Timing Solutions for Swing Traders E-Book

Robert M. Lee

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

Seitenzahl: 316

Veröffentlichungsjahr: 2012

Beschreibung

A unique new approach to trading based on financial analysis and financial astrology Timing Solutions for Swing Traders: Successful Trading Using Technical Analysis and Financial Astrology is a remarkable new book that introduces a revolutionary approach to non-day trading that combines the four basic dimensions of trend analysis--price patterns, volume, price momentum, and price moving averages--with a little financial astrology. Focusing on the essentials of technical analysis, the book is filled with examples of reliable indicators and formulas that traders can use to help develop their own styles of trading, specially tailored to their individual needs and interests. Filled with real-life market examples to help you understand how to use the matrix of moving averages, how to apply different sets of time frame moving averages to form a trading decision, and how to determine the intermediate state of the market using the Queuing Theory (QMAC)--which dissects the interplay of long-term moving averages and helps anticipate major support and resistance levels--this book is packed with the information you need to maximize your trading potential. * A dedicated trading guide for non-day traders * Incorporates examples and formulas to bring ideas to life * Presents an innovative new approach to trading that draws on the four core dimensions--price patterns, volume, price momentum, and price moving averages--for analyzing trends Innovative and practical, Timing Solutions for Swing Traders is a hands-on guide to applying a remarkable new approach to trading.

Leseprobe

Contents

Foreword

Preface

Disclaimer

Chapter 1: Be Prepared

Fundamental and Technical Analysis

Conclusion

Chapter 2: Let’s Get Started

Patterns

Volume

Price Momentum

Price and Moving Averages

Combining the Four Dimensions

Beyond Technical Analysis

Financial Astrology

Keeping Count

Conclusion

Chapter 3: Essential Patterns

Open

High

Low

Close

Candlestick Patterns

Divergence Patterns

Diagonal Patterns

Patterns Continued

“M” and “W” Patterns

Head and Shoulders Patterns

Rectangle Patterns

Saucer Patterns

AB=CD Patterns

Gaps

Conclusion

Chapter 4: Elliott Waves

Wave 1

Wave 2

Wave 3

Wave 4

Wave 5

Extended Waves

Three-Wave Structures

Corrective 3-3-5 Patterns

Corrective 5-3-5 Patterns

Rule of Alternation

Fibonacci Retracement and Projection

Application of Elliott Wave Analysis

Conclusion

Appendix: Ratios and Wave Relationship

Chapter 5: Volume

Basic Volume Plots

Reading Volume

Money-Flow Indicator

Deciphering Trend with Volume

Conclusion

Chapter 6: Key Indicators

Momentum Oscillator

Queuing Theory of Moving Average Crossovers (QMAC)

MACD

Average Direction Index

Protective Stops

Conclusion

Chapter 7: Applied Systems

Catching That Trend

Built-In Color Trend Indicator

Supporting Moving Averages

Trade on Daily Signals

Trading with Ichimoku

Conclusion

Chapter 8: Formulating Your Trading Plan

Determining Your Time Frame

Selecting Stocks

Risk Management

Determine Entry Points

Determine Exit Strategies

Reality Check

Chapter 9: Financial Astrology

Using Lunar Cycles in Trading

How to Pick Winning Stocks

Choosing the Best Periods for Trading

Market Projection

Conclusion

Appendix 1: Ruling Planets of the Natural Horoscope

Appendix 2: Effects of Various Aspects

Appendix 3: Characteristics of the Twelve Zodiac Signs

Appendix 4: Formulas in MetaStock Format

Glossary

Bibliography

About the Authors

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.

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Published by John Wiley & Sons Singapore Pte. Ltd.

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Foreword

Like many practitioners, my collection of books on technical analysis has grown over the years. In the initial years, during the 1980s, when such books were few and far between, I bought almost indiscriminately. Later, as my knowledge of the markets and analytical methods grew, my purchases became more selective. This well-written book, which focuses solely on the equity markets, will occupy an important place on my bookshelf along with Robert’s first little gem of a book, Power Tools for Traders (1997).

Timing Solutions for Swing Traders has something for the novice as well as the seasoned trader. The first few chapters serve as both a learning aid for beginners and as a refresher course for the more experienced practitioner, while the latter chapters show how to combine and use the indicators and methods discussed to create a trading plan.

