Probably the best practical how-to book on the subject of daytrading stocks, indices, and futures contracts.
It's all technical - that is, chart-reading - but you get a much clearer idea of how to actually trade using a chart than you do out of all the classic technical analysis books. There is nothing in this book about chart patterns (triangles, cups, flags, etc.) or about candlestick formations. Perhaps the author doesn't consider those things worthwhile, but personally I find that knowing about them is at least helpful.
His mantra is trading with the trend of a higher time-frame than the one you are trading in and basically trying to capture the meat of the next wave after a correction in the direction of that trend in your trading time-frame. He uses trendlines and channels to find the best entries and exits. If there is no trend then you are in a range-bound market and should play the range reversals at the extremes - when this fails be prepared to play the break of the range without chasing it, which usually means waiting for a pullback (in which case you have now switched back to trend-following tactics). Breaks of channels in the higher time frame create a reversal in trend and are played in a similar manner.
There is alot of material on using oscilators correctly, especially Stochastics - not just looking for reversals when it crosses and turns from overbought and oversold like most people use it. He shows how it can be helpful in both trends and range-trading.
Interestingly enough, he includes some examples of "high probability trades" that are against the trend as well - although he always goes back to saying you are better off sticking to trades with the trend. (There are a few seemingly contradictions like that but this is still a great trading book.)
Link stresses over and over that top traders will have 50% losing trades. So what trading boils down to is a probability game like poker or backgammon. Your average winner has to be significantly higher than your average loser - and that's where picking the good setups comes into play. So you want to be stepping in where different types of traders and investors in different time frames all get signals in the same direction and will act as a collective force to move the market because of it. Even with that, still expect 50% losers so these spots must have reasonably tight stops that still give the market wiggle room but when the move happens it will usually be sustained enough to make up for all the losers plus some.
Link also acknowledges that it doesn't matter how large or small your profits are when you take them as long as you are systematically taking even smaller losses. This opens one's mind to different approaches that can all be successful.
The book lacks a clearly defined trading plan - it is up to the reader to develop one of his own from these concepts. But the building blocks of a successful plan are certainly contained herein.
This review is the subjective opinion of an Investimonials member and not of Investimonials LLC
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