Trend Qualification and Trading

L.A. LITTLE is what Jim Cramer called a "technician extraordinaire" on his Mad Money television show. Little is a professional trader, money manager, and senior contributor to RealMoney.com and TheStreet.com. His columns on those sites generally receive 50,000 to 75,000 views. Little also provides daily market analysis and the tools to implement the trading strategies covered in this book on his web site TAToday.com. He has contributed articles to well-known technical trading publications such as Technical Analysis of Stocks and Commodities and Traders World. With a trading philosophy centered on capital protection first and the accumulation of consistent gains over time, Little exposes a simplistic technical approach to trading the markets that is a throwback to the days of past.

• Foreword xiAcknowledgments xiiiIntroduction 1Part I Trend Theory 5Chapter 1 Redefining Trend 7Chapter 2 Classical Trend Model 13Objective of the Model 13Inputs 14Model Definition 14Rules for the Model 15Applying the Model 18Summary 22Chapter 3 Neoclassical Trend Model 25Objective of the Model 26Inputs 29Model Definition 30Rules for the Model 37Summary 46Chapter 4 Determining Trends 49Fundamentals for the Long Term 49Swing Point Logic 50Identifying and Labeling Trends 65Summary 70Chapter 5 Qualifying Trends 73Using Swing Point Tests 73Trend Continuation and Transitions 75Retest and Regenerate 97Summary 106Part II Application of Trend Theory 109Chapter 6 Preparing to Trade 111Overview of Trading Strategies 112Risk versus Reward 115Time Frames 116Summary 125Chapter 7 Entering and Exiting Trades 127Support and Resistance 128Price Zones, Not Lines 131Defining Entry and Exit Points 136A Trading Example: Combining Technical Events 161Summary 166Chapter 8 Reversals and Price Projections 167Price Reversals 168Price Projections 176Summary 187Chapter 9 Time Frames 191Time Frame Analysis 192Time Frame Integration 197Establishing a Trading Bias 206Trade Trend Matrix 212Summary 214Chapter 10 Markets, Sectors, and the Trading Cube 215General Market 216Market Sectors 217The Trading Cube 219Summary 240Chapter 11 Trading Qualified Trends 243Example of a Qualified Trend 244Entering a Trade 249Exploiting the Trend 258Exiting the Trade 263Flipping Trading Positions 268Concluding Thoughts 272Notes 275Glossary of Key Terms 281About the Author 287Index 289