I found Robert’s innovative approach to multiple moving averages, which he calls the Queuing Theory of Moving Average Crossovers (QMAC), to be very interesting. I particularly liked the way he dissects the interplay of long-term moving averages to anticipate major support and resistance levels and his use of colored candlesticks to differentiate between trending and non-trending phases based on simple but effective concepts.

It is the last chapter, on financial astrology, written by Peter, that I found to be most fascinating. Having never explored this area before—and not being very esoterically inclined—I found the material quite easy to follow. The astrology-based approach to selecting stocks, in combination with the more accepted methods of analysis along with the section on projecting future trends based on planetary influences, definitely merits further study. I hope the authors explore this fascinating new area in more detail, with examples from other equity markets and perhaps the currency markets, in a future publication.

I have known Peter since he was a rookie broker, and in recent years, I have come to know Robert as well. I have observed firsthand how their approach to analyzing the stock market can produce quite extraordinary results. Robert and Peter have many more innovative indicators and methods between them and I look forward to reading their next offering.

Ananda Bhaumik

Private Banker

Hong Kong

Preface

The title of this book, Timing Solutions for Swing Traders: Successful Trading Using Technical Analysis and Financial Astrology, defines its mission. It is all about detecting trend and exploring the best timing to trade. The first eight chapters are authored by Robert and cover comprehensive aspects of technical analysis, including a summary on the Theory of Elliott Wave Principle and the Queuing Theory of Moving Average Crossovers. The last chapter was contributed by Peter. It introduces the application of financial astrology to picking stocks and cycles, to finding the best period to trade, and to ascertaining the best period of your personal Part of Fortune.

The book covers four dimensions related to trend analysis: price patterns, volume, price momentum, and price moving averages. The objective is to decipher price trend and to develop the most effective and profitable method to trading. It will show how to use financial astrology in lunar cycle trading, select stocks with the best potential, and find the best time for profitable trading. And, it will introduce readers to the emerging trend of fusing technical analysis with cycle analysis and financial astrology.

This book is not about day trading of stocks and is not intended for day traders. Day traders are very short-term players and they make trades during market hours in one trading day. This is a book primarily for people who work from “9 to 5” and who do not have the spare time to monitor their stocks closely during the day. They are more likely to be position traders who make longer-term trades that may last from several days to several months, and can only find time after office hours in the evening. Many of them would like to have some sort of technical analysis method that can help them take better care of their trades, but they just do not know where to start. They would like to read charts. However, there are so many methods and systems to pursue that the whole process becomes somewhat overwhelming. This book is dedicated to these people who want to be more proactive traders. It will demonstrate a simple and practical approach to doing just that. It will not require the purchase of expensive and sophisticated software, as we are dealing only with end-of-day data and not real-time data. Other than the examples of charts in financial astrology, we are using MetaStock software and end-of-day data subscribed from data vendors to illustrate the charts. The formulas in the samples of this book are enclosed for the benefit of the readers. These formulas are not exhaustive or definitive; readers can of course amend them to suit their own style of trading. MetaStock also has many other popular indicators and systems available.

Our purpose is to show swing traders or non–day traders a concise method to trading and encourage them to take the subject to a higher level, particularly in configuring the indicators they will use for trading, management of risk, and use of financial astrology. In financial astrology, we try to show the application of astro-harmonics and how they are being used with common technical tools to give an extra edge in timing market turns. Every trader has his or her own habit of trading, such as preferred use of certain indicators and methods, and margin of acceptable risk. Most traders, however, depend entirely on the standard formula of a packaged program. Many of them have good ideas of what indicators they would like to use in their trading, but lack the time and patience to implement their concepts into a program. Others are still exploring different options to develop a trading program that suits all their criteria.

After countless hours of research, we have put together the essentials of a practical course on technical analysis in nine chapters, as described in Chapter 2, Let’s Get Started. We feel the subjects covered will be more than adequate for trading stocks. There are many dos and don’ts regarding interpretation of analysis that we have encountered in our 35 years of trading experience, and the book describes how to interpret developing patterns and trends. It also gives examples of how mechanical trading systems are designed, and how a standard indicator could be incorporated into a system. Taken together with the emerging trend of fusing technical analysis with cycle analysis and financial astrology, it is hoped the book may serve as a useful guide and inspire novice as well as veteran traders to further their techniques in the areas covered.

