Complete Guide to Technical Trading Tactics

JOHN L. PERSON is a registered Commodity Trading Advisor who publishes The Bottom Line Financial and Futures Newsletter, a weekly publication.John hosts his own financial radio show where he interviews some of the country’s top analysts and traders. These interviews are archived on his Web site www.nationalfutures.com. He is widely quoted by CBS Market Watch,Reuters, Dow Jones Newswires, Bloomberg, the BBC, Futures magazine,and appears as a guest onCNBC. He teaches these techniques atsome of the country’s leading investment expos andconducts seminars from coast to coast. He was invited by the Chicago Board of Trade to contribute his daily market commentaries, which can be found at www.cbot.com/dow.

• Preface ixAcknowledgments xvCHAPTER 1 Introduction to Futures and Options:Understanding the Mechanics 1How the markets work, the elevator analogy, product for the times, important terminology such as margin, contract specifications, and leverageCHAPTER 2 Fundamentals: The Market Driver 19Supply and demand issues, economic growth and productivity effects, major economic reports and their in role in market pricesCHAPTER 3 Technical Analysis: The Art of Charts 33Western-style bar charts and key reversals, point-and-figure charts that focus only on price, market profiling, price and time analysisCHAPTER 4 Candle Charts: Lighting the Path 43Enlightening charting technique and its colorfully named patterns—hammers, stars, spinning tops, dojis, hanging man, and others—powerful reversal patterns, reliable continuation patterns, key examples in the dollar and bondsCHAPTER 5 Chart Analysis: Volume, Open Interest, Price Patterns 67Volume and open interest rules for traders, M tops and W bottoms, trend lines, measuring patterns, the head-and-shoulders, triangles, pennants and flags, diamonds, wedges, funnels, gaps, islands, rounded bottoms, oops signals, opening range breakoutsCHAPTER 6 Pivot Point Analysis: A Powerful Weapon 93The pivot point formula for target trading, calculating support and resistance levels, importance of multiple verification from several sources, the P3T trading technique, weekly and monthly charts and numbers, risk management techniquesCHAPTER 7 Day-Trading, Swing Trading: Acting on Analysis 113Trading to bounce off target numbers, calling tops and bottoms, weekly chart magnets, harami cross and other candle clues to market reversals, pivot points save the day, lining up the stars, the verify-verify-verify approachCHAPTER 8 Technical Indicators: Confirming Evidence 135Moving averages and trends, simple rules with averages, tweaking and visualizing MACD, stochastics, false signals, Gann’s key numbers, Fibonacci ratios and projections, time counts for cycles, Elliott wave and its cluesCHAPTER 9 Market Sentiment: What Traders Are Thinking 161Getting a market consensus from contrary opinion, Commitments of Traders reports, margin rate changes, Market Vane Bullish Consensus report, put-to-call ratios, volatility index (VIX), when the boat is tipping over, media effectCHAPTER 10 Order Placement: Executing the Plan 171Importance of getting an order right, online platform concerns, impact of market conditions on orders, 14 top order entry selections you need to know, orders in after-hours trading, spreading conceptsCHAPTER 11 The Mental Game: Inside the Trader 189Conquering fear, learning discipline, improving confidence, suggestions for success, I’ll-think-about-it syndrome, the paper trader, fear and greed factors, becoming a specialist, setting up an investment diary, setting a positive mind frame, dealing with adrenaline, establishing goals, positive affirmations, stress relief techniques, rewarding success to build successCHAPTER 12 The Tactical Trader: Tips and Techniques That Work 203Pyramiding approaches, scale trading, stop reversals, breakouts, momentum trading, the Friday 10:30 a.m. rule, stop placement near a magnet, trading multiple contractsCHAPTER 13 Options: A Primer 217What options are and how to use them with futures, simple puts and calls, options premiums, the Greeks, comparison shopping, strangles and straddles, eight top option spreads, delta neutral techniquesCHAPTER 14 Closing Bell: My Top 10 List 235What the experts suggest, top 10 trading thoughts, measuring successGlossary 241Bibliography 253Index 255