Jake Bernstein - The Compleat Day Trader Vol I

242 Pages·1980·9.15 MB·English

The Compleat
Day Trader

Trading Systems, Strategies, Timing Indicators,
and Analytical Methods

Jake Bernstein
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Contents

Preince ue
Adknoniedgments xi

sntroduetion

‘Tue Fort Bediod Laceased Vallhy 1
‘The Crmputer Revolution and Trading 2
Aavmnces i Sureet Quotation Spares, 3

The international an Permelic Palucal Backdrop 3
Uesponstoliios and Goals a Ine Day Trader 8
‘About hie Book

Beware of val Tales 5

Stho Succeeds and Who Fils Qualities for Success 5
‘Whit The Bool Gannoe md Wl Nat Door You &

No wsaggerated Clams 10

Povour Own Heasareh 40

Gating Started 14

‘Waid Lona vutures Trading 12

1. The Bastes
Definition of Terme 13,

2. Wht a Day Teader tx and Wust a Day Trader Doce

What Boos a Tg Tender Trude? 18

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38
i contents

9. The Iluslon af System Testing

System Develapuscac 23,
Waariea trading System? 26

hats et? as

Muntcta Change—Market Porelyuste Change 20
Sirirg toe Sclutens 27

Freroke avril InteMgerce | 27
Tmplcations for the Futire 39

|. Day Trading with Moving Avcrages

Moriag average Basins 30
rauidona Movang Aveoye: Syonems: Assets and sbi,
Moning hverage CronemerePoce vraus MA
Moog Sowrogr ag Support aad Reselamen | $8

5. Intraday Application of Stockastioa

ng Slornsatios Quicely and Simply 49
“he baale Sider eestor 4

Basie apprenehes fo SUTrowag 43

Intraday Stochastic POF: Defonsion 47
Sharanucters 48

Markets in Which SP Works Well 52

Hicand Rio Trading Thing te SP 82
Yariaton om ie Thee el SP 8S

‘Whine Yon can Expect 5a

Prefered Workeieter SP Applicaton 55)

3. ape, Gaps, Gane

Uap Tending Rules and Detttans 58
Sie Observations aboot ihe Gap Technique 65
Get Some Eaperienee 70

Gop Sloe and Penetration Size 71

Witt Yeu Cau Realstealy Papert. 71

[New Last Word sbost Slop Ordre 72

. Support and Resistance: the "MAC"

the Moving average Chowne 74
How Supper! tnd Recmtance Doveop during the Day 78
Determining Ped, Suppate, and Reciamerce 74
‘racing yatboe ae Establiied rend 20

Ensting PonilonaTughe of Wang 80,

Stdniys Trea Teadiig —Treding within tbe Chanael 2
‘Aow Precautions and Suggestions 8

Sag cis Channel Technique si Ouser Methods 64
Enaaton of he MAC

‘Using Wilder's RSI for Day Tradiog

Decnyg be Pre Deriatte, 28
[Rates 2 Day Yeading oth the RSI 89

23,

30

87
©. Using Intraday Momentam
10, Rate of Change in Day Teading

12, Intraday Chimne! Breakout
ot tae Channel Breatiout System Works 108

12, Teaditione! Methade nf Techntest Analysis and Day Trading

‘Tend une Anaya 11
‘Tren Lite Appictlons—hart Formations, 115

19, A Unique Oselllator for Day Trading

pens verona Clones 123
‘Ehnecrucdon ofthe O/C Toe mtreday Taguig 128

14, Soniping the Markets

Way Sealping® 151
Rule forseaiing 132

‘Siugerted Methods of Sealping | 382

‘Buyin nto Large Declines or GeRing into Large Rales 130

18, Importance of Order

une You Should Xow abort Merket Orders LAL
Markcell-Toorve I te
Hicersamyron)Oraere 14S

