Table Of Content

Page 1 of 8 3 The information in this book was derived from a live training we did in front of 1,100 traders. It is an advanced guide to investing in the currency markets using a layered approach. Just like Warren Buffet uses several points of reference before making an investment decision, I use a 5-step process to make currency trading decisions. Please read this guide carefully and take notes. If you have any questions, then don’t hesitate to email [email protected] ThePatternTrader.com Page 2 of 83 Copyright Notice. All materials and software published on or used in this document are protected by copyright, and are owned or controlled by Mark Shawzin and www.thepatterntrader.com. UNAUTHORIZED COPYING, REPRODUCTION, REPUBLISHING, UPLOADING, POSTING, TRANSMITTING, OR DUPLICATING OF ANY OF THE MATERIAL IS PROHIBITED. You may use any materials for personal, noncommercial, and informational purposes, provided that the documents are not modified and provided you maintain and abide by all copyright, trademark, and other notices contained in such material or if none, you include the following copyright notice in such downloaded materials: © Copyright The Pattern Trader. All rights reserved. All use subject to Terms and Conditions of Use set forth here. Page 3 of 83 CHAPTER 1 The Man Who Got Kicked  Off Wall Street My name is Mark Shawzin. By the way, I’m the guy on the left. The little guy on the right is my son Elon whom I love and adore. Right now, I’m known as one of the most successful market reversal pattern traders with over 1,000 traders following my analysis online today. However, it wasn’t always like this. I started my career all the way back in 1979. My father was doing business with a fellow named Graham Loving who was an investment banker. On the side, Graham was trading the commodity futures markets. Everything from cocoa to orange juice to pork bellies to gold, silver, and anything that had a price fixed to it. He was doing this very, very simply, using a price action methodology. You have to remember that this was 1979. I don’t know if you remember back then, but it was a very turbulent and chaotic economic time. Page 4 of 83 You had gas embargos by the Gulf States, you had gas lines in the United States, you had oil going crazy, you had gold for the first time running to $1,000. The Hunt Brothers cornered the silver market and the silver ran to $50. It was just a crazy time in the investment markets. At that time, Graham was trading everything under the sun using a very simple price action trading methodology. He got a simple piece of graph paper with an X and Y-axis and he drew a graph with price and time. He put cocoa at the top, or live hogs, or whatever he was trading, up to about 22 different markets. Every day, he would just plot the closing price from one level to the other, and after a couple weeks, it would form an uptrend or a downtrend. He used to say to me, “Mark, I simply want to buy a market that’s going up or sell a market that was going down.” Graham was very kind enough to take me under his wing and teach me all this technical price action methodology. At this time, I was in my last year of USC Business School wondering what I was going to do for a career. I was taking investment courses that taught me how to evaluate investments based on fundamental information. Basically, you had to examine Page 5 of 8 3 all the investment metrics in order to make a determination when to buy or sell something. Now, Graham was just showing me how to make that determination on some very exotic instruments, looking at only the prices. It was that simple exposure to Graham that launched my career. I knew what I wanted to do and I was seeing the money that he was making. He was making so much money that when he invited my dad to join him in a trading account, my dad leaped at the chance. In 1979, my dad put in about $50,000 and Graham put in $450,000 into a trading account so all told, they had $500,000 about at the start of the year. At the end of that year, that account was well over $5 million, again, just using a very simple price action strategy. I remember Graham used to come over for dinner or stay overnight and in the morning, he would get up and watch the financial news channel. They would have the commodity clacker boards. They were called the clacker boards because they were actually metal so that when the prices turned over, you could hear this constant clacking in the background. Page 6 of 83 Every day, Graham would wake up and gold would be limit up because of all the embargoes and things of that nature. He was just making money hand over fist. Of course, I thought this would be an interesting way to make a living. So it was based on what Graham exposed me to that I started building a career and a journey in trading. My first job in 1980 was at Merrill Lynch. I never just wanted to be a customer man, taking orders over the phone. I really wanted to learn how to trade the markets and be financially independent for myself. I began at Merrill Lynch. I eventually started a commodity division for EF Hutton and went on to work for four major Wall Street firms over the ensuing decade. Over that time, I evolved a trading strategy that was authentic to myself that was based on the simple principles that Graham had exposed me to. The next decade spent on Wall Street, I developed different nuances and other ways to approach the market that was very, very successful. On the basis of that, I was able to attract very high net worth investor accounts as well as small institutional accounts to trade. Page 7 of 83 I was doing fantastically, making money hand over fist and then I basically lost everything due to a very bad decision I made. At one point, my brother shared with me some information on a company he was looking at. I ended up buying the stock. I never understood that eventually it came to pass that my brother learned about it by virtue of inside information, and I got entangled with the SEC in a nine-year lawsuit. I tried to tell them that I had nothing to do with it and I had no inside knowledge. At the end of the day, I didn’t even pay a fine, but it ended up putting a blemish and a stain on my career, and effectively my time on Wall Street was over. As I tell my son, when one door closes, another one opens. It was actually the best thing that happened to me. In 2002, my son was born and I ended up wanting to spend a lot of time with him. So I decided to be a stay-at-home dad. To make money, I ended up taking all the things that I learned in the markets, while on Wall Street, and applied it to my own small account and myself. Page 8 of 83 I very quickly grew it to a sizable account just trading from home. Then in about 2010, I met Peter Visser. We talked about my trading strategies. He quickly became very fascinated with what I was doing. He kept pestering me about doing something online. He wanted me to sell my services and my knowledge. Frankly, I really resisted the notion of doing this. I liked being independent. I didn’t want the pressure of having a lot of retail investors. I really resisted his attempt for many, many years up until early 2015. He came to me and he said that he would do all of the grunt work that I didn’t want to do. He would do the website, the marketing, and just leave the trading to me. Eventually, I agreed to Peter’s proposal and we kicked off the Pattern Trader. It’s become very, very successful very, very fast. It’s always fascinated me that the statistics in this industry are really so poor. Page 9 of 83 It’s estimated that greater than 98% of traders in the Forex world actually lose money. It’s estimated that greater than 98% of traders in the Forex world actually lose money. After online trading became available, I started noticing most of the things that you have been exposed to and taught are dead wrong. I often get emails from my competitors giving me all kinds of hype and different ways of trading that I know aren’t going to work on a consistent basis. MISCONCEPTION #1 There are several misconceptions and big lies that you’ve been exposed to. Of course, the first big lie is that Internet marketers would have you believe that their past results mean that you can make money using their systems. This simply isn’t true. Now, coming from Wall Street onto this online world, I couldn’t believe what I was seeing. There was one big lie, and while people on Wall Street would never fall for it, it was different in the retail Forex world. So let’s put this to bed... Page 10 of 8 3