High-Probability Trade Setups E-Book

Timothy Knight

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: Wiley Trading Series
• Sprache: Englisch

Seitenzahl: 409

Veröffentlichungsjahr: 2011

Beschreibung

A comprehensive volume of today's most profitable trade set-ups A key element of trading is identifying situations in the financial markets that can produce a profitable trade. Fundamental analysts search for situations where a stock is undervalued or if a stock's prospective earnings growth is underestimated by a majority of investors. Technical analysts look at patterns in the market that historically indicate the direction of the markets next move. High Probability Trade Set-Ups catalogs the best trading situations from a variety of technical approaches. Engaging and informative, High Probability Trade Set-Ups provides a detailed explanation of twenty powerful, recurring tradable situations in the financial markets. Each pattern is thoroughly described, including its strengths and drawbacks, ease of identification, and the degree to which it produces profitable trades. Most importantly, the author provides entry and exit points for each set up. Examples of the set-ups include chart patterns such as ascending triangles, diamonds, gaps, pennants, and channels. * Features many new technical tools for tracking individual stocks * Contains a resource guide, which will help to monitor the market for the trade set-ups discussed throughout the book * Reveals how to use ProphetCharts to perform advanced intermarket technical studies and identify the best opportunities Written in a straightforward and accessible style, High Probability Trade Set-Ups covers a lot of ground with respect to this approach and shows you how to use it to make the most of your time in today's dynamic markets.

Leseprobe

Contents

Cover

Series

Title Page

Copyright

Dedication

About the Author

PART I: An Overview

Chapter 1: A Primer on Chart Setups

THE BULLS VERSUS THE BEARS

WHY IS A PREDICTION VALUABLE?

A WORD ON SHORTING

SUPPORT AND RESISTANCE

WHAT HAPPENS WHEN PRICES PUNCH THROUGH?

