Winning the Day Trading Game E-Book

Thomas L. Busby

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

Seitenzahl: 400

Veröffentlichungsjahr: 2011

Beschreibung

Take a proven approach to short-term trading. Winning the Day Trading Game offers an insider'sview of the trading life and provides proven strategies forprofitable trading. Professional trader Tom Busby explains how thestrategies that made him so much money early on in his careerultimately failed during the 1987 stock market crash and thenreveals how he reinvented himself as a high-percentage day trader.He interweaves personal experiences with technical explanations tooutline the cornerstones of his technique. In highlighting his owntrading experiences, Busby clearly explains how to beat the marketby balancing the impulses of greed and fear, managing risk at alltimes; and taking responsibility for your trading. Thomas L. Busby (Mobile, AL) has been a professional trader andbroker for 25 years, working with Merrill Lynch and Smith Barney.He founded the Day Trading Institute in 1996 and it has grown intoone of the most successful trading schools in the world.

Leseprobe

Table of Contents

John Wiley & Sons

Title Page

Copyright Page

Acknowledgments

Introduction

CHAPTER 1 - The Crucible Black Monday

FROM PORK BELLIES TO PAN AM

THE AFTERMATH

CHAPTER 2 - Time Is Central

IN THE MARKETS, JUST LIKE FISHING, PATIENCE PAYS

CAREFULLY SELECT TRADING OPPORTUNITIES

CERTAIN MARKET MOVEMENTS CORRELATE TO THE TIME OF DAY

USE A 24-HOUR TRADING CLOCK

THE TIME OF YEAR IS ALSO IMPORTANT

REVIEW

CHAPTER 3 - Trading Is a Numbers Game

USING KEY NUMBERS IS NOT NEW

WHAT ARE KEY NUMBERS AND HOW ARE THEY ESTABLISHED

HOW I USE KEY NUMBERS TO ANALYZE THE MARKET

HISTORICAL KEY NUMBERS

HISTORICAL KEY NUMBERS ON THE S&P FUTURES

HOW I USE KEY NUMBERS TO TRADE

REVIEW

CHAPTER 4 - Read the Tape

SOMETIMES, THERE IS TOO MUCH OF A GOOD THING

TRADING IS AN ART

GET THE BIG PICTURE

KEEP A TREND LINE OF YOUR TRADING VEHICLES

NOTE KEY NUMBERS

CHECK MAJOR INDICATORS

MY INDICATORS

THE SIGNIFICANCE OF TIME

TRUST THE NUMBERS

REVIEW

CHAPTER 5 - There’s No Crying in Trading

DON’T GET GREEDY

FEAR IS A NEGATIVE FACTOR

ARROGANCE CAN ALSO BE COSTLY

TECHNIQUES TO TAME YOUR EMOTIONS

REVIEW

CHAPTER 6 - Riding the Rail

REVIEW

CHAPTER 7 - Worry about Risk, the Rewards Will Come

TRADING IS A BUSINESS

MANAGE YOUR ACCOUNT BALANCE

MANAGE EVERY TRADE

USE PROTECTIVE STOPS

FOLLOW THE TWO-MINUTE RULE

GREEN CIRCLE COUNTRY

REVIEW

CHAPTER 8 - Respect the News

BREAKING NEWS CAN RUIN YOUR DAY

A DAILY MARKET MOVER: SCHEDULED ECONOMIC REPORTS

THE BIG IDEA: KNOW WHEN IMPORTANT REPORTS ARE BEING ISSUED

REVIEW

CHAPTER 9 - Getting Down to Brass Tacks

TRADING FUTURE INDEXES

TRADING MUTUAL FUNDS

TRADING STOCKS

TIME AND QUANTITY

TRADING BOND FUTURES

TRADING OIL OPTIONS

TRADING GOLD FUTURES

REVIEW

CHAPTER 10 - Preparation Pays

PREPARATION PAYS IN EVERY PROFESSION

DON’T GET COMPLACENT, KEEP LEARNING

DON’T JUST READ BOOKS, READ THE MARKET

HAVE A PLAN AND EXECUTE IT

KEEP A TRADING DIARY

REVISIT THE DIARY OFTEN

REVIEW

CHAPTER 11 - A Study in Contrast

THE WEEK BEGINS

LET THE NUMBERS LEAD THE WAY

COUNTING MY CASH OR MOURNING MY LOSS

REVIEW

CHAPTER 12 - Recap the Essentials

BEGIN WITH TIME

INTEGRATE NUMBERS WITH TIME

READING THE TAPE IS THE SKILL OF MARKET ANALYSIS—LEARN IT

GOOD TRADING REQUIRES EMOTIONAL BALANCE

ESTABLISH STRATEGIC OBJECTIVES AND BE TACTICAL

TRADING IS A BUSINESS THAT REQUIRES GOOD MONEY MANAGEMENT

NEWS CAN DESTROY THE PERFECT STRATEGY

A WINNING TRADER HAS TO GET THE RIGHT EQUIPMENT

ALWAYS PREPARE, EVALUATE, AND IMPROVE

CHAPTER 13 - An Afterthought for Consideration The Doctrine of Genius

APPENDIX A - Glossary

APPENDIX B - Getting Started

APPENDIX C - Order Types

APPENDIX D - Suggested Reading

APPENDIX E - Helpful Websites

Index

John Wiley & Sons

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

Copyright © 2006 by Thomas L. Busby. 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.