‘Stop Orders 143

Slop Lunt Ordese 14
BiontTU-taneeied GTC) Orcers 144

Ope Canals the Deber (000) 144

Doing Ordere Your Atvanlage 14

16, How Seasonelity Affects Barnet

Defining Fry Seasonal Dares 148
How to ive tue Rey Seasonal Dave Teeneioa 19,
Bey Semen Tendencies 160

17, intraday Spread Trading

Prevehstins The Key to Prilabe Spread Dry Tracing 163,
Melons of Spresd Day Trading 10%
‘What You Ca Realitealy Expect 160

18, The Conncentive Closes System

Deftotinsind Signs 170
Bow te CU Syocean Opeentes 172

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130

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170
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Contents

10, Sentiment Reigne Supreme

Delning Seatinent 176
‘Rvaily Sentomen ex—ideal fr ShorL-Tesm Trading
‘Rill Hstoreel Overton 77

ADSL Day- Trading fppication 178

Sisualtmg Market Sonteoert Reladonstans 178
The impertonee of Market Seutunent 178
DStHisteriet Dats 185

20, Critical Time of Day (CTOP)

Basic CTON Sigialn nd Verametere 169.
pe and Seggeatine or Using CTO TBS

21. Putting tt aD Together

29, The Peyohology af Day Trading
A Sueeessink Pay Tratha Needs Dusipine 186

23, The Impact of 24-Hour Trading on Day Trading

24, Twenty Keys to Success

Day Trader

Appendte. Formulae

178

186

aor

197

207

an

220
Preface

Kor many years, fonzres traders have been fascinated with the idea of
day trading. Increased market volatility has created large intradsy price
swings which, in tum, have provided numerous epporrunities fer the
day trader

Tn addition 1o the increase in opportunities, the wide availabilty of
relatively low-priced computers and soffsare hag helped narrow the
‘gap between the professional day trader and the novice.

The bok you are about to evad contains many different methods of
day trading. Take the time to learn, study, and track the mnethosts. Then,
arler you have lestned the techniques you vant to use, begin trading, But
dont plunge in before you have spunt wore time learning, the methods.

(One last paint before you bugin your reading. Do nol believe for even
cone scwund that Jay trading fe wags. Day Umding may, i fact, he more
difficui than position trading, In the fal snalysiv day wading Is not the
proverbial “piece of cake” thats many traders seek. [t anyone tells yout
that yon can day trade your way to riches with little effort they're
wrong. Day ading lakes work, work, and more work. If you do the
work, you'll eeap the rewards, [ts thal simple and its that complicated,

Twish you success ia your venture, LL | can be of assistance, please cal
cor write me,

eke Berestein

Acknowledgments

| wish to extend a special word of thuiks tu Cummodity Quote Graphics
of Glenwood Springs, Calonadu, for permission to reprint charts from
theiz outstanding quotation, ‘graph:cs hardware and soltwrare program,
SYSTEM ONE. I have bean a COG customer for many years and tind
their services quttanding as well as especially useful for the purpose af
day trading.

Tam alsa imdebted to Mr, Bill Crnz of Omege Revearch in Misuni,
Hlorida, or inv assistance and permission to use reperts generated by
Jhis excelent analytical and testing sortware programs, TradeStalion ant
Systeeniriter, Both programs make the job of historical testing and
tain development enjoyable and efficient.

(Naturally, I owe considerable tanks to the many traders I've knows
Hhrough che years who have contributed ta my knowledge of Ue anar-
Ikels. You all nn wha you ave ve loarued from each and every one of
YoU, My list i far too lengthy fy include heze; however, | am thankful to
all who have touched my life with their upicions, suggestions, systerns,
‘methods, and timing indicators

My hard-working office staft must also 9¢ commended for their
efforts in the piodcsion of this hook. | am not casy tu work with. |
change my mind toa easily and too quickly although all \wrns out well
im the long run. Special thanks to Linda, Denise, and Rob. Patrick gebs
an extra note of thunks for editing ond pasting up the manuscript. And,
‘of course, thanks 49 Chis for his progratmening work.