The Ultimate Trading Guide

The Ultimate Trading Guide will examine the fallacies of this approach and present an outline and a basket of trading ideas that should give you a statistical advantage in trading the markets. Technical analysis is simply reviewing historical data in an effort to understand the forces of supply and demand. This effort can give you a slight edge in the markets that may lead to consistent an profitable trading results. Technical analysis is a viable and effective force in trading the markets.

Introduction:

All speculative markets are governed by the law of supply and demand. Economics have proven that a fair market will determine the equilibrium point between the supply and demand of goods or services. This equilibrium point is the price where buyers and sellers agree on a value of the product being traded. The price of a stock or future is constantly changing. This price movement, also known as market action, is often represented by a simple bar chart that provides five different statistics for the market that it represents: open, high, low, close price, and the range of market movement fur that day.

The bar chart represents the war that is fought between buyers and sellers (bulls and bears). If the market closes up from the open, the hulls have won. If just the opposite happens, then the bears are the victors. The range of the bar chart represents the battles that were fought during the day. If the price of a stock advances by one point, that stock was worth an extra point in price. A collection of the latest bar charts of a certain market gives a longer term view of the supply and demand for that underlying market. Market technicians believe that future prices of a slock or future can be determined by following the map of supply and demand that is portrayed by the bar chart. If one can master the art of proper chart interpretation and uncover the law of supply and demand, it can lead to profitable trading.

The first part of this book is dedicated to the art of deciphering the bar chart. The authors present several approaches to reading the charts that are based on years of watching the markets. We learn best when we concentrate on one idea at a time. Take any chart and mark specific entries under each idea presented. The ideas presented will not work in isolation, but will contribute to an overall trading plan. There are only three parts to a trading plan: entry, exit, and stop loss when the entry is wrong. Each one of these three parts has a basket of techniques. By learning these techniques, you will develop your own key indicators and eventually you’ll have the ability to navigate any chart and recognize a potential edge that suits your trading style. You can develop an edge in the markets, but you will never master the monster.

The second part of this book is dedicated to the multimillioni dollar industry of mechanical trading systems. The advent of the computer and inexpensive data has given everyone the ability to teat trading ideas. Since most of the trading public are inexperienced traders, they have searched out the gurus and experts in trading systems. Many gurus and experts promise wealth to anybody wanting to trade stocks or futures. Unfortunately, many people followed their advice, purchased their trading systems, and failed miserably at trading. The large gap between what was promised and what was actually achieved has given this industry a bad name. Futures Truth Company has been testing and evaluating trading systems since 1986. This company was organized to provide hard cold facts on the many trading systems that are available to the public. Futures Truth began as a watchdog company, but over the years it has become a medium for good and honest trading ideas. A mechanical approach to the markets can be successful and this is backed up by the fact that approximately 80% of the $30 billion in the managed futures industry is traded by exact systematic methods.

Well over 80% of traders and speculators lose money. Computers have incorrectly been used to show hypothetical performance statistics. A trading system cannot be dreamed up by a computer; it must be based on a reasonable chart interpretation of supply and demand. The computer, with the benefit of hindsight, can be used to massage data to show any desired return. This is known as curve fitting. Such trading systems have no relationship to the real world, but do make impressive promotional pieces. That is why it is extremely important for a trader to understand the forces of supply and demand that operate in the markets. The purpose of this book is to show you how to make money in the markets by providing:

Contents:

• The Set-Ups or the Big Picture
• Practical Applications of the Elliott Wave Theory
• Bar Charts and Their Forecasting Ability
• Channel and Trendline Trading
• Swing Trading
• Patterns
• Drurnmond Geometry and the PLdot: An Introduction to the Fundamentals
• Introduction to Mechanical Trading Systems
• Where to Start
• Historical Testing—A Blessing or a Curse
• Money Management
• Turnkey Systems and Portfolios
• Top Ten Systems of All Time

The Ultimate Trading Guide By John R. Hill, George Pruitt pdf