Pasadena, CA, 1983.
Hurst, J.M., The Profit Magic of Transaction Timing, Prentice-Hall,
Englewood Cliffs, NJ, 1970.
Jiler, W.L., How Charts Can Help You in the Stock Market, Trendline, New
York, 1962.
Jiler, H., Ed., Guide to Commodity Price Forecasting, Commodity Research
Bureau, New York, 1971. Jorion, P., Value at Risk, John Wiley & Sons, New
York, 1996.
Kaufman, P.J., Commodity Trading Systems and Methods, Wiley, New
York, 1978.
Kaufman, P.J., Technical Analysis in Commodities, John Wiley & Sons,
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FT Press, Upper Saddle River, NJ, 2007. MacKay, C., Extraordinary
Popular Delusions and the Madness of Crowds, Three Rivers Press, New
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Magee, J., Winning the Mental Game on Wall Street, 2nd ed., W.H.C.
Bassetti, Ed., St. Lucie Press, Boca Raton, FL, 2000.
Magee, J., and W.H.C. Bassetti, Introduction to the Magee System of
Technical Analysis, St. Lucie Press, Boca Raton, FL, 2002.
Mandelbrot, O., “A MultiFractal Walk Down Wall Street,” Scientific
American, February 1999, June 1999, 280, 70-73.
McMillan, L.G., Options as a Strategic Investment, New York Institute of
Finance, New York, 1993.
Murphy, J.J., Technical Analysis of the Futures Markets, New York Institute
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Niederhoffer, V., The Education of a Speculator, John Wiley & Sons, New
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Nison, S., Japanese Candlestick Charting Techniques, New York Institute
of Finance, New York, 1991. Nison, S., Beyond Candlesticks, John Wiley &
Sons, New York, 1994.
O'Neil, W.J., How to Make Money in Stocks, 2nd ed., McGraw-Hill, New
York, 1995.
Patel, C., Technical Trading Systems for Commodities and Stocks, Trading
Systems Research, Walnut Creek, CA, 1980.
Pring, M., Technical Analysis Explained, 2nd ed., McGraw-Hill, New York,
1985.
Pring, M.J., Technical Analysis Explained, 3rd ed., McGraw-Hill, New
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Schultz, J.W., The Intelligent Chartist, WRSM Financial Services, New
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Schwager, J.D., A Complete Guide to the Futures Markets. Fundamental
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Index
A
ABC Vending Corp., 455, 576, 579
Absolute certainty, 275
Accelerating Downward Trend, 68
Accumulation, 14, 17, 43, 44, 107, 157, 159, 168, 184, 241, 245, 265, 32,
538, 542, 595
Pattern, 73, 401
Action Industries, 472, 576, 579
Activity, see Volume
Acts of God, 12, 248
Acute Triangle, 79-80
Advisors, 252, 268, 310
ADXR Indicator, 595
Agricultural commodity, 247-248
AIQ Trading Expert Pro, 531-532
Amazon, 2 , 335-336, 358, 47 , 563, 573, 579
AMD, 475, 57 , 579
American Locomotive, 63, 163, 433, 566, 570, 575, 580
American Stock Exchange (AMEX), 271, 309, 311, 312, 316, 349, 494,
524, 616
Apex, 80, 83, 84, 8 , 88, 94, 9 , 99-100, 122, 128, 142,
145, 153, 201, 203-205, 209, 398-400, 404, 408, 412, 423, 440, 443, 596
Apex of Symmetrical Triangle, 414
Appel, Gerald, 542
Apple Computer Inc (APPL), 135, 366, 478-479, 577 Appreciated portfolio,
protecting profits in, 285-286 Arbitrage, 344, 596
Area Gap, see Common Gap
Area Pattern, 8, 90, 145, 176, 184, 186, 198, 202, 221, 261, 264, 319, 423,
439, 596, 601, 604, 605, 611-614, 617-618
Area Reversal Pattern, 599
Arithmetic paper, 8, 229
Arithmetic scale, 8, 58, 69, 143, 211-216, 596
Arms CandleVolume charting, 551-553
Arms Index, 545, 548-549
Aroon, 538, 542
Aroon Down, 538, 542
Aroon Oscillator, 538
Aroon Up, 538, 542
Ascending Channel, 596
Ascending Formation, 99
Ascending Pattern, 98-99
Ascending Trend Channels, 596, 599, 613
Ascending Trendline, 596, 618
Ascending Triangle, 84-89, 94-95, 97-98, 114-115,
122, 135-136, 141, 147, 161, 166, 177-178, 189, 204, 294, 373-375, 395,
399, 408, 428, 434, 439-441, 465, 472, 596, 613-614
Asset allocation, 275, 278, 280-282, 491
Astrodata Inc. (ADA), 46, 576, 581
At-the-money, 283, 596
Automated trendline, 421-425, 540
Average(s), 4, 17, 19, 26, 41, 50, 99, 106, 112, 135, 145, 151, 181, 313, 34 ,
393-394, 428, 436, 445, 459, 481, 482, 596, 600
discount, 12
Dow, see Dow averages
gaps in, 187
investor, 192 moving, see Moving averages support and resistance in, 206
trendlines in, 243
Average Directional Index (ADX), 538, 542, 595 Average True Range
(ATR), 358-359, 538
Averaging Cost, 442, 485, 596-597
Avnet Electronics Corp., 448, 459, 575, 581
Axis, 196, 205, 597
B
Balanced program, 481-486, 597
Bandwidth, 538, 598
Bar Chart, 31, 266, 304, 531, 532, 545, 550, 552, 554, 558, 597
Baruch, Bernard, 265
Basic Trendlines, see Trendlines
Basing Points (BP), 31-40, 198, 239, 256, 258, 260, 299-300, 308, 314,
326, 328, 340, 357-359, 362-366, 368-370, 404, 414, 480, 504, 506, 574,
581, 597
Basket Trades,


vnet Electronics Corp., 448, 459, 575, 581
Axis, 196, 205, 597
B
Balanced program, 481-486, 597
Bandwidth, 538, 598
Bar Chart, 31, 266, 304, 531, 532, 545, 550, 552, 554, 558, 597
Baruch, Bernard, 265
Basic Trendlines, see Trendlines
Basing Points (BP), 31-40, 198, 239, 256, 258, 260, 299-300, 308, 314,
326, 328, 340, 357-359, 362-366, 368-370, 404, 414, 480, 504, 506, 574,
581, 597
Basket Trades, 389-390, 597
Bearish Move, 391, 451
Bearish Trend, 310, 482
in Industrial Rayon, 446
in Lorillard, 447
Bear Market, 13, 15, 225, 242, 264, 293, 299, 386, 413,
481, 509, 511-512, 597,602, 611
signal, 519-521
Bear Market Bottom in Socony-Vacuum, 89, 109
Bear Market Rallies, 61, 63
rising wedges in, 144
Bear Market Selling Climax, 608
Bear Raiding, 168
Bent Neckline, see Neckline (NL)
Bent neckline, 138, 444, 597
Beta, 310, 321, 322, 342-343, 346, 597
coefficient, 597
Bitcoin, 326-328
Black Scholes model, 266, 273, 531
Block Trades, 97-99, 105, 597
Blow-Off, see Climactic Top
Blue Chips, 41, 280, 301, 320, 353, 43 , 598
Blue Parallel, 373-374, 378-380, 410, 598
Blue Trend, 373, 375-379
Blue Trendline, 373-378, 578, 598
Bollinger Bands (BB), 266, 267, 53 , 561-563, 598
Bollinger, John, 533, 561
Bona fide breakout, 600
Bond
futures for asset allocation, 280-282
traders and investors, 496
Book value, 4, 5, 175, 599
Bottom, 599
Kilroy, see Head-and-Shoulders Bottom
Patterns, 5 , 58, 117, 161, 458
Trendlines, 224, 273, 414
Boundary, 54, 78, 599
Bowl Pattern, see Rounding Bottoms
Bracketing, 599
Breakaway gaps, 4 , 63, 91, 142, 162, 173-174, 177-182, 186, 202, 254,
258, 410, 412, 417, 423, 470, 599, 607
Breaking neckline, 47-49
Breakout failure, 603
Breakout Gap, 126, 175, 184
signals, 185
“Breakout of dormancy,” 73
Breakouts, 88, 108, 161, 418, 551, 599 decisive, 221, 37 , 378 downside,
95, 99, 398, 408 premature, 85, 108 pullbacks, 224 from Right-Angle
Triangles, 100 upside, 89, 99, 402, 408
Broadening Bottoms, 135