How to gauge different market scenarios is one of the trickiest issues facing traders every day. To help develop your trading techniques, the book contains many charts illustrating how to assess and analyze different kinds of conditions. The charts have been produced from various vendors’ software programs. By the end, traders should have further advanced to an all-around understanding of using technical analysis in formulating a profitable trading plan

In the book, we have demonstrated a simple concept of a trading method. The stocks are selected at random and are not selected to fit the system. The system is not a mechanical or fully automated trading system, and parameters of the system and indicators are not optimized. The basic formulas used in the system are provided for reference. The formulas are simple and easy for traders to use. It should be easy also to adjust them for incorporation (with their personal system design) into their personal trading method. The program has a built-in color trend indicator to alert traders to the state of the stocks in the short time frame, and to validate the short-term trend by the medium-term indicators of the system. In essence, we want to trade when the short-term trend is moving in tandem with the medium-term trend, and trade signals are executed only in the direction of the longer trend frame. The application requires discretionary traders’ decisions to anticipate market outlook for the intermediate trend. It uses candlestick patterns, Elliott Wave Principle, volume, and the interplay of three longer-term moving averages to decide whether relevant price rallies or corrections are expected to be short-lived or the start of a longer trend. It is also recommended to include a protective stop-loss system in every trading system. There are no standard parameters or definitive methods for applying stop-loss. Each trader has to define his own acceptable risk to set the appropriate stop-loss. For reference, the formula of a simple indicator for stop-loss has been included together with formulas of the various indicators mentioned in the book.

To a large extent, the success of trading depends on your frame of mind, money management ability, and trading methodology. Having a healthy frame of mind is a prerequisite for trading stocks. The mind greatly influences how you trade and how you manage your financial risk. Trading is all about making mental decisions. A frame of mind that is negative, tired, or anxious is not the right condition for trading anything. On the other hand, a healthy and cheerful attitude and learning to take a break from trading are indispensable factors in the unceasing quest to achieve the best trading results.

Robert T. H. Lee

Peter A. Tryde

Disclaimer

This book is sold with the understanding that neither the publisher nor the authors are engaged in offering legal, accounting, or other professional services or advice by publishing this book. Thus, if legal or financial advice or other expert assistance is required in a specific situation, the services of a competent professional should be sought to ensure that the situation has been evaluated carefully. The publisher, the authors, and any other person connected with the writing of this book disclaim any liability for any losses that may be sustained as a result of applying the methods suggested in this book.

This book should not be deemed to be a definitive investment guide and should not be taken to replace advice from a qualified financial planner or other competent professionals. There are always risks in investments of almost any kind and there is no guarantee that the investment methods described in this book will be profitable. System trading is a risky business and can result in heavy losses. Do not assume that the theories, systems, methods, or indicators mentioned in the book would be profitable or that they will not result in losses. The trading systems presented in this book are for guidelines only and serve to illustrate the relative theoretical results between different trading systems. They were produced from various technical analysis software programs developed by various vendors who are in no way responsible for the results. They do not warrant or make any representation regarding the use, or the results of the use of their software programs, or written materials in terms of correctness, accuracy, reliability, or otherwise. They are not responsible for any losses resulting from investment decisions based on information obtained through the use of the systems.

Certain information contained herein has been obtained from sources believed to be reliable, but which cannot be guaranteed as to accuracy or completeness, and is subject to change without notice. The risk of using any trading program or method rests with the user.

CHAPTER 1

Be Prepared

Trading stocks is 100 percent mental. Trading means the buying and selling of one or multiple stocks to take advantage of price fluctuations, rather than just holding on to the stocks indefinitely. Success as a trader is a difficult achievement; it has never been easy. Added to this, the 2008 financial crisis brought to the market a new age of volatility, as well as new thinking and new approaches in trading. If you do not know what you are doing, trading will now be even harder.

Markets consist of a multitude of investors from individuals to institutions, each with their own investment agenda. In aggregate, investors’ emotions of greed, fear, hope, and despair dictate market fluctuations and directional movements. Similarly, the psychological state of a trader may affect his trading results because his emotions influence his decision making. To outperform the market and to succeed in trading, a trader needs to take charge of his emotions. To start off, he requires a patient and confident mind. If a trader is confused about what he is doing, the probable win ratio is zero and he might as well give up trading. The mind is mischievous and it often is the primary cause of failures. The market is always creating noises and if a trader fails to control his inner noises, how can he listen to what the market is trying to tell him?