Trend trading set-ups : entering and exiting trends for maximum profit

268 Pages·2012·22.6 MB·English

by  L. A. Little

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Trend Trading
Set-Ups
i
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Trend Trading
Set-Ups
Entering and Exiting Trends
for Maximum Profit
L.A. LITTLE
JohnWiley&Sons,Inc.
iii
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Copyright(cid:2)C 2012byL.A.Little.Allrightsreserved.
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Little,L.A.author.
Trendtradingset-ups:enteringandexitingtrendsformaximumprofit/L.A.Little.
pagescm.(Wileytradingseries)
Includesindex.
ISBN978-1-118-07269-1(cloth);ISBN978-1-118-22247-8(ebk);
ISBN978-1-118-23640-6(ebk);ISBN978-1-118-26108-8(ebk)
1.Portfoliomanagement. 2.Investmentanalysis. 3.Stockpriceforecasting. I.Title.
HG4637.L5822013
332.6—dc23
2012020177
PrintedintheUnitedStatesofAmerica
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Contents
Foreword ix
Acknowledgments xi
Introduction 1
PART I 7
CHAPTER 1 Identifying and Qualifying
Trend Probabilities 9
TrendDetermination 10
QualifiedTrendFailureProbabilities 13
QualifiedTradeFailureProbabilities 31
Summary 37
CHAPTER 2 Anchor Zones: The Key to
Timing Trades 41
AnchorBarsandZones 42
ReconsideringTradeFailures 46
Summary 54
CHAPTER 3 Broader Influences Affecting Stocks 55
SectorCongruence 59
VirtualIndustryGroups—FutureDirection 72
GeneralMarketCongruence 74
Summary 81
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vi CONTENTS
PART II 85
CHAPTER 4 Formulating a Workable
Trading Plan 89
TrendDirectionandStrength 90
TimeFrames 94
EntryandExitTiming 95
TradingSize,ScaleTrading,TradeSuccessProbabilities,
andReward-to-RiskRatio 100
EvaluatingandActingUponthePlan 104
Summary 105
CHAPTER 5 The Data behind Trend
Trade Set-Ups 107
TheOnlyTwoTypesofTradeSet-Ups 108
TradingBreakoutsandRetraces 111
BreakoutsversusRetraceTradeProbabilities 113
ProbabilitiesforTradeSet-UpScenarios 122
Summary 133
CHAPTER 6 Sideways Range Trades 135
TradeSet-UpConditionsandCategorizations 136
TradingSidewaysTrends 137
Summary 155
CHAPTER 7 Breakout and Retrace
Trade Set-Ups 157
RetraceTradeSet-Ups 158
BreakoutTradeSet-Ups 186
ConsideringOtherTradeSet-Ups 199
TradeSet-UpRationaleandThoughts 201
Summary 205