date

Date Filled

Order Type

Buy 0r

Sell QTY

Stock Code

Futures

Option Code

Entry Order

Entry Filled

Exit Order

Exit Price

Profit or

Loss

Total Profit or Loss

OOOVVVEEERRRAAALLLLLL PPPRRROOOFFFIIITTT///LLLOOOSSSSSS BBBYYY TTTRRRAAADDDEEE

TRADING RECORD

PLEASE PHOTOCOPY BEFORE USING


T

T

E

T

T

E

E E

rade Code:

rade Entry Date:

ntry Price:

Date Closing Price Update Profit (Loss)

Trade Code:

Trade Entry Date:

Entry Price:


rade Code:

rade Entry Date:

ntry Price:


Trade Code:

Trade Entry Date:

Entry Price:


DAILY UPDAT
PROFIT/LOSS BY TRAD
$ G
PLEASE PHOTO COPY BEFORE USIN
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TRADING PLAN FOR:…………………………………………….Trade Number:..……… (Insert Stock code or Futures Contract here)

A. DAILY CHART PROJECTED TIME TARGETS

DATE PRICE Price 1 Previous Range Enter By Price 2 Time Stop Price 3 Time exit 80% Entry Projected new price range 100% Time exit 100% Exit Time extension 1 Profit/Loss Time extension 2

Time extension 3

Actual exit time Exit: 1 Disaster stop loss:____________________

2 Time stop expired:____________________ 3 Trailing stop loss: PULL the TRIGGER! 4 Time or price target reached:____________

B. WEEKLY CHART PROJECTED TIME TARGETS

DATE PRICE

Price 1 Previous Range Enter By Price 2 Time Stop Price 3 Time exit 80% Entry Projected new price range 100% Time exit 100% Exit Time extension 1 Profit/Loss Time extension 2

Time extension 3

Actual exit time Exit: 1 Disaster stop loss:____________________

2 Time stop expired:____________________ 3 Trailing stop loss: PULL the TRIGGER! 4 Time or price target reached:____________

C: Add to position at:

Date Price ANALYSIS Quantity Stop Loss

Limit Order Risk

D: Liquidate position at:

Date Price ANALYSIS Quantity Residual Held Final Qty Held

Profit Loss

Evaluation of this trade: Trade Entry:________________________________________________________ Trade Exit: ________________________________________________________

PLEASE COPY THIS FORM BEFORE USE

Trade Rating GOOD BAD

Hi folks, Here's a story that began 2000 years ago and has been unfolding, ever since ..... Gann Signs - Gann Traders will love it, astrologers will be amazed, Gann peddlers will hate it and Christians will be very much divided about this text ..... however you may look at the "new" bible codes, you will never look at a Bible in the same way - ever again !~! ===== 2004 is exactly 77 years, since W D Gann started to write his book .......................... “Tunnel thru the Air or looking back from 1940.” Gann was a respected commodities trader in the early part of the 20th century and he found certain time cycles in the bible, by decoding it using the bible codes, found in the King James version of the bible. He also considered that information too sensitive to be made public, in 1927, so he used the same bible codes to hide that information in his own book, TTTTA ... ===== It is very appropriate then, that the writing of “Gann Signs” was completed on 09 May 2004, same day as Gann wrote the TTTTA Foreword. While researching material for this work it has become quite apparent, that Gann was simply a messenger, owing much of his knowledge to Sepharial and other contemporaries of his day. Looking back, it is now easy to appreciate why Gann chose not to reveal his findings in the Bible, instead he used the bible codes to hide his methods, until the world was ready for them. He may well have been branded a raving lunatic in 1927, if he had publicly revealed these details ... :) Unambiguous proof of HOW Gann used the bible codes and astrology in his trading, is available now, on CD-rom.

"Gann Signs: Title-Bible-Tetragrams" was released to the public on Robert Gordon's birthday, on 09 June 2004. Naturally, a special price will be offered to the readers of my "Cardinal Astrographs ... easy trading tools," before Gann Signs is made available to the public next month, in a similar package to CAETT. To give you an idea of "Gann Signs'" contents, here's a breakdown of the main sections:- Introduction: An updated look at the TTTTA Foreword and some basics relating to Gann and Sepharial. Bible: ..... Sepharial's work and why Gann pointed us towards that astrologer's books and others, too ..... Also, "NEW" bible codes that reveal exactly what Gann found in the bible and how to apply them to the decoding of TTTTA and other texts. Tetragrams ..... More about decoding the texts and how Gann made his amazing forecasts, in TTTTA. Practical Astrotrading 1 ... we use Gann's own charts to explain how he applied that information to his own trading ... in great detail. Practical Astrotrading 2 ... we look at that same market, about 45 years onwards, to verify that those same methods can be applied to modern commodity markets, too. Practical Astrotrading 3 ... here's an example of how we apply these methods to the stockmarket and we use a REAL trade and REAL money, in a current example. Practical Astrotrading 4 ... further examples of applying the planetary cycles to modern markets. Practical Astrotrading 5 ..... more trading examples. Practical Astrotrading 6 ..... more trading examples. Practical Astrotrading 7 ..... more practical astrotools. Loose Ends .... tying all the relevant ends together and further insight into future Gann Signs coverage, like the Gann's individual trading campaigns.

We also look ahead at specific astrological events, in the future and some suggestions on how to analyze many more of Gann's bible references. Milestones and messengers ..... ..... a brief look at the SnP500 astrochart. In short ..... you will never need to speculate about "how-Gann-did-it", ever again. ======== Like Gann, my role is simply as a messenger. Unlike Gann, my writing is not in any sort of code, because NOW the world IS ready for this information, so Gann Signs has been presented in plain and simple English. In fact, the world needs this information, now. These details will have you looking at the wisdom of the bible and other old texts in a new light. WARNING: There's a LOT of simple mathematics, geometry and astrology in this ebook, so BE WARNED, up front. Having said that, this ebook will surely be seen as a pioneering effort in reviving an old branch of mathematics, that has been long-forgotten, with the advent of modern technology. ====== TTTTA and some books on his reading list were the ONLY publications, where Gann gave us enough information, to prove that he used astrology in his trading. Using Gann's original material, it can now be proven, beyond doubt, that he used the cosmic clock to trade stocks and commodities. Truth is, Gann told us to read other astrologers' works to find the answers and really, that relegated Gann to the role of messenger, albeit that he used that information in his trading. Astrologers like Sepharial, Raphael, William Allan and Dr L Broughton, probably all contributed to Gann's knowledge of planetary cycles.

One thing is guaranteed, if you have a basic understanding of astrology, you will never look at the bible (or other old texts) in the same way ..... ever again. ----- Gann Signs and CAETT is now available in one astrotrading package of THREE ebooks, which also includes the ISBA Book about business and financial astrology. ..... 770 pages of PRACTICAL astrotrading information. Just happy to be a messenger ..... :) happy trading all yogi For Gann Signs, CAETT and ISBA Book: http://easy-trading-tools.00cd.com ============= Gann Signs: Title-BibleTetragrams support forum: http://groups.yahoo.com/group/gann_signs

http://easy-trading-tools.00cd.com

http://groups.yahoo.com/group/gann_signs

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