Broadening Formations, 121-122, 599, 608-609 volume during, 122-128
Broadening Pattern, 604
Broadening Price Formation, 130-131
Broadening Price Patterns, 121, 122, 126, 131, 136
Broadening Tops, 122, 124, 125, 129, 133, 309, 400, 404, 408, 617
in Dow-Jones Industrial Average, 444-445
Orthodox, see Orthodox Broadening Top
Broad market, 243
Broad market background, 264
Broad Market Trend, 243
Brokerage firms, 270
Brokerage houses, 526-527
Brokers, 145, 146, 268, 269, 313, 347
Brooker, Brian, 27
Brunswick Corporation, 450, 575, 581
Bullish Market, 321, 460, 481, 483
Bullish Move, 391, 406
Bull Market, 13-19, 23, 70, 226, 241, 264, 293, 299, 396-39 , 481, 492, 493,
514, 518, 595, 599, 602 in commodities, 260 dynamic phase of, 157
Primary, see Primary Bull Market
Publicker, 116
Bull Market Advance, 159, 225, 294
Bull Market Concomitants, 159
Bull Market High, 52
Bull Market Peaks, 114
Bull Market Reaction, 219
Bull Market Top, 53, 86, 240
of Head-and-Shoulders Form, 50
Symmetrical Triangle Bottom, 80
Symmetrical Triangle Reversal, 78
in U.S. Steel, 127
in Westinghouse, 96
of Westinghouse Electric, 47
Bull Market Trend, 237
of General Motors, 230
Bull Market Trendlines, 229
Bull signal, 513-514
Bull trap, 139, 148, 326, 32 , 420, 473
Bull Trend reaffirmation, 515-516
Burndy Corporation, 449, 575, 582
Buy-and-Hold investor, 26, 27
Buying at the top, 487
C
Call option, 599, 611
Candlestick charts, , 8, 182, 266, 267, 553 Candlesticks, 551, 599
Canny investor, 278
CANSLIM system, 316
Capital, 489 application in practice, 491-494 to use in trading, 489-490
Cash, differences with future transactions, 277 Catastrophic Risk, 503
“Cats and dogs,” 15, 320, 493, 517, 599
Caveats, 330-331
of Moving Averages, 422
CBOT® DJIASM Index futures, 276, 282
Cerro Corporation, 456, 576, 582
Chaff, 270
Chaikin Money Flow (CMF), 538
Chaikin Oscillator, 538
Chandelier Exit, 359, 537
Chande Trend Meter (CTM), 538 Channel, 599
Chart(s), 15, 19, 261, 267, 269, 304, 505, 599, 605 Ascending Triangle, 399
associated dry goods winds up, 396 Broadening Tops, 400, 408 candlestick,
, 8, 182, 266, 26, 553 Complex or multiple Head-and-Shoulders, 403 daily
chart in Northern Pacific, 412 daily chart of Lehigh Valley R. R, 407
decorating graphic charts, 304 Diamond, 409
Diamond Pattern in American Can, 404 Double Tops and Bottoms, 409
Dow Theory, 393-399
Flags and Pennants, 410-411
Gaps, 411-413
Gulf, Mobile, and Ohio builds beautiful Wedge, 405
Head-and-Shoulders Bottom, 401-403 Head-and-Shoulders Top, 400-401 of
New York Central, 175
One-Day Reversals, 410
Pennant in Martin-Parry, 406 Rectangles, 408-409
Rectangles in Remington Rand, 401 Right-Angled Broadening Formations,
409 Right-Angle Triangles, 408 rounding Bottom in 1945, 397
Rounding Tops and Bottoms, 403-406 Spiegel's Bear Market, 262 of stocks,
163
Support and Resistance, 414 Symmetrical Triangle in allied stores, 398
Symmetrical Triangles, 406-408 Trendlines, 414
trendlines in American steel foundries, 413 types of scales, 8-9
Wedges, 409-410
wide Descending Triangle of, 262
Chart analysis, 304, 539-540 computer for, 304-305
Chart analysts, 259, 266 Commodity Research Bureau Index, 254 trading
futures, 259-260
Chicago Board of Trade (CBOT®), 271
Chicago Board Options Exchange (CBOE), 273, 494
Chicago Mercantile Exchange, 276-27 , 312
Chicago, Milwaukee, St. Paul and Pacific, 440 Chrysler, 436
Classical technical analysis, 4 Clean-cut Triangle, 82
Clean-Out Day, see Selling Climax
Climactic Top, 59 , 600
Climax Day, see One-Day Reversal
Climax, Selling, see Selling Climax Close-only charts, 267
Closing gap, 171-173
Closing prices, 18, 600
Closing the gap, 600, 601
Cloud, 269
Coil, see Symmetrical Triangle
Colby, Robert, 21
Commission, 600 Commitments, 417-418
Commodity, 276
agricultural, 247-248
market, 615
traders, 298
Commodity Channel Index (CCI), 538
Commodity charts, technical analysis of application of Edwards and
Magee's methods, 252-259
chart analyst trading futures, 259-260 rocket scientists, 249-250
Turtles, 250-252
21st-century perspective, 249
variety of method

eBooks\Technical Analysis of Stock Trends, Eleventh Edition-CRC Press (2018).pdf


see Symmetrical Triangle
Colby, Robert, 21
Commission, 600 Commitments, 417-418
Commodity, 276
agricultural, 247-248
market, 615
traders, 298
Commodity Channel Index (CCI), 538
Commodity charts, technical analysis of application of Edwards and
Magee's methods, 252-259
chart analyst trading futures, 259-260 rocket scientists, 249-250
Turtles, 250-252
21st-century perspective, 249
variety of methods, 259
Common Gap, 175-17, 184, 596, 600
Comparative relative strength, 600
Complete Basing Points Procedure, 368-370 Complex Formations, 59
Complex Head-and-Shoulders Pattern, 59, 403, 600, 602, 610
EN, 60
ragged Kilroy Bottom, 61 strong movement toward lower interest rates
evident, 60
Composite Average, 600
Composite Leverage, 498, 600
Composite Leverage Index, 492, 493
Compound Annual Growth Rates (CAGR), 32
Computer, 265
for charting analysis, 304-305 technology, 267-268
Computer software packages, 267
Conant, James Bryant, 289
Confirmation, 16-19, 600-601
Congestion, 151, 601
Congestion Formations, 115, 175-176
Conservative investing, 310-311
Consolidating, 151
Consolidation Formation, 110, 151
a, 156
Bull Flag in February and Bear Flag in April 1936 compact type of price
“Congestion,” 158 Consolidation Pattern, 167 down-sloping, converging
price formation, 157 flag pictures on weekly and monthly charts, 158-159
Flags and Pennants, 151-153
Flag seemed for several weeks, 163
“Half-Mast” Pattern, 161
Head-and-Shoulders Consolidations, 160-162, 164 measuring formula, 154-
156 modern vs. old-style markets, 168-169 rectangular Consolidations, 159
reliability of Flags and Pennants, 156-157
Consolidation Formation (Continued)
scallops, 162-167
series of Flag-type Consolidations, 159 stock make long series of small
Consolidation Patterns, 155
Consolidation Head-and-Shoulders, see Head-And-Shoulders Pattern
Consolidation Pattern, 79, 94-9 , 156, 161, 167, 190, 392, 600, 601, 604
Consolidations of Rectangle, 159
Construction of index shares and similar instruments, 311-312
Continuation Formation, see Consolidation Formation
Continuation Gap, see Runaway Gap Continuation-of-Trend Pattern, 137
Continuation Pattern, see Consolidation Pattern Control Data Corp (CDA),
462, 576, 583
Controlling risk, 351, 499, 503
Convergent Pattern (Trend), 601
Copper Range Co., 452, 576, 583
Coppock Curve, 538
Correction, 601
Corrective trends, 226-227
Correlation Coefficient, 500, 538
“Cost of carry,” 276-279
Costs, 390
Covering the gap, see Closing the gap
“Cradle,” 205, 601
“Cradle point,” 440, 456
Crossovers, 422-424
Crucible Steel Co. of America, 45 , 576, 583
Cyber trader, 316
