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The Big Trade: Simple Strategies for Maximum Market Returns PDF

162 Pages·2013·3.25 MB·English
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Contents Acknowledgments Preface Chapter 1: Breaking with Tradition Then I Got High Training Sequence Technical Difficulties Reading Is Fundamental Inductively Coupled Failure The Big Trade We’re Getting the Band Back Together Summary Chapter 2: The Conditions of Change Livin’ on the Edge Closing Time The Outsiders Living Day to Day Sold to the Highest Bidder Breaking It Down Finites Move in Infinite Markets Summary Chapter 3: Wax On, Wax Off What Goes Around Comes Around It’s Always Noon Somewhere Opening Range Jitters Objects in Motion Summary Chapter 4: As the Market Turns . . . Subconscious Implications Elephant Walk Breakouts versus Reversals Losing Your Inhibitions Reversal of Fortune Traders Do It with Frequency Rules of Engagement Turn Around and Make Money Heading for the Exits Becoming a Reactionary Summary Chapter 5: The Range Is Your Friend Sideways Waves of Sentimentality Where Are They Now? The Edge of Value The Great One Summary Chapter 6: Closing Arguments Crossing the Great Stream Pressing the Issues The Point of the Journey Is Not to Arrive Summary Appendix A: Terms and Definitions Appendix B: Trading Examples Appendix C: Spreadsheet Examples Appendix D: Supporting Data for Nvidia Example in Chapter 4 About the Author Index Copyright © 2013 by John Wiley & Sons Singapore Pte. Ltd. Published by John Wiley & Sons Singapore Pte. Ltd. 1 Fusionopolis Walk, #07-01, Solaris South Tower, Singapore 138628 All rights reserved. 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 expressly permitted by law, without either the prior written permission of the Publisher, or authorization through payment of the appropriate photocopy fee to the Copyright Clearance Center. Requests for permission should be addressed to the Publisher, John Wiley & Sons Singapore Pte. Ltd., 1 Fusionopolis Walk, #07-01, Solaris South Tower, Singapore 138628, tel: 65-6643-8000, fax: 65-6643-8008, e-mail: [email protected]. 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 the author shall be liable for any damages arising herefrom. Other Wiley Editorial Offices John Wiley & Sons, 111 River Street, Hoboken, NJ 07030, USA John Wiley & Sons, The Atrium, Southern Gate, Chichester, West Sussex, P019 8SQ, United Kingdom John Wiley& Sons (Canada) Ltd., 5353 Dundas Street West, Suite 400, Toronto, Ontario, M9B 6HB, Canada John Wiley& Sons Australia Ltd., 42 McDougall Street, Milton, Queensland 4064, Australia Wiley-VCH, Boschstrasse 12, D-69469 Weinheim, Germany ISBN 978-1-118-49895-8 (Hardcover) ISBN 978-1-118-49896-5 (ePDF) ISBN 978-1-118-49898-9 (Mobi) ISBN 978-1-118-49899-6 (ePub) This book is dedicated to all friends and loved ones as well as those who have provided me with support and challenged me to continuously improve, not only as a professional but as a person. Acknowledgments I would like to thank everyone who has an interest in the markets and trading, as you were the inspiration for me to codify my methods and share them with those who are interested in seeking an alternative trading strategy. I would also like to thank the team at AlphaVN.com, who have risen to the challenge of building something of value from very humble beginnings. Preface Over four centuries ago, the invention of both the telescope and microscope brought new focus to a data measurement revolution. The ability to bring far away objects closer and make tiny objects bigger opened the world and sky up to new levels of observation. The science of optics fed our curiosity and ignited our imaginations. Today our world is awash in data; we are swimming in it. We call this the Information Age but we could just as easily call it the Data Age. The art of statistics and the use of Big Data are leading to revolutions in fields as diverse as the physical sciences, sports, and economics. It doesn’t matter if you’re the general manager of a hockey club or a process engineer working for a solar cell manufacturer, data is your work’s lifeblood, and without accurate and precise data we would not have been able to make the kinds of strides we have. This use of data is spearheading a decision-making revolution that is changing the very foundations of our society. Similar to how the use of optic lenses four centuries ago paved the way for the Age of Enlightenment, we are living through a leap forward in the types and quality of observations we can make about our world. No longer are we intuiting our decisions based on a mix of anecdotal evidence and supposition. We can make an observation, test its validity, and make decisions based on it. Data is at the heart of how we conduct business and how prices paid form markets for our goods. Over the past decade I’ve had the pleasure to stumble upon this big and small data phenomenon in my pursuit of understanding capital markets. What I have discovered is that data-driven discovery is fundamentally changing the way our lives work, and those who master its manipulation will have an inherent competitive advantage over their peers. This is especially true in the capital markets, where quantitative analysis mixed with the brute force of vast amounts of capital create a very hostile environment for the individual investor. It is my hope that this book will help level that playing field a little bit for you. As I said, we live in a world steeped in data. Information comes screaming at us in waves and it is easy to be overwhelmed by it, become lost in it. Big Data can and often does overwhelm the smallest actor. But it doesn’t have to. The bigger they are, the harder they fall. One person with an idea and the will to implement it in this age of unprecedented access to high-quality information can disrupt things, and use it to their advantage. Previously, information itself was the barrier to entry into the markets. Today, the biggest worry for most established players is not innovating by producing new information but keeping information under their control and away from you. Think of the music industry or Apple’s patent litigation against Samsung and you have an idea of where we’re headed. Take heart, because inside of each of us is our Big Idea. I believe that. Everyone has at least one, biding its time and waiting for you to believe in it. With time, attention, and the proper use of Big Data, we all have the means to see our Big Idea become real. It’s simple, really, when you stop to think about it. It is a little thing in a big world, but it is the secret to finding and making The Big Trade.

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A powerful, profitable, and elegantly simple system for tradersMarkets can be extraordinarily complex, and unfortunately most trading systems are too. The Big Trade presents a new system that helps filter out the noise. It leaves behind only meaningful signals you need to listen to in order to make
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