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Library of Congress Cataloging-in-Publication Data Busby, Thomas L., 1951-

Winning the day trading game : lessons and techniques from a lifetime of trading / Thomas L. Busby. p. cm.—(Wiley trading series)

ISBN-13: 978-0-471-73823-7 (cloth) ISBN-10: 0-471-73823-9 (cloth)

1. Day trading (Securities) 2. Electronic trading of securities. I. Title. II. Series.

HG4515.95.B87 2005

332.63’228—dc22

2005016420

ISBN-10 0-471-73823-9

Acknowledgments

I would be remiss if I did not thank and acknowledge the people who helped me to write this book. First, I want to thank Paula, my wife of more than 20 years and my two sons, Winston and Morgan. I thank them not because they wrote the book but because they lived it. They know first hand what the life of a trader is like—they have ridden the rocky road with me and experienced the ups and the downs. I thank them for the chance to do the job I love. Their patience and understanding cannot be measured.

I also thank my Dad, Melvin. His guidance and instruction taught me the lessons that have been my guiding light throughout the years. They illuminated my path. Dad, I thank you.

Also, I want to thank Patsy Dow, my cousin, one of my students, and the wordsmith of this book. Patsy took my trading method and techniques and mixed them with my personal stories and experiences. She accurately transported them from my mind onto these pages. I appreciate her hard work and dedication to the task.

Thanks also to Jeanette Sims, the COO of DTI and my right hand. Jeanette spent many long hours proofing and editing these pages and adding her ideas to the mix. Geof Smith, our Chief Instructor at DTI created all of the artwork and graphics that enhance and explain the information presented. Thanks to a long-time friend and student, Christopher Castroviejo, who was instrumental in helping me with my facts, dates, and the overall structure of the content. Thank you to all of the DTI Students who have enchanced my education in the markets over the years. Thanks to all of you.

There is one other person who had a tremendous impact on my trading and that is Dr. Bobby Gene Smith. Over the years, he had such great faith in me and he was infinitely patient. He died a few years ago, but his influence in my life and the lives he touched was great.

Finally, a special thanks to Kevin Commins and all of the folks at John Wiley & Sons for allowing me the opportunity to publish this book.

Introduction

Trading is risky business that involves a great deal of discretion and skill. Accurate market analysis, correct execution, emotional control, discipline, consistency, and good money management are some of the skills that are required to trade successfully. In addition, there are times when any method, even when executed correctly, will result in a loss.

A great deal of effort has been made to insure that the information presented in this book is correct and accurate. However, we are all human and mistakes can always be made. The information and techniques presented have been helpful to me. However, I cannot and do not guarantee or assure you that they will work for you. I hope that you will find some of the ideas useful. In fact, I hope that your trading will be both more enjoyable and more profitable as a result of the information and ideas presented.

Before you trade, be sure that you can afford to lose the money that you are risking. Always limit your risk first and worry about taking profits second. I make money with this method, but past results are never a guarantee of future results.

Enjoy the book and trade with care.

CHAPTER 1

The CrucibleBlack Monday

October 19, 1987. When the sun rose on that Monday morning, I felt financially secure. I had a great job, a beautiful house, nice cars, money in the bank, and a belief that the future would bring me greater and greater riches. By the time the sun set that evening, I was broke!

During the course of the day, the Dow Jones Industrial Average dropped more than 500 points. The Dow lost approximately 22 percent of its total value in a single day. One trillion dollars of financial assets vanished as quickly as a tiny puff of smoke in a strong wind. And, of course, the Dow was not alone. The Nasdaq also fell, losing more than ten percent of its value.

The United States financial markets underwent a free fall and there seemed to be no stopping, or even bracing, the fall. Furthermore, the decline was not limited to the United States. Major markets around the globe took a nosedive. It was as though a flame on Wall Street quickly got out of control and spread around the world faster than a fire in a parched, dense thicket. Close to home, the Canadian market reeled from historical losses and dropped over 20 percent before the disaster ended. The international scene was not any better: by the week’s end, the average stock value on the London Financial Times Stock Exchange had declined by over 20 percent; Asian markets also tumbled. On October 20, the Nikkei experienced the biggest loss in its history. The market in Singapore was down significantly for the week. After experiencing a huge decline on October 20, the Hang Seng closed for days. In the wake of the crash, the Australian market suffered a record double-digit loss. Some exchanges and indices closed for a few days in the hope that the break or timeout would serve to calm jittery nerves. The reality of a global economy became all too real.