John Person - A Complete Guide to Technical Trading Tactics

288 Pages·2005·7.93 MB·English

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P-00_4218 4/26/04 3:32 PM Page iii
A
Complete
Guide to
Technical
Trading
Tactics
How to Profit Using Pivot
Points,Candlesticks &
Other Indicators
JOHN L. PERSON
John Wiley & Sons, Inc.
P-00_4218 4/26/04 3:32 PM Page viii
P-00_4218 4/26/04 3:32 PM Page i
A
Complete
Guide to
Technical
Trading
Tactics
P-00_4218 4/26/04 3:32 PM Page ii
Founded in 1807, John Wiley & Sons is the oldest independent publishing
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P-00_4218 4/26/04 3:32 PM Page iii
A
Complete
Guide to
Technical
Trading
Tactics
How to Profit Using Pivot
Points,Candlesticks &
Other Indicators
JOHN L. PERSON
John Wiley & Sons, Inc.
P-00_4218 4/26/04 3:32 PM Page iv
Copyright © 2004 by John L. Person. 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,
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Library of Congress Cataloging-in-Publication Data
Person, John L.
A complete guide to technical trading tactics : how to profit using pivot
points, candlesticks & other indicators / John L. Person
p. cm.
“Published simultaneously in Canada.”
Includes bibliographical references and index.
ISBN 0-471-58455-X (cloth)
1. Stocks—Charts, diagrams, etc. 2. Investment analysis. 3. Futures.
4. Options (Finance) I. Title.
HG4638 .P47 2004
332.63′2042—dc22
2003026687
Printed in the United States of America
10 9 8 7 6 5 4 3 2 1
P-00_4218 4/26/04 3:32 PM Page v
Contents
Preface ix
Acknowledgments xv
CHAPTER 1 Introduction to Futures and Options:
Understanding the Mechanics 1
How the markets work, the elevator analogy, product for the times, important
terminology such as margin, contract specifications, and leverage
CHAPTER 2 Fundamentals:
The Market Driver 19
Supply and demand issues, economic growth and productivity effects, major eco-
nomic reports and their in role in market prices
CHAPTER 3 Technical Analysis:
The Art of Charts 33
Western-style bar charts and key reversals, point-and-figure charts that focus only
on price, market profiling, price and time analysis
CHAPTER 4 Candle Charts:
Lighting the Path 43
Enlightening charting technique and its colorfully named patterns—hammers,
stars, spinning tops, dojis, hanging man, and others—powerful reversal patterns,
reliable continuation patterns, key examples in the dollar and bonds
v
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vi CONTENTS
CHAPTER 5 Chart Analysis:
Volume, Open Interest, Price Patterns 67
Volume and open interest rules for traders, M tops and W bottoms, trend lines,
measuring patterns, the head-and-shoulders, triangles, pennants and flags, dia-
monds, wedges, funnels, gaps, islands, rounded bottoms, oops signals, opening
range breakouts
CHAPTER 6 Pivot Point Analysis:
A Powerful Weapon 93
The pivot point formula for target trading, calculating support and resistance lev-
els, importance of multiple verification from several sources, the P3T trading tech-
nique, weekly and monthly charts and numbers, risk management techniques
CHAPTER 7 Day-Trading, Swing Trading:
Acting on Analysis 113
Trading to bounce off target numbers, calling tops and bottoms, weekly chart
magnets, harami cross and other candle clues to market reversals, pivot points
save the day, lining up the stars, the verify-verify-verify approach
CHAPTER 8 Technical Indicators:
Confirming Evidence 135
Moving averages and trends, simple rules with averages, tweaking and visualizing
MACD, stochastics, false signals, Gann’s key numbers, Fibonacci ratios and projec-
tions, time counts for cycles, Elliott wave and its clues
CHAPTER 9 Market Sentiment:
What Traders Are Thinking 161
Getting a market consensus from contrary opinion, Commitments of Traders
reports, margin rate changes, Market Vane Bullish Consensus report, put-to-call
ratios, volatility index (VIX), when the boat is tipping over, media effect
CHAPTER 10 Order Placement:
Executing the Plan 171
Importance of getting an order right, online platform concerns, impact of market
conditions on orders, 14 top order entry selections you need to know, orders in
after-hours trading, spreading concepts