Cyclical approach, 3
D
Daily Range, 148, 173, 508, 601
Dampened risks, 313
Danaher Corp., 558
Day-to-day chart analysis, 196
“Day traders,” 31, 166, 168, 298, 302
Day trading, 168, 298
DecisionPoint Price Momentum Oscillator (PMO),
538
Definite warning, 428
Degree of fluctuation, 283, 345
Delaware, Lackawanna And Western, 432 “Delivery,” 276
Dell, 473-474
Delphic Options Research, 523, 529
Demand, 70, 86, 98, 112, 117, 601
Demand Line, 98, 104, 176, 202
Descending Channel, 601
Descending Trend, 603
Descending Trend Channel, 374-375, 599, 601, 613, 619 Descending
Trendline, 601, 603
Descending Triangle, 92, 97-99, 122, 136, 175, 294, 408,
601-602, 613-614, 617
Detrended Price Oscillator (DPO), 538 Diagonal Movements, 423
Diamond, 74, 12 , 129, 130, 137-139, 602
Pattern, 610
Reversal Formation, 128, 137-138, 409 DIAMONDS™ (DIA), 271, 274,
299, 312, 317, 323, 350, 351, 390 Directional tendency, 110 Discipline,
260, 28 , 501, 542 Dissecting Dow Theory, 499 “Distance away” criteria,
194, 203 Distribution, 43, 44, 117, 136, 168, 602 frequency, 500 Line, 538,
542 Pattern, 90 planned, 98
Distribution period, 15, 17 Divergence, 4, 99, 212, 510, 511, 513, 600-602
definite, 166
negative, 610 Divergent Pattern, 206, 602 Divergent Trend, 617 Divergent
Trend Channel, 376, 377, 379 Diverging boundary lines, 100
Diversification, 41, 298, 313, 319, 389, 390, 481-486, 602 Dividends, 23,
194, 27 , 294, 297-298, 30 , 310-311, 315, 341, 345, 348, 361, 419, 469,
602 Donchian system, 251 Dormant Bottom, 72-74, 602
Double Bottoms, 113-115, 118, 409, 602 Double Top, 103-105, 113-115,
118, 409, 602, 617
at Primary Trend Reversals, 118 Double trendlines, 222-223, 603 Dow
averages, 12
basic tenets, 12-14 major trend phases, 14-16 principle of confirmation, 16-
19 tide, wave, and ripple, 14 Dow Index futures, 27 , 287 Dow Industrial
Average (DIA), 481 Dow interpretation, 507-508 Dow-Jones Industrial
Average (DJIA), 6, 41, 146, 311,
444-445, 454, 486, 600, 603, 606 Dow-Jones Industrial Index differences
between cash and futures, 277 Dow Index futures, 277 exercising option,
284 exploiting market reversals, 285 fungibility, 276-277 futures and
options, 275, 284 investment and hedging strategies, 276 investment uses of
Dow Index futures, 279-282 marking-to-market trading, 276 option
premiums, 283 options on Dow Index futures, 282-283 option spreads in
high-or low-volatility markets, 286-287
perspective, 287
portfolio yields improvement, 286 profits in rising markets, 284-285
protecting profits in appreciated portfolio, 285-286
settlement of futures contracts, 276 stock index futures to control exposure
to market, 277-278
volatility, 283-284 Dow-Jones Stock Composite, 12 Dow-Jones
Transportation Average, 603, 612 Dow-Jones Utility Average, 600, 603, 618
Down Channel, see Descending Channel Down-slanting boundary line, 79-
80 Downtick, 603 Downtrends, 143, 202, 242, 423, 429
Intermediate, see Intermediate downtrends Major, see Major downtrends
Primary, see Primary downtrends
Dow principles, 16, 17, 23-24
Dow Theory, 3, 11, 18, 21-23, 28-29, 31, 41, 7, 207, 259,
264, 313, 365, 381, 393-399, 50 , 533, 600, 601 in 20th and 21st centuries,
26-27 Bear Market signal, 519-521 bull signal, 513-514
Bull Trend reaffirmation, 515-516 closing price levels of Dow-Jones
Industrial and Rail averages, 509, 510, 511, 512, 514 failure to confirm,
510-511 final up-thrust, 519 first correction,


ciples, 16, 17, 23-24
Dow Theory, 3, 11, 18, 21-23, 28-29, 31, 41, 7, 207, 259,
264, 313, 365, 381, 393-399, 50 , 533, 600, 601 in 20th and 21st centuries,
26-27 Bear Market signal, 519-521 bull signal, 513-514
Bull Trend reaffirmation, 515-516 closing price levels of Dow-Jones
Industrial and Rail averages, 509, 510, 511, 512, 514 failure to confirm,
510-511 final up-thrust, 519 first correction, 514-515 first severe test, 508-
510 five years of Dow interpretation, 507-508 intermediate trend investor,
23-26 leaving investor in doubt, 23 Rails falter, 516-517 signs of major
turn, 511-513 spring of 1946, 517-518 utilization, 507 Dow Theory Line,
151 Dow Theory replacement with John Magee's Basing Points Procedure
Dow-Jones Industrials (1924-1934), 39-40 fractal nature of market, 31
interesting charts ever made of Dow-Jones Industrials, 40 trades made by
Magee Basing Points Procedure,
33-37
2008 top in industrials, 38 Drawdown, 498-499, 603 Dreman, David, 280,
496 Dunn and Hargitt, 251
E
Eagle-Picher Lead, 436 “Earnest money,” see Futures “margins” Ease of
Movement (EMV), 538 Economic tide, 264
Edwards and Magee's methods, 252-258 stops, 258-259
Electronic marketplaces, 269
Electronic portfolio, 270
Elliott Wave Theory, 6, 528-531
Emotion-driven markets, 266
End Run, 83, 204, 205, 603
Equilibrium Line, 609
Equilibrium Market, 603
Equivolume charting, 550
result, 551-553
technique, 551
Evaluative Index, 39 , 448, 482-483
Ex-Dividend, 90, 173, 175, 361, 443, 603
Ex-dividend gaps, 174, 603
breakaway gaps, 177-182 common or area gap, 175-177 continuation or
runaway gaps and measuring rule, 182-184
exhaustion gaps, 185-186 two or more runaway gaps, 184-185
Exaggerated leverage, 272
Exception, 381
Exchange-traded fund (ETF), 271, 317, 322, 603
Exchange Traded Notes (ECNs), 268, 321
Execution of buys, 376-377
Exercise, 283, 325, 603 exercising option, 284 price, 272, 282, 494
Exhaustion Gap, 184, 185-186, 258, 410, 603-604, 607 Experimental lines,
224
Expiration, 271, 284, 604
Exponential Moving Average (EMAs), 422, 53 , 542, 609
Exponential Smoothing, 604 “Extent of decline” criterion, 193 Extent of
penetration, 221
Extraordinary Risk, 503
F
Facebook, 332
Fact chart analysis, 266
Failure to confirm, 510-511, 513-514, 515
Faith, Curtis, 251
Falling Wedge, 132, 139, 142-143, 410, 604
False Breakout, 604, 612
False moves, 48, 66, 81, 89, 108, 179, 487
False Signal, 66, 88, 129, 149, 266, 479, 604
Fan lines, 217, 218, 220, 22, 309, 604
Fan principle, 226-227
Fansteel Metallurgical, 434, 448, 585
Filling the gap, see Closing the gap
Final up-thrust, 519
Finance theory and practice developments in, 271 futures on indexes, 273-
274
MPT, 275
options, 271-272 options on futures and indexes, 274 options pricing
models and importance, 273
Finance theory and practice (Continued) quantitative analysis, 272-273
wonders and joys of investment technology, 275
Fin de siecle, 139
First correction, 514-515 First severe test, 508-510
Five-Point Reversal, see Broadening Pattern Flag-type Consolidation, 411
Flag, 151-159, 258, 410-411, 604 Flag Consolidation, 15 , 179, 392, 465
Flag of mid-April, 175 Flat-Topped Broadening Formation, 136-137, 163
Flat-Topped Broadening Pattern, 151 Flat-Topped Price Formation, 177
Floating Supply, 73, 107, 117, 145, 315, 341, 604 Flying Tiger Corp, 471,
586