HISTORY REPEATS ITSELF

WHEN PATTERNS WORK TOGETHER

HOW TO USE THIS BOOK

Chapter 2: My Personal Trading Journey

EARLIEST INTEREST IN THE MARKETS

BEGINNING WITH THE CRASH

TECHNICAL TOOLS

PROPHET'S BEGINNING

THE INTERNET MAKES ITS APPEARANCE

ENTER ALEX AND JAVACHARTS

PROJECT KANDINSKY

THE SLOPE OF HOPE

LESSONS LEARNED

PROPHETCHARTS LIVES

THE THREE STEPS

PART II: The Patterns

Chapter 3: Ascending Triangles

DEFINITION OF THE PATTERN

PSYCHOLOGY BEHIND THE PATTERN

EXAMPLES

SUMMARY

Chapter 4: Ascending Wedges

DEFINITION OF THE PATTERN

PSYCHOLOGY BEHIND THE PATTERN

EXAMPLES

SUMMARY

Chapter 5: Channels

DEFINITION OF THE PATTERN

PSYCHOLOGY BEHIND THE PATTERN

EXAMPLES

SUMMARY

Chapter 6: Cup with Handle

DEFINITION OF THE PATTERN

PSYCHOLOGY BEHIND THE PATTERN

EXAMPLES

LONGER-TERM EXAMPLES

SUMMARY

Chapter 7: Descending Triangles

DEFINITION OF THE PATTERN

PSYCHOLOGY BEHIND THE PATTERN

EXAMPLES

SUMMARY

Chapter 8: Descending Wedges

DEFINITION OF THE PATTERN

PSYCHOLOGY BEHIND THE PATTERN

EXAMPLES

SUMMARY

Chapter 9: Diamonds

DEFINITION OF THE PATTERN

PSYCHOLOGY BEHIND THE PATTERN

EXAMPLES

SUMMARY

Chapter 10: Fibonacci Fans

DEFINITION OF THE PATTERN

PSYCHOLOGY BEHIND THE PATTERN

EXAMPLES

SUMMARY

Chapter 11: Fibonacci Retracements

DEFINITION OF THE PATTERN

EXAMPLES

SUMMARY

Chapter 12: Flags

DEFINITION OF THE PATTERN

PSYCHOLOGY BEHIND THE PATTERN

EXAMPLES

SUMMARY

Chapter 13: Gaps

DEFINITION OF THE PATTERN

PSYCHOLOGY BEHIND THE PATTERN

EXAMPLES

SUMMARY

Chapter 14: Head and Shoulders

DEFINITION OF THE PATTERN

PSYCHOLOGY BEHIND THE PATTERN

THE IMPORTANCE OF THE NECKLINE

EXAMPLES

SUMMARY

Chapter 15: Inverted Head and Shoulders

DEFINITION OF THE PATTERN

PSYCHOLOGY BEHIND THE PATTERN

THE IMPORTANCE OF THE NECKLINE

EXAMPLES

SUMMARY

Chapter 16: Multiple Bottoms

DEFINITION OF THE PATTERN

PSYCHOLOGY BEHIND THE PATTERN

EXAMPLES

SUMMARY

Chapter 17: Multiple Tops

DEFINITION OF THE PATTERN

PSYCHOLOGY BEHIND THE PATTERN

EXAMPLES

SUMMARY

Chapter 18: Pennants

DEFINITION OF THE PATTERN

PSYCHOLOGY BEHIND THE PATTERN

EXAMPLES

SUMMARY

Chapter 19: Rounded Bottoms

DEFINITION OF THE PATTERN

PSYCHOLOGY BEHIND THE PATTERN

EXAMPLES

SUMMARY

Chapter 20: Rounded Tops

DEFINITION OF THE PATTERN

PSYCHOLOGY BEHIND THE PATTERN

EXAMPLES

SUMMARY

Chapter 21: Support Failure

DEFINITION OF THE PATTERN

PSYCHOLOGY BEHIND THE PATTERN

EXAMPLES

SUMMARY

Chapter 22: Automatic Patterns

PATTERNS IN PROPHETCHARTS

WORKING WITH THE RESULTS

PATTERN FAILURES

PUTTING THE PATTERNS TO WORK

PART III: Trading and You

Chapter 23: Setting Stops

GENERAL GUIDELINES

BELOW SUPPORT

ABOVE RESISTANCE

ABOVE TRENDLINE

BELOW TRENDLINE

MOST RECENT LOW

MOST RECENT HIGH

SPECIAL CASES

Chapter 24: On Being a Bear

THE PHILOSOPHY OF SHORTING

PRACTICAL GUIDE TO SHORT SELLING

EXCHANGE-TRADED FUNDS

PUTS FOR LEVERAGED PROFITS

THE PHILOSOPHY OF SHORTING

Chapter 25: A Guide to Real-Life Trading

TRADING RULES

HOW TO OPEN A POSITION

HOW TO HOLD A POSITION

HOW TO CLOSE A POSITION

TIME AND MONEY

THERE IS NO HOLY GRAIL

CLOSING THOUGHTS

Index

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The Wiley Trading series features books by traders who have survived the market's ever-changing temperament and have prospered—some by reinventing systems, others by getting back to basics. Whether a novice trader, professional, or somewhere in-between, these books will provide the advice and strategies needed to prosper today and well into the future.

For a list of available titles, please visit our web site at www.WileyFinance.com.

Copyright © 2011 by Tim Knight. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada.

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, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, [phone], fax [phone], or on the Web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, [phone], fax [phone], or online at http://www.wiley.com/go/permissions.

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

ProphetCharts used with permission from TD Ameritrade.

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Library of Congress Cataloging-in-Publication Data:

Knight, Tim, 1966– High-probability trade setups : a chartist's guide to real-time trading / Tim Knight. p. cm. – (Wiley trading series) Includes index. ISBN 978-1-118-02225-2 (hardback); ISBN 978-1-118-11296-0 (ebk); ISBN 978-1-118-11295-3 (ebk); ISBN 978-1-118-11297-7 (ebk) 1. Stocks–Prices–Charts, diagrams, etc. 2. Stocks–Charts, diagrams, etc. 3. Investment analysis. 4. Speculation. I. Title. HG4638.K553 2011 332.63′2042–dc22 2011014260

For E&S May you always be the best of friends

About the Author

Tim Knight is a hedge fund manager and the founder of Prophet Financial Systems (now owned by TD Ameritrade), rated by Forbes magazine and Barron's as the number-one online site for technical analysis. He also writes the popular blog Slope of Hope (www.slopeofhope.com). Prior to starting Prophet.net, he was Vice President of Products for Montgomery Securities investment bank, where he helped develop Macintosh-based traders’ workstations before the development of Web trading. Knight has traded for over 20 years, primarily using technical analysis and price charts, and has written 20 other books. He lives with his family in Palo Alto, California.

PART I

An Overview

Chapter 1

A Primer on Chart Setups

This is a book about chart setups and how they can make you a more profitable trader. I have been involved in trading for a quarter-century, and during almost that entire time, I have used charts and technical analysis as the basis of my investing decisions. This book endeavors to show you meaningful, clear examples of the most powerful chart patterns so that you can commit them, and their importance, to memory.

Technical analysis is the study of past price movement for the purpose of predicting future price movement, which, if done correctly, can lead to substantial trading profits. The prices studied are typically those of financial instruments such as stocks, commodities, and foreign currencies. But no matter what market is being studied, the underlying principles are the same. Specifically:

A price chart is the most perfect representation of the balance of buyers and sellers for any given entity.Prices tend to move in trends and patterns which, based on historical analysis, can lead to statistically meaningful probabilities of future price movement.The skilled examination of a price chart can guide a trader as to how long he should remain in a trade and when he should exit.

No matter what you trade, technical analysis can make you a better and more profitable trader. Price charts will consistently provide the most truthful picture that can be had of a tradable object, because everything that can be publicly known or speculated is already built into the graph. You will never get the same pure representation of a stock (or anything else) from a broker, a newsletter writer, or an analyst. A chart is as good as it gets. How much good that chart can do for you depends on your own skill and objective analysis.

THE BULLS VERSUS THE BEARS

Before we get into price charts—and there will be hundreds of them in this book—let's examine the basics about what forms a price chart in the first place: sellers (the supply) and buyers (the demand). It should also be noted at the outset that almost all the examples in this book will be of stocks, but the same rules and methods are appropriate for any form of financial instrument.