Introduction: the Journey Begins xi
Chapter 1
Subjective Doesn’t Work in the Market: Technical Analysis Is the Objective Standard 1
The Guru Syndrome 1
The Pitfalls of Fundamental Analysis 2
Technical Indicators: Adding Subjectivity to the Chart 5
Approaching the Markets Objectively 8
In Summary 14
Chapter 2
Candlestick Analysis: Using the Language of Candles to Profit from Market Moves 17
A Single Candle 18
Multiple Candle Formations 21
Failure Is Not Always Bad 29
In Summary 31
Chapter 3 Support and Resistance: Price Is King 33
Price Patterns 33
Recognizing Reference Points 36
The Two Forms of Support and Resistance: Major and Minor 40
How Support and Resistance Areas Form 46
In Summary 56
Chapter 4 Moving Averages the Right Way: Visual Aids to Price Action 57
A Valuable Technical Measurement 57
Convergence Can Help 63
Moving Averages as Focal Areas 67
Staying Objective 69
A Few Good Rules While Using Moving Averages 74
Other Points to Consider 75
Moving Averages to Find Plays 78
In Summary 79
Chapter 5 Volume Is Money: Commitment to Prices 81
Chapter 6 The Fallacies of Volume 81
Using Volume Properly 85
The Primary Uses of Volume 87
Volume As It Relates to Tradability 98
In Summary 101
Chapter 7 Retracement Analysis: Using Retracement Analysis to Continue Your Move 103
The Concept of Retracements 103
To Retrace or Not to Retrace? 106
Retracements Imply a Trend 107
Continuing To Keep It Objective 111
What Lies Beyond 60 Percent? 111
Retracement Levels in Downtrends 114
A Special Retracement Pattern 115
Retracement Levels in Sideways Trends 117
What Lies Beyond 100 Percent? 118
The Bigger Picture 121
In Summary 123
Bar-by-Bar Analysis: Each Bar Tells Us Something 125
Objectivity Is Still the Goal 126
A Quick Review of Individual Bars 126
How the Bars Interact 128
Additional Thoughts 135
In Summary 137
Chapter 8 Market Internals: Examining the Direction of the Market 139
Determining Price Movement 141
When to Be Different 143
Contents ix
Favorite Market Internals 143
A Quick Overview of Intermarket Analysis 157
In Summary 158
Chapter 9 Relative Strength: Relative Strength Defined 159
Chapter 10 Identifying Different Types of Relative Strength 160
Is Relative Strength Always Good? 166
Relative Strength and Weakness with Morning Gaps 170
Relative Strength with Sector Analysis 172
Relative Strength to Market Internals 173
In Summary 174
The Trend Is Your Friend: There Are Only Three Directions 177
What Makes a Trend? 178
Pivots 178
When Pivots Come Together 182
Some Subjective Guidance 186
Keeping It Clean 188
Checking the Reaction 192
Final Thoughts 198
In Summary 200
Chapter 11 Shoot the Gap: What Is a Gap? 203
What Causes a Gap? 206
Fallacies about Gaps 207
Gaps and the Daily Chart 209
The Intraday Play 214
In Summary 219
Chapter 12 Frame-by-Frame: The Concept of Multiple Time Frames 221
Which Time Frames? 221
The First Goal of Using Multiple Time Frames 223
A Powerful Concept Emerges 228
Warning Signs in the Micro Trend 230
Hidden Patterns 233
In Summary 236
Chapter 13 Making Failure Work for You: Recognizing When Patterns Fail 239
Did the Play Stop, or Did the Pattern Fail? 241
When Good Patterns Fail 242
Capitalizing on Predictable Failures 246
Expected (or Unexpected) Failure 248
In Summary 250
Chapter 14 Manage the Trade and the Money: The Missing Link 253
Chapter 15 Managing the Money—Share Size 253
How Much to Risk 257
Managing the Money—Throughout the Day 259
Considerations When Swing Trading 260
Basic Trade Management Concepts 262
Managing the Trade—Staying with the Trend 264
Managing the Trade—Zooming Down 265
In Summary 267
Getting Through a Typical Trading Day: Strategies to Incorporate into Your Daily Routine 271
Beginning Your Day 271
Planning Your Trade, Trading Your Plan 273
After the Close 275
Maximizing the Winners, and Handling the Losers Properly 277
Chapter 16 There Is Only One Truth in the Markets 279
Price Is King 279
Appendix A: Abbreviations 283
Appendix B: Trade Types 285
Glossary 287
About the Companion Website 299
Index 301
