Simple Profits from Swing Trading E-Book

Jea Yu

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

Seitenzahl: 81

Veröffentlichungsjahr: 2013

Beschreibung

There are so many trading systems out there today, each one claiming to have the secret that will bring windfall returns. Some may fare well in rising markets, but all too often leave the trader struggling to keep their head--and capital--up when the market starts to fall. Doesn't sound too reliable, does it? The Underground Trader Swing Trading system is unlike any other. Having been meticulously forged by hand from hours of active market participation and analysis from over a decade, it is an all-encompassing system that performs strong when the market is rising and perhaps even stronger when it is falling. It functions well in every market condition, ensuring that traders can rely on it no matter how the market moves. This revised book from renowned trader and president of UndergroundTrader.com, Jea Yu, provides all of the information necessary to successfully begin swing trading today. You will learn: * How to break down and grind away any stock piece by piece, allowing you to quantify and analyze it on the fly * To build a solid foundation using the highest probability setup--the perfect storm * A step-by-step process of how to plan and execute a trade to ensure the highest available return, and * When to buy long or sell short and exactly the criteria to identify and look for before making these moves. Also included in this e-book are real-life examples and charts as well as an in-depth look at how the Underground Trader system really works, what its chat rooms and alerts look like, and how you can use the platform to exponentially increase your swing trading knowledge and--in turn-- your profits. Knowing the information provided in this e-book will help you to boost your returns and minimize losses with just a few simple strategies that will leave you wishing you'd been an Underground Trader years ago.

Leseprobe

Contents

Preface

Section One: The Underground Trader Trading System Exclusive Quick Start Guide

Converging Time Frames

Screen Setup

The Basic Chart: Stochastics Moving Average Chart

Wider Time Frame/Swing Trade Charts

Intraday Trading Charts

Mini-Pup and Pup Patterns

Perfect Storms

Analysis Checklist

The Trade Process

Filtering Is the Key to Consistency

Building a Solid Foundation, aka Storm Chasing for Perfect Storms

Pup Quiz ...

Buying Long Checklist

Selling Short Checklist

Perfect Storm Short Trade

Swing Trades in Action

The Undergroundtrader.com Trading Pit

Trading Alerts

Conclusion

Section Two: Swing Trading and The Underground Trader System

Getting Started

Time Frames

Chart Basics: The Stochastics Moving Average Chart

Pattern Basics: Underground Trader Patterns

Perfect Storm

The Trade Process

Filtering Is the Key to Consistency

Building a Solid Foundation: Perfect Storm Chasing

Trade Planning and Execution

Swing Trades in Action

UndergroundTrader.com Trading Pit Chat Room Trade Alerts

UndergroundSwingTrades.com

Chart Time Frames (Excerpt from Trading Full Circle)

Wider Time Frames

Chart Patterns

DVD Courses from Jea

Founded in 1807, John Wiley & Sons is the oldest independent publishing company in the United States. With offices in North America, Europe, Australia, and Asia, Wiley is globally committed to developing and marketing print and electronic products and services for our customers’ professional and personal knowledge and understanding.

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 more on this series, visit our website at www.WileyTrading.com.

Cover image: © Photodisc / Jupiter Images

Copyright © 2014 by Jea Yu. All rights reserved.

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

The First edition of Simple Profits from Swing Trading: The Underground Trader Swing Trading System Explained, published by Marketplace Books 2011.

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.

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ISBN 9781118770917 (ePDF)

ISBN 9781118770849 (ePub)

To Katana, for always being my greatest inspiration,

salvation, and foundation.

Preface

The Underground Trader embodies the simple theme of starting from the surface and drilling our way down, rather than the conventional working our way up from the proverbial “ground floor.” This is how we organically attain depth of knowledge that leads to enlightenment. In this minus sum game of trading, the only way to keep profits is by going against the majority. This takes unconventional methods that have been meticulously developed through thousands of hours of hands-on participation, not just back-testing.

