Other titles by Smith: Option Strategies, Third Edition, Seasonal Charts For Futures Traders, Commodity Sp
Table of Contents
Preface xi
CHAPTER 1 The Basics of Foreign Exchange Trading 1
Sell a Yard of Cable 2
Don’t Want to Trade! 4
Transaction Costs 7
It Never Stops 8
My Biggest Losing Trade 8
The Bottom Line 11
CHAPTER 2 Trend Analysis 13
What Is a Trend? 14
How to Profitably Trade Bull and Bear Markets 18
How to Trade the Trend 21
Megaphones and Pennants 25
Average Directional Index 27
The Bishop 28
The Bottom Line 30
CHAPTER 3 Channel Breakouts 31
The Beginnings of Channel Breakouts 31
What Is a Channel Breakout? 32
Better Channel Breakouts 35
The Pros and Cons of Channel Breakouts 39
The Bishop 40
ADX Filter 43
The Principle of Instant Gratification 46
Rejection Rule 46
The Last Bar Technique 51
Tactics 52
Taking Profits 52
The Bottom Line 53
CHAPTER 4 The Conqueror 55
The Beginnings of the Conqueror 55
What Is True Range? 56
Enhancing the Conquistador 57
Adjusting the Stop 63
The Bottom Line 65
CHAPTER 5 Stochastics 67
What Are Stochastics? 67
How to Use Stochastics as an Overbought and Oversold Indicator 69
Trading Signals from Crossovers 71
Profitability of Stochastics 74
Warnings 75
The Best Way to Make Money Using Stochastics 76
Go with the Trend 81
How I Use Stochastics 81
Interview with George Lane 82
The Bottom Line 89
CHAPTER 6 Pattern Recognition 91
Inside Days 91
Double Whammy 94
Multiunit Tactic 95
Reversal Days 97
Riding the Rejection Rule 101
The Bottom Line 103
CHAPTER 7 Risk Management 105
Stopping Bad Risk Management 105
How to Make Sure We Are Never Wiped Out 108
Good Risk Management: Fixed Fractional 108
How Many Contracts Should I Put On? 109
Highly Correlated Positions 109
Kelly Formula 110
Trade Your Equity Curve 114
Take a Time Out 115
Turning Poor Systems into Good Systems 115
How Big a Position Should I Take? 116
The Bottom Line: Diversify through Time 117
CHAPTER 8 Slingshot 119
The Importance of Minimizing Losses 120
Beware of Taking Profits Too Early 121
Psychological Profits 122
Confirmations 123
Maximum Excursion Analysis 124
Using the Slingshot for Profits 125
The Mini-Slingshot 128
The Bottom Line 130
CHAPTER 9 The Psychology of Successful Trading 131
Why Do You Trade? 132
The Pressures of Trading 136
Why Do You Lose? 137
Addressing a Lack of Knowledge 138
Addressing a Lack of Capital 140
Addressing a Lack of Self-Discipline 141
An Example of Overcoming the Bizarre Twists and Turns of the Mind 143
Treat Trading as Education 144
Stress-Free Trading 147
Be the Casino 148
Developing Your Trading Plan 149
Filling Out the Plan 150
The Importance of a Postmortem 153
The Bottom Line 155
CHAPTER 10 Putting It All Together 157
Diversifying to Reduce Risk 157
Use a Mental Checklist 158
How to Trade Only One Method 159
The Bottom Line 160
Epilogue: Key Insights for Maximizing Your Trading Profits 161
Appendix: Suggested Reading 177
Acknowledgments 179
About the Author 181
Index 183
