Jason Alan Jankovsky

209 Pages·2007·2.22 MB·English

ffirs.qxd 9/20/06 10:33 AM Page i
Trading
Rules
that Work
ffirs.qxd 9/20/06 10:33 AM Page ii
Founded in 1807, John Wiley & Sons is the oldest independent publishing
company in the United States. With offices in North America, Europe, Aus-
tralia, and Asia, Wiley is globally committed to developing and marketing
print and electronic products and services for our customers’ professional
and personal knowledge and understanding.
The Wiley Trading series features books by traders who have survived
the market’s ever changing temperament and have prospered—some by
reinventing systems, others by getting back to basics. Whether a novice
trader, professional, or somewhere in-between, these books will provide
the advice and strategies needed to prosper today and well into the future.
For a list of available titles, visit our web site at www.WileyFinance.com.
ffirs.qxd 9/20/06 10:33 AM Page iii
Trading
Rules
that Work
The 28 Essential
Lessons Every
Trader Must Master
JASON ALAN JANKOVSKY
John Wiley &Sons, Inc.
ffirs.qxd 9/20/06 10:33 AM Page iv
Copyright © 2007 by Jason Alan Jankovsky. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted
in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or
otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright
Act, without either the prior written permission of the Publisher, or authorization through
payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc.,
222 Rosewood Drive, Danvers, MA 01923, [phone], fax [phone], or on the web
at www.copyright.com. Requests to the Publisher for permission should be addressed to the
Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030,
[phone], fax [phone], or online at http://www.wiley.com/go/permissions.
Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their
best efforts in preparing this book, they make no representations or warranties with respect
to the accuracy or completeness of the contents of this book and specifically disclaim any
implied warranties of merchantability or fitness for a particular purpose. No warranty may
be created or extended by sales representatives or written sales materials. The advice and
strategies contained herein may not be suitable for your situation. You should consult with a
professional where appropriate. Neither the publisher nor author shall be liable for any loss
of profit or any other commercial damages, including but not limited to special, incidental,
consequential, or other damages.
For general information on our other products and services or for technical support,
please contact our Customer Care Department within the United States at [phone],
outside the United States at [phone] or fax [phone].
Wiley also publishes its books in a variety of electronic formats. Some content that appears
in print may not be available in electronic books. For more information about Wiley
products, visit our web site at www.wiley.com.
Library of Congress Cataloging-in-Publication Data:
Jankovsky, Jason Alan, 1961–
Trading rules that work : the 28 essential lessons every trader must master /
Jason Alan Jankovsky.
p. cm. — (Wiley trading series)
Includes bibliographical references and index.
ISBN-13 978-0-471-79216-1 (cloth)
ISBN-10 0-471-79216-0 (cloth)
1. Speculation. 2. Investment analysis. 3. Futures. 4. Foreign exchange.
I. Title. I. Series.
HG6015.J36 2007
332.64—dc22
2006014076
Printed in the United States of America.
10 9 8 7 6 5 4 3 2 1
ffirs.qxd 9/20/06 10:33 AM Page v
The fault, dear Brutus, is not in our stars,
but in ourselves, that we are underlings.
—William Shakespeare
ffirs.qxd 9/20/06 10:33 AM Page vi
ftoc.qxd 9/20/06 10:34 AM Page vii
Contents
Acknowledgments ix
Introduction xi
PART I Getting in the Game
RULE #1 Know Your Game 3
RULE #2 Have a Trading Plan 9
RULE #3 Think in Terms of Probabilities 15
RULE #4 Know Your Time Frame 23
PART II Cutting Losses
RULE #5 Define Your Risk 31
RULE #6 Always Place a Protective Stop 37
RULE #7 Your First Loss Is Your Best Loss 43
RULE #8 Never Add to a Loser 47
RULE #9 Don’t Overtrade 51
PART III Letting Profits Run
RULE #10 Keep Good Records and Review Them 59
RULE #11 Add to Your Winners 65
vii
ftoc.qxd 9/20/06 10:34 AM Page viii
viii CONTENTS
RULE #12 Use Multiple Time Frames 71
RULE #13 Know Your Profit Objective 77
RULE #14 Don’t Second-Guess Your Winners 83
Part IV Trader Maxims
RULE #15 Know the Limits of Your Analysis 91
RULE #16 Trade with the Trend 97
RULE #17 Use Effective Money Management 105
RULE #18 Know Your Ratios 111
RULE #19 Know When to Take a Break 117
RULE #20 Don’t Trade the News 123
RULE #21 Don’t Take Tips 129
RULE #22 Withdraw Equity Regularly 133
RULE #23 Be a Contrarian 137
RULE #24 All Markets Are Bearish 143
RULE #25 Buy/Sell 50% Retracements 149
RULE #26 The Only Indicator You Need 155
RULE #27 Study Winning Traders 161
RULE #28 Be a Student of Yourself 167
Conclusion 173
Recommended Reading 179
About the Author 183
Index 185
flast.qxd 9/20/06 10:35 AM Page ix
Acknowledgments
Special thanks to those helped me stay focused on completing this
manuscript on time: my editor, Kevin Cummins, who just let me
work but reminded me that deadlines are part of the business; Emilie
Herman at Wiley for being so patient with my lack of computer skills and
endless questions; the staff at Infinity Brokerage and ProEdgeFX, who al-
lowed me to work after hours with company equipment to finish the manu-
script; Jim Cagnina and Jim Mooney at Infinity, who encouraged Wiley to
sign with me even though this was my first real publishing opportunity;
and my family, who encouraged me to stay with it when the work seemed
overwhelming. Thank you all.
ix