Force Index, 538 Forecasting methods, 11, 176, 421, 604 Formation, see
Area Pattern
Formula measurement, 154-156, 160, 164, 596, 608 Fractal nature of
market, 31
Dow-Jones Industrials (1924-1934), 39 interesting charts ever made of
Dow-Jones Industrials, 40
trades made by Magee Basing Points Procedure, 33-37
2008 top in industrials, 38
Front-Month, 605
Fundamental analysis, 3, 6, 91, 266, 328, 605
essence of, 528-531 Funds tracking indexes, 603 Fungibility, 276-277
Futures “margins,” 277 Futures contract, 274, 276-27 , 282, 283, 349, 494
Futures options, 283, 28 , 313
to participate in market movements, 284 price of, 283
Future transactions, differences between cash and, 277
G
Gains and losses, percentage, 496 Galbraith, John Kenneth, 326 Gamblers
Anonymous, 302 Gaps, 171, 411-413, 423, 605
April-June Rectangle on 1945 chart of “AW,” 172 in averages, 187 closing
gap, 171-173 daily chart of Blaw-Knox, 176 ex-dividend gaps, 174-186
Island “shakeouts, 181 Island in “PA,” 183 Island Reversal, 186-187
monthly chart of Zenith Radio, 175
Panic Declines produce large Runaway Gaps, 178 small Island in right
shoulder of Head-and-
Shoulders Top, 180
SMC, 180
TLT, 183
Gates, Bill, 244
General Motors, 41, 99, 229, 230, 586, 598 straight-line Bull Market Trend,
230
General Semantics of Wall Street, The, 269
General Steel Industries, Inc. (GSI), 459, 586 Gilt-edged securities, 598
Gimlet-eyed investor, 270
Google, 321, 331, 339, 340, 343, 389, 586
Granite City Steel, 430-431, 586
Graph, see Chart
“Graphic Stocks,” 437
Great Crash, The (1929), 326
Greenspan, Alan, 248, 281
H
“Hair splitting” theory, 521
“Half-Mast” patterns, 154, 161, 604, 608
Handbook of Portfolio Mathematics (Vince), 618 Head-and-Shoulders
Bottom, 55, 57-59, 61-63, 161, 336, 395, 401-403, 58 , 605, 60 , 608
Head-and-Shoulders Consolidation, 160-162, 164, 605 Head-and-Shoulders
Formation, 48, 88, 373
Head-and-Shoulders formula, 100, 162 Head-and-Shoulders Pattern, 4 , 13 ,
241, 392, 414,
454, 605-606, 608, 610, 615
Head-and-Shoulders Reversal Pattern, 211 Head-and-shoulders to Dow
Theory, 55 Head-and-Shoulders Top, 44, 45, 46, 48, 54, 57-59, 63, 75, 7 ,
103, 108, 118, 160, 161, 180, 198, 202, 241, 24 , 294, 35 , 394, 400-401,
449, 454, 455, 466, 602, 605, 606, 608, 617
Daily chart of Chicago, 46 hypothetical daily stock chart, 45 starting in
March, “HUM,” 46 variations in, 49-52
Heavy Volume, 355, 356, 363, 398, 402, 435, 605, 606 Hedging, 137, 240,
246, 276, 279, 28 , 312, 606 Hedging strategies using CBOT® DJIASM
futures contract, 276
High-risk stocks
hope springs eternal, 332-340
managing tulipomanias and internet frenzies and Bitcoin, 326-328
multitudinous lessons in Microsof


cago, 46 hypothetical daily stock chart, 45 starting in
March, “HUM,” 46 variations in, 49-52
Heavy Volume, 355, 356, 363, 398, 402, 435, 605, 606 Hedging, 137, 240,
246, 276, 279, 28 , 312, 606 Hedging strategies using CBOT® DJIASM
futures contract, 276
High-risk stocks
hope springs eternal, 332-340
managing tulipomanias and internet frenzies and Bitcoin, 326-328
multitudinous lessons in Microsoft, 326 techniques for management of
runaway issues, 328-332
High-volatility markets, option spreads in, 286-287 Higher priced stocks,
353
Historical Data, 606
Hook Day, 606
Horizontal Channel, 213, 606
Horizontal Congestion Pattern, 178, 189
Horizontal Line Formations, 103, 207
Horizontal Movements, 423
Horizontal pattern boundary, 177
Horizontal Trendline, 256, 333, 606
Hull, Blair, 26 , 531, 611
Hybrid Head-And-Shoulders, 606
I
Ichimoku Cloud, 537
I C Industries (ICX), 49
“Ideal” trend, 197
“Implied volatility,” 284
In-the-money, 283
Indexes, , 19, 243, 261, 271, 310, 312, 314, 341, 343 funds tracking, 603
futures on, 273-274
options on futures and, 274
Index funds, 299, 390
Index futures for asset allocation, 280-282
“Indexing,” 310-311
Index Shares, 302, 310-312, 313, 390, 447
Individual stocks, 26, 41, 55, 112, 145, 146, 206, 243, 342, 44 , 454, 484,
493, 495
Industrial Average, 11, 12, 13, 16, 18, 20, 23, 393, 444, 446, 454, 514, 515,
518, 600, 603
Industrial Rayon Corporation, 446, 587
Inflationary and deflationary movements, 481, 587
Information revolution, 265-266, 268, 270-271
Initial public offering share (IPO share), 327-328, 607
Inside Day, 606
Insiders, 41-42, 168, 322, 32 , 606
Inspiration Copper, 429
Intel, 319, 474, 475, 587
Intermediate Bottom, 64, 8 , 193, 202, 294, 384, 386, 414
Intermediate downtrends, 225-226
Intermediate Reversals, 59, 200, 206
Intermediate Support, 197, 198, 226, 384, 385
Intermediate Support Range, 198
Intermediate Swing, 13, 50 , 508
Intermediate Tops, 200, 211, 294, 361, 386, 414, 513
Intermediate Trend, 14, 41, 216, 224, 296, 380, 515, 519, 590, 606, 614
investor, 23-26
Intermediate Trendlines, 208, 226, 229
Intermediate Uptrend, 194, 212, 213, 219, 222, 225
Intermediate Up Trendline (IUT), 52, 176, 211, 212, 21 , 220-221, 224
Internet-age markets, 351
Internet, 265, 268-269, 532
Internet Age, 269, 351, 393, 494
Internet frenzies and Bitcoin, 326-328
Internet technical analysis sites, 305, 531-533
Intraday gaps, 173
Inverted Bowl, see Rounding Top
Inverted Triangles, 100, 121, 135-136
Investment advancements in investment technology, 271 bond and index
futures for asset allocation, 280-282
developments in finance theory and practice, 271-275
finance theory and practice, 271-275 futures and options on Dow-Jones
Industrial Index, 275-287
increasing exposure with futures, 280 investment-oriented sites, 524-527
investment/information revolution tools, 265 portfolio protection, 279-280
strategies using CBOT® DJIASM futures contract, 276
uses of Dow index futures, 279
Investor, 297-298, 332, 351 cyber, 270 experienced, 268 gimlet-eyed, 270
long-term, 310-311 modern, 244 private, 312 sophisticated, 302 iPod, 479
Island Congestion, 186 Island Pattern, 147, 186, 187
Island Reversal, 182, 186-187, 60 , 611
J
Johns-Manville's Primary Trend Reversal, 79 Jorion, Philippe, 500, 502,
524
July-August Flag, 158-159
K
Kaufman's Adaptive Moving Average (KAMA), 537 Kelly Criterion, 534,
535
Keltner Channels, 537
Key Reversal Days, 147-149
Kilroy bottom, 57-59, 63, 309, 336, 401, 58 , 607 Kovner, Bruce, 35 , 365
Kresge (S.S.) Co., 196, 43 , 588, 591
L
Laddering, 607
Lane, George, 615 Lane theorizes, 615 Leisurely pattern, 65-66 Leverage,
258, 315, 607 Leverage factor, 534-535
Leverage Space Model, 351, 504, 618
Leverage Space Portfolios (LSP), 533-536, 607 Libby, McNeill And Libby,
436
Limit Move, 258, 607
Limit Order, 391, 60 , 611 Limit Up, Limit Down, 607
Linear Moving Averages, 422 Line Chart, see Bar Chart Line in Dow
Theory, 17-18, 607
Liquidating, 378-379
Livingston Oil Company (LVO), 464, 588 Logarithmic scale, 211-216, 229,
607
Long-term charts, 9