While the title of this work emphasizes swing trading, we have included the core methods and tools that are used intraday for executions and trade management in the first section in the book, The Underground Trader Trading System Exclusive Quick Start Guide. These are the core charts, patterns, and methods that make up the execution and technical analysis portion of the system. Once you have built that foundation, then it’s time to engage in applying that to the swing trading in the second section, Swing Trading and The Underground Trading System, which extrapolate the basic system to wider time frames that are also tempered with key fundamental analysis methods.

Successful swing trading requires sharp fundamental analysis integrated with strong technical analysis, trade management, and execution skill sets. This book is designed to enhance those specific skill sets and nurture your development in the game of swing trading. Take it slowly and absorb the information at your own pace. Embrace the enlightenment.

Section One

The Underground Trader Trading System Exclusive Quick Start Guide

The mechanics behind the Underground Trader trading system may seem overwhelming in the beginning. For this reason, we have put together a quick and dirty start-up guide.

Before we get started, take a look at these two series:

1. > > > >

2. > < > <

Which is an example of convergence also known as aligned, uniformed, and congruent?

Think fast. If you picked 1, then you are correct.

Now spot that same series in the following:

1. < > < < > > > > > < < > < > > > >

2. < < > > < > < > > > < < > < > > <

3. < < > > > < > < > > < < > > > < <

A little more difficult this time, eh? The correct answer is 1 as well. What makes this more difficult is the background noise.

The first has the same “> > > >” convergence, but it’s camouflaged within the context. The second and third have just as much noise and get close but not the series pattern we are looking for. If you can distinguish between the three series, then you are already off to a good start because this is what happens in the markets every single day. We are constantly trying to filter through the noise to spot the convergence pattern.

To get definitions of convergence, backtesting, and other key terms, be sure to visit the glossary at http://blog.traderslibrary.com/traders-library/glossary.html.

Most trading books and courses focus on particular patterns that historically have high probability results. Often, this is “backtested” to confirm the validity, effectiveness, and so forth. Yet, when the average trader or investor takes the signals, the results usually do not live up to the expectations. They look good on paper, but in reality, it feels like a coin toss. Does this mean the pattern is ineffective?

Let me pose this question in another light. Does a rifle have the potential to kill a deer? Yes. Can a rifle be used to kill a deer in the woods? Yes. Can that same rifle be used underwater to kill a shark? No. Why? Because you can’t use a rifle underwater! Bingo.

Does that make the rifle insignificant as a weapon? No.

The key is the environment in which the rifle is being used, right? No one will dispute the deadly capabilities of a rifle in the right hands and the right environment. Common sense tells us this. If we extrapolate that thinking to trading, then you should see why methods and patterns are effective only when used like a weapon/rifle in the right environment.

The environment is the CONTEXT. Context is the red-headed step-child that is often left out or forgotten in the markets mainly because it’s so hard to interpret and align. Well, that’s what our system does. It quantifies the correct CONTEXT FIRST and then spots the high probability setup within that context!

When Michael Milken was pitching his junk bonds to fuel leveraged buyouts and corporate raiders in the 1980s, he was comparing the default rates of his double-digit-return junk bonds versus triple-A-rated corporate bonds paying less than 50 percent of his junk. Imagine if you are an insurance company that must invest all the cash premiums in a secure return and you have a choice between an 8 percent corporate AAA bond and a 24 percent junk bond. The first question is: “What is my risk?” Milken showed identical risk and default rates between the two products with a handy-dandy chart. This was a no-brainer for the insurance companies and the reinsurance companies to the tune of over $11 billion. Ultimately they collapsed, triggering the infamous savings-and-loan crisis. What was the problem with the equation? Milken compared corporate triple-A-rated bond default rates in the 1980s to junk bond default rates in the 1930s just after the Great Depression—apples and oranges. The context was the key element of deception. This is just another example of context being the often overlooked yet most important distinguishing factor in analysis.

I will go so far as to state that the context is the most important part of the setup