The Trading Book Course: A Practical Guide to Profiting with Technical Analysis

By Anne-Marie Baiynd

The companion volume to The Trading Book--practical, hands-on exercises that make trading decisions easier than ever

Filled with activities, exercises, and expert advice, The Trading Book Course explains how to accurately identify market conditions before beginning to trade--which is the key to determining the best entry and exit points possible. It also teaches you how to combine powerful technical analysis with smart trading psychology to increase your chances of success even more!

The Trading Book Course provides everything you need to evaluate:
Trends * Peaks * Price/Volume Relationships * Support/Resistance * Price Patterns * Moving Averages * Momentum Indicators

The Trading Book Course includes case studies of real traders making real trades to clearly illustrate what you should do and what you should avoid in every trade.

The only path to successful trading is practice. The Trading Book Course provides the virtual practice you need so that you can hit the ground running toward real profits in the actual marketplace.

• Language: English
• Publisher: McGraw-Hill Education
• Release date: Dec 7, 2012
• ISBN: 9780071803373

Book preview

Copyright © 2013 by Anne-Marie Baiynd. All rights reserved. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher.

ISBN: 978-0-07-180337-3

MHID:       0-07-180337-8

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Experience is a cruel teacher—it gives the exam first, then it teaches the lesson.

—Unknown

Contents

Acknowledgments

Introduction

CHAPTER 1 Technical Recap

CHAPTER 2 Price Action

CHAPTER 3 Price Pattern Identification

CHAPTER 4 Trending

CHAPTER 5 Trade Setups and Walkthroughs

CHAPTER 6 The Mechanics of Letting Winners Run

CHAPTER 7 The 15-Minute Rule

CHAPTER 8 Gap Trades

CHAPTER 9 Wave Action

CHAPTER 10 Finding the Sweet Spot

CHAPTER 11 Dealing with Crisis

CHAPTER 12 Conclusion

Index

Acknowledgments

I would like to thank a wonderfully supportive and loving family for being who they are: a husband who always seems to know when he needs to lift my chin and encourage me when a difficult challenge faces me; children who love me in spite of my demanding, driven, and obsessive temperament; parents with indomitable spirits, who taught me that no matter how hard you get pushed down, staying down is never an option; and siblings who love me without reservation. They all continually remind me of the important things in life, and those things have nothing to do with the market.

My thanks continue for a great publisher and editorial team—they are some of the hardest-working people I have ever known—for a supportive trading community, and for Twitter friends who sometimes make me laugh so hard that I can barely breathe. I also cannot overlook StockTwits, Traders Press, Tim Bourquin, and the great folks at MoneyShow.com and the Traders Expo, to include Debbie Osborne, Allison Purcell, and the slew of busy bees who prepare superb speaking venues and book signings for me across the country and the world.

As always, and truly foremost in my mind, is my gratefulness to the Lord Jesus Christ for saving me and giving me a life of hope, joy, contentment, and peace. There is an indescribable feeling that only the believer can know; there are no empty spaces inside, no yearnings for something missing—we are complete, with our God-shaped void filled.

And finally, I’d like to thank the market for being a truly brutal and unforgiving teacher, never failing to deliver the lessons well after the exams, and always ready to prove to me that it will always be master and commander.

Introduction

Writing The Trading Book was the culmination of years of study, practice, and real application in the market. I receive e-mails and tweets often that reference the book and how much this piece of work affected the way the readers trade, and every e-mail brings a smile to my face. I wrote it to help the trader focus on the simple elements of trading with straightforward examples and approaches to the craft. In order to strengthen the principles outlined in The Trading Book, we designed this workbook to support the original material. Though this new piece of work can stand alone, it is highly recommended that you possess both pieces of work as they build off each other.

This workbook has been designed for the intermediate- to short-term swing trader and the day trader. It is not a workbook about investing and asset allocation, but one that gives you a clear way to manage your assets in the market in terms of when to enter, how long to hold, and when to begin and complete an exit. It is filled with a series of examples, each a little different from the others, with chart assessments and probable movements. Some of it may seem repetitive, but until you have consistent results, memory retention of the best formations is probably the key element that is missing from your tool kit.

It is difficult to write an introductory book of any kind, particularly one on technical trading. We all begin reading each book with a unique set of skills that we have accumulated through our exposure to the markets. Some of us are real beginners who are unfamiliar with even the concept of the market auction and buy and sell events in the markets, and some of us have a solid collection of skills, but perhaps because of our results, we call ourselves beginners (as well we should). So when we open new reading material, we are often well versed in some areas, while other concepts seem alien. As you read through this workbook, there will be some concepts that will be straightforward that you can skim over, and others that will need more of your attention. One thing is certain, though: success in trading can come only through the consistent practice and application of proper trading techniques in the right trading environment, along with strong elements of psychological control.

Preparing to trade well is like organizing a day at your favorite amusement park. No matter how carefully you plan the fun, if it is raining and 40 degrees, there will be no fun to have. The analogy is this: the best trading strategy and plan, no matter how well they are executed, will yield marginal results in poor market conditions. Therefore, the ultimate goal is to identify the proper market conditions before beginning to trade, but this turns out to be an unvalued skill among novice and inconsistent traders. If you have wondered why your results seem to be inconsistent even as your trading knowledge grows, it is quite possible that this is what you have been ignoring. As a result, our focus will combine these concepts of ideal market conditions and technical strategies.

THE NATURE OF TRADING

Markets are not all created equal. Markets change, and there are simply times when becoming involved is much more dangerous. Professionals know this very well, but novice and amateur traders believe that when they are looking for a trade setup and it arrives, it is time to trade, regardless of the surrounding formations. Whether I can convince you, the reader, of the importance of market conditions is completely up to you. I am only going to lay out the facts, and it will be your choice to make, but if you choose to acknowledge this truth, it will absolutely improve your success rate.

In order to accomplish that, I’d like to relate trading to something that most of us know about—baseball. The longer I trade, the more I relate my career to one in professional baseball. The season (our trading career) is a marathon, a game of attrition—and a season is a long time in the life of a baseball player. It is often the case that a few really bad games show up in there; we blow saves, we give up huge leads, we force errors, and, in spite of all our preparation for the oncoming pitches, we strike out. We measure our strength in wins above .500 (that’s a 50 percent win rate, for those who are unfamiliar with that statistic), and every game is a test of how ready we are to perform at our position. No doubt about it, it is all about being ready when the ball comes our way. How well we focus and how prepared we are to react to the critical event determines how well we perform at our position.

Baseball