Long-term investment problem, 293
Long-term investor, 293, 29 , 299, 313, 314, 389 strategy and tactics for,
297-298
Long-term investor (Continued)
strategy of, 299-300
viewpoint, 310-311
“Long side” of market, 41
Lorillard, 44 , 588
Low-volatility markets, option spreads in, 286-287 Lower-priced stocks,
353
“Lunatic fringe,” 3
M
MacKay, Charles, 325
“M” Formation, 119, 602
Magee-type technical analysts, 266
Magee analyst, 267, 268, 270
Magee chart analysis, 266, 270, 595
Magee Evaluative Index (MEI), 19, 300, 485-486, 491,
495, 503-504
Magee methodology, 260
Magee's admonitions, 316
Magee's Composite Leverage, 499
Magee's concept of “sensitivity,” 342
Magee's method, 252-259, 343, 497
Magee's Sensitivity Index, 342, 354, 497
Magee's simple-as-pie method, 32
Major Bear Market signal, 393
Major Bear Moves, 159
Major Bear Trend, 15 , 226
Major Bull Market, 225
Major Bull trendlines, 241
Major charts, 9
Major Double Tops, 114
Major Downtrend, 242, 428-429, 439, 511-512, 519, 576,
579, 592
Major Market Turn, 60
Major Reversal, 106, 114, 123, 132-133, 139, 158, 180,
491, 510, 513-514, 604-605
Major Reversal Formation, 66, 114, 123, 186
Major Reversal Patterns, 44, 605
Major Signals, 394
Major Trend, 17-18, 22, 9 , 198-199, 212, 225, 229, 242,
296, 314, 356, 380-381, 384, 386, 393, 398,
430, 446, 449, 456, 482, 491, 493, 510, 512, 515, 60 , 612
general outline of policy for trading in, 380-381 of market, 410-411
Major Trend Channels, 242-243
Major trendlines, 227
accelerating uptrend of common stock, 231
Bull Market tops, 240 conservative investment-type utility stock, 232
decurving Major Bull Trend of high-grade preferred stock, 231
high-grade food issues, 236
low-priced building stock, 235
Major Bull Trend, 234
Major Downtrends, 242
Major Trend Channels, 242-243
primary Bear Market, 238
S&P long-term perspective, 239
S&P Reagan Crash, 239 speculative oil stock, 233 steel stocks, 234 straight-
line uptrends in investment oil


ative investment-type utility stock, 232
decurving Major Bull Trend of high-grade preferred stock, 231
high-grade food issues, 236
low-priced building stock, 235
Major Bull Trend, 234
Major Downtrends, 242
Major Trend Channels, 242-243
primary Bear Market, 238
S&P long-term perspective, 239
S&P Reagan Crash, 239 speculative oil stock, 233 steel stocks, 234 straight-
line uptrends in investment oil, 233 tobacco stocks, 236 trading Averages in
21st century, 244 trendlines in averages, 243 up-curving trend of
speculative motors stock, 230 Major Turn, 121, 167, 226, 242, 290, 483,
487 signs, 511-513
Margin, 88, 108, 145, 147, 221, 223, 274, 276, 342, 345,
367, 445, 492, 495, 535, 607-608 decisive, 48, 57-58, 118, 128 transaction,
346, 349 use, 345-346
Market, 3, 6, 11, 19, 2, 31, 42, 7, 82, 104-105, 121, 139,
143, 147, 192, 20 , 256, 259, 264, 270, 274, 280, 285, 289, 29, 299, 312,
315, 32, 383, 42, 48, 493, 505, 507
Dow-Jones Industrials (1924-1934), 39 exploiting market reversals, 285
fractal nature, 31 indicator, 609
interesting charts ever made of Dow-Jones
Industrials, 40 marking-to-market, 269-270 marking-to-market trading, 276
technical trading effect on market action, 419-420
trades made by Magee Basing Points Procedure,
33-37
2008 top in industrials, 38
Market on Close, 608
Market Order, 29 , 328, 608, 611, 616
Market Reciprocal, 49 , 608, 612
Market Technicians Association, 499
Market Technicians Association of New York
(MTANY), 6
Masonite, 431, 575, 588
Mass Index, 538
Mast, 152, 217, 392, 411, 604, 608
move, 410
Maximum drawdown, 2 , 32, 502, 52 , 603
Maximum retracement, 502
McClellan Oscillator, 608
McDermott, The Redoubtable Richard, 325, 528 Measuring Formulae, 608
Measuring Gap, see Runaway Gap
Measuring or Half-Mast Patterns, see Flag
Measuring rule, 55, 65, 100, 154-155, 182-184, 392 Mechanical Dow
Theory, 299
Mechanical systems, 250, 252, 260, 296, 423 Megaphones, 608, 613
Melon, 194, 609
Memorex Corp. (MRX), 470
Metastock 9.0, 531-532
Mike Moody, 545, 556-561
Mining engineers, 326
Minor Bottom, 88, 91-92, 122-123, 193, 198, 208, 210, 222, 354, 362-363,
373, 378-379, 386, 403, 413, 414, 41 , 517, 608-609, 616-617
Minor Bottoms, 123, 208, 222, 361, 363, 373, 386, 413-414, 617
Basing Points, 362-365
Basing Points paradigm, 365-366 complete Basing Points Procedure, 368-
370 narrative of events in chart, 367-368, 371-372 representative case fully
analyzed using wave lows and new highs, 370-371
Variant 2 procedure, 370
Minor Correction, 209, 363, 386
Minor Fluctuations, 13, 74, 7 , 99, 129-130, 138, 151, 186, 190
process, 153
Minor phenomena, 202
Minor Reaction, 95-96, 115, 172, 181, 186, 362, 39 , 40 , 440, 605
Minor Reversal, 122-123, 155-156
Minor Reversal Areas, 157
Minor Setback, 17, 216, 432, 517
Minor Swings, 186
Minor Top, 79-80, 122, 198, 206, 354-355, 361, 363, 373-374, 378, 385,
414, 439, 444, 513, 616
Basing Points, 362-365
Basing Points paradigm, 365-366 complete Basing Points Procedure, 368-
370 narrative of events in chart, 367-368, 371-372 representative case fully
analyzed using wave lows and new highs, 370-371
Variant 2 procedure, 370
Minor Trend, 13-14, 82, 144, 229, 290, 386, 410, 50 , 609 Minor Wave
Pattern, 197
Minor Waves, 13, 223, 509
Misconceptions, 198-200 Model-driven market, 266, 272 “Models,” 266-26
, 273
Modern-style markets, 168-169
Modern era development, 271
Modern Portfolio Theory (MPT), 275, 499 Momentum, 43, 49, 184, 326,
539, 611, 614 Momentum Indicator, 538, 542, 609
Money, 41, 249, 253, 265-266, 270, 272, 283, 299, 332, 348, 489-490, 608
management procedures, 503-504 management rules, 258
Money Flow Index (MFI), 538
sophisticated risk and, 504
Monthly chart gaps, 171
Moving Average, 421, 424, 53 , 539, 609, 610
150-Day Moving Average, 424
200-Day Moving Average Line, 31, 267, 299, 300,
31 , 422, 423, 484, 618
50-Day Moving Average Line, 316, 422, 484, 604 crossovers and
penetrations, 422-424
PENTAD Moving Average system from formula research, 424-425
Sensitizing Moving Averages, 422
Moving Average Convergence/Divergence (MACD),
538, 542-544, 609, 610 Histogram, 538
Moving Average Crossovers, 609 Moving Average Envelopes, 537
Moving Average Line, 422-423, 541, 598, 604,
609, 618 Multicolincarity, 598, 610 Multiple Bottoms, 414, 434 Multiple
Formations, 66, 68
Multiple Head-And-Shoulders Pattern, see Complex Head-and-Shoulders
Pattern
Multiple Tops, 364, 403, 409, 414 Mutual funds, 43, 268, 390, 495
N
Narrow Range Day, 610
NASA, 249
National Association of Securities Dealers
Automated Quotations (NASDAQ), 19, 316 NASDAQ 100, 312, 480
Natural Hedge, 485, 610
Natural mechanical systems, 260
Natural method, 359, 610 NDX, 480, 577
Near progressive stops, 139
Neckline (NL), 47-49, 57, 59, 610
on multiple head-and-shoulders formations, 61 Ned Davis Research, Inc.
