Street smarts- High probability short-term trading strategies PDF

Street smarts- High probability short-term trading strategies PDF

Street smarts- High probability short-term trading strategies PDF will teach you everything we know about swing trading. By swing trading we mean monitoring the market for support and resistance levels and actively trading around those areas. Stops are placed just beneath support or above resistance to minimize risk. You will learn to recognize the best setups at these levels and then how to lock in profits when trades are made.

Category: Stock

Author: Linda Bradford Raschke, Laurence A. Connors

Language: English

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Introduction

Yes, Virginia, you CAN make a living from trading!
In a day when global money managers are given increasing attention and funds seem to dominate the market arena, it might be difficult to imagine that the small speculator could have much of an edge. Has trading become a function of computer power? Have markets changed in the last decade? How relevant is the theoretical world in the heat of battle? The truth is, a few trading tricks and a little common sense will get you more mileage than all the books on technical analysis combined. Ultimately, an individual can better determine support and resistance than a computer can. And yes, the private individual has more of an edge than he knows!

This book is written for the active trader. It is a compilation of strategies that the two of us have been trading with for the last 15 years in both equities and futures. The strategies are conceptually simple and have been readily adopted by our friends and colleagues. This is not a book of technical analysis. It is a manual of precise setups that have you in the market for only a limited amount of time. Consider it to be a collection of “surgical strikes” with a distinct methodology for managing each one’.

Each pattern identifies a distinct market condition. After all, trading should be done on only the most recognizable and reliable patterns. Most of the setups can be traded on any market and on any time frame.

This manual will teach you everything we know about swing trading. By swing trading we mean monitoring the market for support and resistance levels and actively trading around those areas. Stops are placed just beneath support or above resistance to minimize risk. You will learn to recognize the best setups at these levels and then how to lock in profits when trades are made.

In order for you to get the most out of trading these setups, a few points need to be covered:
• It is important to initially trade a new concept or strategy on paper. Only by seeing a pattern over and over again will you truly feel comfortable with it. You must believe in its ability to repeat itself. Don’t be surprised if you find yourself actually becoming excited as you see the patterns begin to set up.
• If a pattern does not make sense to you, don’t trade it. If you don’t have a 100 percent belief in it, you will not be able to overcome losing streaks.
• All you need is one pattern to make a living! Learn first to specialize in doing one thing well. We know two traders who do nothing but trade the “anti” pattern from a five-minute S&P chart.

Another friend trades only “Three Little Indians” on tick charts. Traders can earn their living by trading any one of the patterns that we present in this book.
• Your biggest enemy in trading is going to be a directional bias, an opinion about market direction … whether yours, a broker’s or a friend’s. Shut it out! Learn to concentrate on the “right-hand side” of the chart-in other words, on the pattern at hand.
• One of the things you will get out of this book is an increased ability to listen to the market.” Even if a chapter does not seem to suit your personal trading style, it should at least heighten your awareness of market action and price behavior at critical points.
• None of these strategies is designed to be a mechanical system. Be grateful that they are not! If they were, a large fund would come into the marketplace and exploit the edge. It is estimated that over 90 percent of the large pools in the commodity markets are run on a mechanical basis, systematically attempting to exploit trends. It is very difficult for these funds to move large amounts of money on a short-term time frame. They do not have the luxury of using resting stop-loss orders without risking adverse slippage. They cannot be as nimble as the small speculator can-and herein lies your edge.
• This brings us to the most important point. Initial stop loss orders are essential! Each strategy in this book will have you entering a protective stop upon being filled. Stops are necessary for your protection against worst-case scenarios. (Remember, we are trading on probabilities only.) All it takes is getting sloppy once, or experiencing the “frozen rabbit syndrome” in a bad trade, to undo the efforts of the previous 20 trades. Placing initial protective stops must become a habit that is never broken. As you will see, in most, if not all of the examples, your stops will risk only a small amount of money.

The patterns in this manual are organized around three distinct swing trading concepts by which support and resistance levels are formed. They are: tests, retracements, and climax reversals. We
will elaborate on these ideas in the introductory chapter on swing trading. This will be followed by a chapter on money management.

Chapters included under “test” setups include Turtle Soup, Turtle Soup Plus One, 80-20’s, and Momentum Pinball. Retracement patterns include sections on the Anti and two ADX trades. Lastly, different types of climax reversals are discussed. Our favorites range from news-reversal patterns to distinct bar chart setups.

We have also included a chapter by a friend who is a finance professor at Syracuse University We thought you would be fascinated-as we were by the summary of his research and findings on the secrets of longevity and profitability of top CTAs.

The appendix includes all applicable back-testing results independently conducted by the Moore Research Center in Eugene, Oregon. These tests are included to illustrate a market’s tendency; that an edge does indeed exist. They are not meant to be mechanical systems. Before we move on to the strategies, let’s first discuss the mechanics of swing trading.

Table of Contents- Street smarts- High probability short-term trading strategies PDF

ACKNOWLEDGMENTS

PREFACE

Chapter 1 INTRODUCTION 1

Chapter 2 SWING TRADING 3

Chapter 3 MONEY MANAGEMENT 7

PART ONE- TESTS

Chapter 4 TURTLE SOUP 12

Chapter 5 TURTLE SOUP PLUS ONE TM 22

Chapter 6 80-20’s 31

Chapter 7 MOMENTUM PINBALL TM 36

Chapter 8 2-PERIOD ROC 42

PART TWO- RETRACEMENTS

Chapter 9 THE “ANTI” 48

Chapter 10 THE HOLY GRAIL 58

Chapter 11 ADX GAPPER 63

PART THREE- CLIMAX PATTERNS

Chapter12 WHIPLASH 71

Chapter13 THREE-DAY UNFILLED CAP REVERSALS 74

Chapter14 A PICTURE’S WORTH A THOUSAND WORDS 80

Chapter15 WOLFE WAVES 88

Chapter16 NEWS 96

Chapter17 MORNING NEWS REVERSALS 99

Chapter18 BIG PICTURE NEWS REVERSALS 104

PART FOUR- BREAKOUT MODE

Chapter19 RANGE CONTRACTION 109

Chapter 20 HISTORICAL VOLATILITY MEETS TOBY CRABEL 115PART FIVE MARKET MUSINGS

Chapter 21 SMART MONEY INDICATORS 122

Chapter 22 MORE WORDS ON TRADE MANAGEMENT 128

Chapter 23 BE PREPARED! 131

Chapter 24 FINAL THOUGHTS 134

Chapter 25 THE SECRETS OF SUCCESSFUL TRADING 135

APPENDIX

Reviews

Straight forward strategies that really work. Simple to understand and easy to spot on a chart.-  D. A. Palmer

Excellent book on swing trading! I read the book and basically confirmed some of the patterns that I’ve been trading for years. Everyone has it’s own name for the setups, but regardless of the name, the patterns describe in the book, do work!- Beau F. Penaranda

Great book, gets right into tactics with no fluff- Scott

About the author

Linda Bradford Raschke

Laurence A. Connors

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