(NDR), 424 Negative divergence, 610 Negative Volume Index (NVI), 538
Nelson Freeburg of Formula Research, 424 New commitments, 418
New Concepts in Technical Trading (Wilder), 618 “New Haven Investor,”
298
New York Stock Exchange (NYSE), 4, 269, 300, 311,
313, 316, 341, 349, 615, 616
NOKIA (NOK), 475
Normal Range for Price, 344, 346, 354, 49 , 610 Normal Uptrend Channel,
141-142 Northrop Aircraft, 438-439
Number-driven systems, 259-260 Number-driven technical analysis, 4, 26 ,
610
Number-driven technical analysts, 266
O
Odd lots, 351, 610 Old-style markets, 168-169
Old-time “plunger,” 168
On Balance Volume (OBV), 538, 610-611 One-Day Island Reversal, 607
One-Day Reversal, 42, 144-145, 410, 600, 615 One-Week Reversal, 147,
450, 589 Operational Risk, 501-504 Opportunity vs. Security, 308 Optimal
formula, 534, 535 Optimization, 275
Options, 271-272, 611
on Dow index futures, 282-283 exercising, 284
on futures and indexes, 274 pricing models and importance, 273 spreads in
high-or low-volatility markets, 286-287 as strategic investment, 273 traders,
272
trading, 272
Options Research, Inc, 611 Oracle Corporation, 332, 468, 573, 576, 579
Order, see Limit Order; Market Order; Stop Order Orthodox


ormula, 534, 535 Optimization, 275
Options, 271-272, 611
on Dow index futures, 282-283 exercising, 284
on futures and indexes, 274 pricing models and importance, 273 spreads in
high-or low-volatility markets, 286-287 as strategic investment, 273 traders,
272
trading, 272
Options Research, Inc, 611 Oracle Corporation, 332, 468, 573, 576, 579
Order, see Limit Order; Market Order; Stop Order Orthodox Broadening
Top, 123, 130-135 “Orthodox” investors, 419
Oscillator, 4, , 304, 419, 600, 611 Aroon, see Aroon Oscillator
Chaikin, see Chaikin Oscillator
Out-and-out boardroom gamblers, 168 Out-of-the-money, 283 strike price,
285
Overbought, 611 Oversold market, 486, 611 “Oversold-overbought”
indicator, 485, 611 Overtrading, 351, 493, 496-498
P
Pacific Coast Options Exchange, 531 Packard-Bell Electronics Corp (PKB),
465
Palm Computing, 327 Panic, 611
decline, 145, 157, 159, 171, 178, 192, 201 phase, 15, 147, 380
Panic Bottom, see Selling Climax Parabolic SAR, 359, 537
Paradigm-setting model, 271 Paradox, 496-498
Parallel Trend Channel, see Descending Trend Channel
Parke, Davis and Company (PDC), 466 Passive Indexer, 611
Patience, 265 Pattern
analysis, 357 boundary, 203 gaps, 176, 184 resistance, 202-205
Peak, see Top
Penetration(s), 422-424, 611 validity, 220-222
Pennant(s), 151-154, 410-411, 611 consolidations, 157 and flags, 608
reliability, 156-157
Pennant Consolidation, 392 PENTAD Moving Average system from
formula research, 424-425
%B Indicator, 538
Percentage Price Oscillator (PPO), 538
Percentage Volume Oscillator (PVO), 538 Performance measurement, 275
Personal body digital assistants (PBDAs), 268 Philosopher's Stone, 249,
265, 275, 539
Pivot Points, 53 , 543
Plain scale, 8
Planned distribution, 98
Point and figure (P&F), 392, 532, 545
analysis, 543
charting, 26 , 532, 545, 612
technical analysis by Mike Moody, 556-561 Polaroid Corporation, 451
Polymath, 31
Pool operations, 105-112
Portfolio ordinary or operational risk, 502-503 Portfolio protection, 279-
280
Portfolio Risk Analysis screen, 529, 530
Portfolio Risk Factor (PRF), 502
Portfolio risk management
controlling risk, 503
measuring maximum drawdown, 502 overtrading, 496-498
risk and money management procedures, 503-504
risk and trend, 499
risk of portfolio, 499
risk of single stock, 498-499
sophisticated risk and money management procedures, 504
VAR, 499-500
Portfolio Risk Strategy, 496, 497
Portfolio valuation, 275
Portfolio yields improvement, 286
Pragmatic analysts, 275
Pragmatic portfolio analysis, 502
portfolio extraordinary or catastrophic risk, 503 portfolio ordinary or
operational risk, 502-503 portfolio risk over time, 503
Pragmatic portfolio risk measurement, 500
determining risk for portfolio, 501-502
risk of one stock, 500-501
Pragmatic portfolio theory, 500 Premature breakouts, 108, 612 Preparatory
buying signals, 375-376 Preparatory selling signals, 379 Price Congestion
Formation, 177 “Price-earnings ratio” index, 469, 612 Price
Relative/Relative Strength, 538 Price(s), 196
channels, 537
fluctuation, 261
of futures option, 283
line, 423
pattern, 52, 5 , 70, 12 , 135, 138, 614
Primary Bear Market, 238, 242, 243, 507-508 Primary Bull Market, 21, 22,
41, 86, 122, 242
Primary Direction, 13, 355, 363, 380, 381, 383, 385, 386, 391
Primary Downswing, 202, 242
Primary Downtrends, 15
Primary Market Trend, 26
Primary Reversal phenomenon, 118
Primary trends, 12-14, 16
Pring's Know Sure Thing (KST), 538-539
Pring's Special K, 539
Probable moves of stocks, 341-344
Profit-taking patterns, 168
Profit analysis, 530
Profits in rising markets, 284-285
Program Trading, 311, 612
Progressive stop, 328, 355-357, 359, 370, 379, 612
Protective stop(s), 295, 353, 355, 356, 358, 361, 612, 616
Proxy markets, 278
Psychological grounds, 117
Psychological handicap, 293
Public Service Electric and Gas (PEG), 469
Pullback(s), 110, 202, 205, 224, 612, 617
Pullback Rallies, 58
“Pure investor,” 294-295
Put option, 272, 284, 285, 312, 611, 612
Q
QID, 350
QQQ, 244, 271, 312, 313, 490
Quantitative analysis, 272-273
Quantitative analysts, 266
R
Rail Average, 513, 603
Rails falter, 516-517
Rally, 612
Rally Tops, 612
Range, 612
Rate of Change (ROC), 539
Reaction, 612
Reciprocal, Market, see Market Reciprocal
Recovery, see Rally
Recovery Trends, 202
Rectangle(s), 18, 151, 159, 173, 189, 373, 408-409, 606, 608, 613
to Dow Line, 112-113
patterns, 378
from Right-Angle Triangles, 113
in Socony-Vacuum, 106
tops, 103-105
Rectangular Consolidations, 159
Red Parallel, 373, 378, 379, 613
Red Trend, 373, 375, 376, 379, 380
Red Trendline, 373, 376, 37 , 613
Relative Strength, 619
Relative Strength Index (RSI), 539, 598, 613, 618-619
Relative Strength Indicator, see Relative Strength Index (RSI)
Reliability of flags and pennants, 156-157
Repeated saucers, 162-167
Resistance, 189, 603, 616
Level, 155, 184, 189, 194, 198, 202, 206, 226, 246, 613
Lines, 99, 196
Range, 189, 193, 196, 197
Zones, 192, 194, 19 , 200, 206
Resources, 523
essence of fundamental analysis, 528-531 important and indispensable sites,
523 investment-oriented sites, 524-527 leverage space portfolio model,
533-536 references for further study, 524 Sharpe Ratio, 527
software packages and internet technical analysis sites, 531-533
volatility calculation, 527-528 Retracement, 118, 172, 603, 613 Return
Line, 223, 225, 596, 601 Reversal
Broadening Bottoms, 135
Broadening Formations, 121-122
The Diamond, 137-139 Falling Wedge, 142-143
Key Reversal Days, 148-149 One-Day Reversal, 144-145 Orthodox
Broadening Top, 130-135 Right-Angled Broadening Formations, 135-137
Rising Wedges common in Bear Market
Rallies, 144
Runaway Days, 148 Selling Climax, 145-147 short-term phenomena of
potential importance, 147-148
Spikes, 147-148
typical example, 128-130
volume during broadening formations, 122-128 wedge formations, 139-142
wedges on weekly and monthly charts, 143-144 Reversal Area, 42, 55, 158
Reversal Days, see Key Reversal Days Reversal Formation, 42, 50, 155,
168, 198
Reversal Gap, 613
Reversal Levels, 190
Reversal P


Days, 148 Selling Climax, 145-147 short-term phenomena of
potential importance, 147-148
Spikes, 147-148
typical example, 128-130
volume during broadening formations, 122-128 wedge formations, 139-142
wedges on weekly and monthly charts, 143-144 Reversal Area, 42, 55, 158
Reversal Days, see Key Reversal Days Reversal Formation, 42, 50, 155,
168, 198
Reversal Gap, 613
Reversal Levels, 190
Reversal Pattern(s), 41, 42, 7 , 132-133, 493, 602, 613 ADM turned sharply
lower, 64 breaking neckline, 47-49 Descending Triangles, 98-99
distinguishing characteristics, 115-118 Dormant Bottom variation, 73-74
Double and Triple Tops and Bottoms, 113-115 Double Bottoms, 118 Dow
Theory, 41
fine Symmetrical Triangle Reversal Formation, 78 Head-and-Shoulders
Bottoms, 57-59 Head-and-Shoulders to Dow Theory, 55 Head-and-
Shoulders Top, 44, 45, 46, 63 “ideal” multiple top made by Budd in (1946),
62 intermediate bottom of complex class, 64 Johns-Manville's Primary
Trend Reversal (1942), 79
leisurely pattern, 65-66
long multiple head-and-shoulders top, 63
Reversal Pattern(s) (Continued)
MCA enjoyed 62excellent advance from (1980-1986), 62
measuring implications of Triangles, 100 multiple head-and-shoulders
patterns, 59-61 planned distribution, 98 pool operations, 105-112 price
action confirmation, 52-55 prices break out of Symmetrical Triangle,
88-90
Rectangles, double and triple tops, 103-105 Rectangles from Right-Angle
Triangles, 113 relation of Rectangle to Dow Line, 112-113 reversal or
consolidation, 94-97 Right-Angle Triangles, 97-98 Rounding Tops and
Bottoms, 66-70 Rounding Turns affect trading activity, 70-73 Sears
Roebuck made Symmetrical Triangle Reversal, 78
slide in Amdahl occupied Bears, 65 Symmetrical Triangles, 79-88 tendency
to symmetry, 61 time to reverse trend, 42-44 Triangles on weekly and
monthly charts, 100 Triangular formations, 100-101 Triple Tops and
Bottoms, 118-120 typical Triangle development, 90-94 variations in head-
and-shoulders tops, 49-52 volume, 44-45, 4 , 74-75, 99-100
Rhythmic investing, 300-302
Rhythmic Trading, 485
Richard Arms work, 545
Arms CandleVolume charting, 551-553
Arms Index, 545-548 calculation, 548
Equivolume charting, 550-551 using index, 548-549 reasoning, 548
Right-Angled Broadening Formations, 135-137, 409
Right-Angled Broadening Triangle, 606, 613
Right-Angle Triangle(s), 97-98, 103, 139, 173, 408, 596, 601
chart, 99
rectangles from, 113
Ripple, 14
Rising Channel, 413
Rising Wedge(s), 139, 141, 143, 614
common in Bear Market Rallies, 144
Risk
analysis, 529 management, 495-504 measurement, 502-503 and money
management procedures, 503-504 sophisticated, 504
“Risk-free” interest rate, 273
Rocket scientists, 249-250
Round-trip costs, 389
Rounding Bottom(s), 66-70, 403-406, 599, 614
Rounding Top(s), 66-70, 403-406, 606, 614, 617
Rounding Turn(s), 66, 68
affecting trading activity, 70-73 picture, 70
Round lots, 351, 614
RRG Relative Strength, 539
Runaway Days, 147, 148
Runaway Gap, 17 , 182-186, 202, 258, 601, 608, 614
Runaway issues, 327 techniques for management of, 328-332
Runaway or Continuation Gap, 392 Running Market, 614
S
Saucer-Like Reaction Pattern, 99 Saucer Pattern, see Rounding Bottoms
Scales, types of, 8-9
Scallops, 162-167, 614
Schadenfreude, 326 Schannep, Jack, 21, 26 Scholes, Myron, 271 Schwager,
Jack
Secondary Reaction, 13, 18, 35 , 493, 515, 516, 517, 519 Secondary
Recovery swing, 508
Secondary Trend, see Intermediate Trend Secondary trends, 12, 13, 17
Secular Trend, 614 “Self-correction,” 197
Selling Climax (SC), 138, 145-147, 190, 201, 600, 611, 615
Selling Climax Day, 615
Selling stock short, 379 Semilogarithmic paper, 8
Semilogarithmic Scale, 8, 144, 220, 242, 60 , 615 Sensitivity, 341, 342,
346, 354, 422, 495, 600, 615 Sensitivity Index, 322, 342, 345, 346, 353,
492, 497 Sensitizing Moving Averages, 422
Settlement
of futures contracts, 276
price, 276, 600
“Settlement date,” 276
Shakeout, 89, 145, 181, 221, 264, 505, 615
Sharpe Ratio, 499, 527
Short-term phenomena of potential importance,
147-148
Short-term profits, 297
Short-term trader, 190, 29 , 389, 419 Shorting stocks, 284
Short Interest, , 348, 615
Short sale(s), 379-380, 400, 409, 615
Short selling, 145, 346-350, 485 “Short side” of market, 41
Shoulder, see Head-and-Shoulders Pattern “Sideways” chart pattern, 151
Sideways Movements, 423
Simple Moving Averages (SMAs), 422, 537, 549 Single stock risk, 498-499
Sites, important and indispensable, 523 “Skullduggery,” 168, 169
Skyrocket, 184, 185, 196, 321, 401, 493 effect, 71
run-up of Willys-Overland, 179
Slauson, John, 387
Slope, 539
“Smart money,” 265
Smoothing, 615
Software packages, 305, 531-533 “Special Opening Quotation,” 276
Speculative aims, 245
Speculative blow-offs, 326
Speculative stock, 345, 492
Speculator(s), 3, 145, 149, 274, 286, 293, 297-298, 300 agile, 148
commodity, 246
psychology, 245
Spiegel's Bear Market, 262 Spike(s), 147-148, 615 Spring of 1946, 517-518
SPY, see Standard & Poor's Depositary Receipts (SPDRs) Standard & Poor
(S&P), 274, 310-311, 482
Standard & Poor's Depositary Receipts (SPDRs), 271, 274, 299, 317, 323,
351, 390
Standard Deviation, 539
Statistical approach, 3
Statistical driven technical analysts, 266
Statistics fundamentalists, 4 “Stepping off” point, 417
Stick to guns, 505-506 Stochastic(s), 542, 615-616
Stochastic Indicator, 615
Stochastic Oscillator, 539, 615
StochRSI, 539
Stock(s), 12, 30 , 353, 356, 414, 41 , 482 alphabetic index of stock charts,
579-593 averages, 483 chart, 7
construction of index shares and similar instruments, 311-312
at different times, 427-479 index futures to control exposure, 277-278
instruments, 313s
kinds of stocks long-term investors want, 311 long-term investor's
viewpoint, 310-311 Major Downtrends, 428-429, 439
NDX, 480 opportunity vs. security, 308 options, 494 prices, 42, 266, 505
probable moves, 341-344
S&P, 308
S&P 500 in glory and tragedy, 309 selection of stocks to chart, 315-323
SPY. for illustration, 309 trends, 218
StockCharts Technical Rank (SCTR), 539
Stock Ex


instruments, 313s
kinds of stocks long-term investors want, 311 long-term investor's
viewpoint, 310-311 Major Downtrends, 428-429, 439
NDX, 480 opportunity vs. security, 308 options, 494 prices, 42, 266, 505
probable moves, 341-344
S&P, 308
S&P 500 in glory and tragedy, 309 selection of stocks to chart, 315-323
SPY. for illustration, 309 trends, 218
StockCharts Technical Rank (SCTR), 539
Stock Exchange vigilance, 168
Stock market(s), 3, 189, 266 fundamentalist, 3 to newcomer, 427 Support-
Resistance Level, 430
Stock Split, 616
Stop, 616
Stop Loss, see Protective Stop
Stop orders, 353, 611
ATR, 358-359 natural method using by Turtles, 359 progressive stop, 355-
357
SAR, 359
stop distances, 354 stop systems and methods, 357-358 survey of stop
methods, 358 target stops, 359
Street, 3
Street firms, 325 “Strike” price, 282
Superior Oil Co (SOC), 458 Supply, 616
Supply and demand, 77 balance, 245 equation, 42 relation, 175
Supply Line, see Resistance
Support, 189, 603 significance of support failure, 197-198
Support and Resistance, 383-38 , 410, 414 in averages, 206 estimating
support-resistance potential, 194-196 explanation, 191-193 levels, 198, 200,
264 locating precise levels, 196-197 normal trend development, 190 pattern
resistance, 202-205 popular misconceptions, 198-200 predictions, 189-190
principle, 189 repeating historical levels, 200-202 round figures, 200
significance of support failure, 197-198 theory, 202 volume on breaks
through support, 205-206
Support Level, 151, 189, 192, 198, 206, 210, 364, 383, 386, 391, 414, 41 ,
616
Support Line, 598
Support Range, 189, 192 Support-Resistance Level, 266, 430 Support-
Resistance Theory, 224 “Swing” power, 30 , 345
Symmetrical Triangle, 80, 600 Symmetrical Triangles, 79-88, 103, 121,
151, 168,
203-205, 406-408, 609, 616 pattern, 603 prices break out, 88-90
T
Tactical methods making new commitments, 418
Tactical methods (Continued)
present commitments, 417-418 quick summation, 417
Tactical problem
Hudson Motors, 295
long-term investor, 299 rhythmic investing, 300-302
strategy and tactics for long-term investor, 297-298
strategy of long-term investor, 299-300 “Tangents,” 208
Tape Reader, 9, 166, 616 “Tape watchers,” 163, 166 Target stops, 359
Tax, 313
consequences, 277
selling, 517
Technical analysis, 4-6, 419, 478, 537
Bollinger Bands, 561-563
number driven tools, 537-545
Point & Figure technical analysis by Mike Moody, 556-561
Richard Arms work, 545-553 and technology, 265-266
Technical chart patterns, measuring implications in, 391-392
Technical data, 6, 22 , 528
Technical indicators, 538-539
Technical Magee analyst and investors, 268
chaff, 270
information revolution, 270-271 internet, 268-269
marking-to-market, 269-270 separating wheat from chaff, 270
Technical overlays, 537-538 Technical regularity, 313
Technical trading effect on market action, 419-420 “Teenie,” 272
TEKNIPLAT
chart paper, 305, 443, 616 semilogarithmic chart sheet, 219-220
Tenets, 12-14, 20 , 50 , 517 Test(s), 617
of authority, 216-220
Text diagrams, 565-578 Textron, 435, 575, 592 “Theoretical value” of
future, 277 Thin Issue, 174, 356, 617 3COM, 319, 32 , 331, 579
“Three-days-away” rule, 300, 328, 361, 369, 414, 617 Throwback(s), 99,
110, 181, 202, 203, 221, 224-225, 612, 617
Tide, 14 Time
requiring to reverse trend, 42-44
scale, 8, 31
TLT chart, 258
Top, 611, 617
Broadening, see Broadening Top
Double, see Double Top
Head-and-Shoulders, see Head-and-Shoulders Top Rounding, see Rounding
Top
Triple, see Triple Top
Top of Ascending Triangle, 177 Top Price Chart Formation, 598 Top
Trendlines, 414, 598, 613 Total Capital (TC), 30 , 492, 498, 502, 503, 504
Total Composite Leverage, 297 Trader(s), 251, 284, 293, 296, 300, 315, 505
Traders, 358 Trades, 33-3 , 409 Tradestation 2000i, 532 Tradestation 8, 532
Trading, 4
activity, 17, 44-45, 80, 91, 122, 163, 185, 221, 316, 441, 511, 614
area, 103, 121, 151, 175, 423, 613 averages in 21st century, 244 costs, 390
opportunities, 42, 163, 266, 475 range, 73, 79, 149, 186, 286, 599, 60 , 609,
616 Transportation Average, 596, 600, 603 Treasury bonds, 253, 281
Trend(s), 12, 13, 14, 223, 229, 617
consolidation, 151
ranges, 222-223
and trendline studies, 264
Trend Channels, 214, 215, 223, 242-243, 356, 392, 617
in Bethlehem Steel, 213
Parallel Trend Channel, 373-375, 378
Rising Trend Channel, 225
Trending Market, 252, 253, 286, 423, 595, 617 Trendline(s), 207-209, 209-
211, 414, 429, 59 , 616, 617 in action, 375 additional suggestions, 380
amendment of trendlines, 222 analysis, 357 arithmetic vs. logarithmic scale,
211-216 buying stock, 375-377 consequences of Trendline penetration, 224-
225 corrective trends, 226-227 covering short sales, 379-380 double
trendlines and trend ranges, 222-223 experimental lines, 224 intermediate
downtrends, 225-226 liquidating, or selling long position, 378-379 policy
for trading in Major Trend, 380-381 selling stock short, 379 tests of
authority, 216-220 validity of penetration, 220-222 Triangular Price
Formations, 103 Triangular/Triangle(s), 79-80, 423, 608, 617 development,
90-94, 98 formations, 100-101 measuring implications, 100 patterns, 378 on
weekly and monthly charts, 100 Triple Bottom(s), 113-115, 118-120, 617
Triple Top, 103-105, 113-115, 118-120, 504, 568, 617-618 TRIX, 539
True Range, 358, 595
True Strength Index, 539
Tulipomania, 61, 308, 325, 331, 332, 339, 57 , 593, 607 managing, 326-328
PALM, 329
Tulips, 241, 325, 329, 331, 339
“Turbulent period,” 485, 486
Twain, Mark, 26-2 , 304, 365, 532
Turtle(s), 250-252, 259
natural method using by, 359
system, 258-260
U
Ulcer Index, 539
Ultimate Oscillator, 539
United Artist Corporation (UNA), 460
Unnatural method, 610
Up-slanting
bottom boundary, 92-93
line, 79-80, 91
Up Channel, 596
Uptick, 349, 350, 618
Up trendline, 208, 209, 210, 211, 216-217, 221, 596, 617 Uptrends, 14, 104,
153, 158, 208, 212, 219, 225, 233, 422-423, 429, 432
U.S. Securities and Exchange Commission (SEC), 105, 145, 168, 390
U.S. Smelting, Refining and Mining Co, 453, 463
a, 42


539
United Artist Corporation (UNA), 460
Unnatural method, 610
Up-slanting
bottom boundary, 92-93
line, 79-80, 91
Up Channel, 596
Uptick, 349, 350, 618
Up trendline, 208, 209, 210, 211, 216-217, 221, 596, 617 Uptrends, 14, 104,
153, 158, 208, 212, 219, 225, 233, 422-423, 429, 432
U.S. Securities and Exchange Commission (SEC), 105, 145, 168, 390
U.S. Smelting, Refining and Mining Co, 453, 463
a, 428
Head-and-Shoulders Top in (1952)
U.S. Steel, 4, 5, 79, 105, 12, 131, 147, 200, 201, 569
Utah-Idaho Sugar Co. (UIS), 461, 576, 593
Utility Average, see Dow-Jones Utility Average
V
Validity of Trendline Penetration, 618
Valley, 116, 118, 119, 176, 618
Value-at-risk procedure (VAR procedure), 499-500
Variance, 212, 311, 344, 501, 527, 536
Variant 2 procedure, 368, 370
Variations in head-and-shoulders tops, 49-52
V/D volume, 618
“Vertical” Panic Declines, 157
“Vested interest,” 186, 199, 200, 201, 202
Vigor, 95, 144, 197, 516
Vince, Ralph, 504, 533, 60 , 618
Volatility, 283-284, 343, 354, 498, 500, 501, 528, 539, 618 calculation, 527-
528
Volume-Weighted Average Price (VWAP), 538
Volume, 44-45, 4 , 108, 193, 194, 264, 595, 616, 618 on breaks through
support, 205-206 during broadening formations, 122-128 characteristics
same as symmetrical type, 99-100 confirmation, 398, 401, 40 , 408, 432,
449 pattern, 46, 4 , 5 , 59, 63, 64, 6 , 74-75, 13 , 161, 196, 20 , 216, 605,
614 by Price, 537-538, 543 of trading, 67, 193, 197, 221, 618
Vortex Indicator, 539
“Voyeur” feature, 532
W
Wall Street investment banks, 325 Wall Street Journal, 11, 12, 243, 312
“Wash sales,” 107
Wave, 14
Wave analysis methods, 260
Wedge(s), 139, 409-410, 618 formations, 139-142 on weekly and monthly
charts, 143-144
Weighted Moving Averages, 422
West Indies Sugar, 43 , 575, 593
Westinghouse Electric, 4 , 237, 437, 442, 566, 568, 572, 575, 593
“W” Formation, see Triple Top
Wide-Ranging Days, see Runaway Days Widening Channel effect, 243
Wilder Relative Strength Index (Wilder RSI), 595, 610, 618-619
Wieckowicz, R.T., 307 Williams, Larry, 420, 531
Williams %R, 539
World Equity Benchmarks (WEBs), 312
World War II, end of, 515, 516 “W” Pattern, see Triple Top Wright, Charlie,
494
Wyckoff, Richard, 259, 392, 550
Wyckoff's charts, 531
Y
Yahoo! (YHOO), 330, 476, 47, 526, 577, 593
Z
Zen, 269
ZigZag, 197, 383, 538 Zone, Resistance, 189, 192-194, 196, 197, 199-200,
202, 206, 387
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BEST
LOSER
WINS
BEST
LOSER
WINS
Why Normal Thinking Never
Wins the Trading Game
Tom Hougaard

HARRIMAN HOUSE LTD
3 Viceroy Court
Bedford Road
Petersfield
Hampshire
GU32 3LJ
GREAT BRITAIN
Tel: +44 (0)1730 233870
Email: enquiries@harriman-house.com
Website: harriman.house
First published in 2022.
Copyright © Tom Hougaard
The right of Tom Hougaard to be identified as the Author has been asserted in accordance with the
Copyright, Design and Patents Act 1988.
Paperback ISBN: 978-0-85719-822-8
eBook ISBN: 978-0-85719-823-5
British Library Cataloguing in Publication Data
A CIP catalogue record for this book can be obtained from the British Library.
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, or
otherwise without the prior written permission of the Publisher. This book may not be lent, resold,
hired out or otherwise disposed of by way of trade in any form of binding or cover other than that in
which it is published without the prior written consent of the Publisher.
Whilst every effort has been made to ensure that information in this book is accurate, no liability can
be accepted for any loss incurred in any way whatsoever by any person relying solely on the
information contained herein.
No responsibility for loss occasioned to any person or corporate body acting or refraining to act as a
result of reading material in this book can be accepted by the Publisher, by the Author, or by the
employers of the Author.
The Publisher does not have any control over or any responsibility for any Author’s or third-party
websites referred to in or on this book.

To the girl at the Bloomberg terminal
CONTENTS
Dear Markets
Preface
Introduction
Liar’s Poker
The Trading Floor
Everyone Is a Chart Expert
The Curse of Patterns
Fighting My Humanness
Disgust
The Drifter Mind
Trading Through a Slump
Embracing Failure
Best Loser Wins
The Ideal Mindset
About the Author
DEAR MARKETS
FROM THE MOMENT I first came across you, I have been fascinated by you. I
probably even fell in love with you. I was too young to know what that
meant, no more than ten years old. You were featured in a national
newspaper – a competition of sorts.
I was too young to play with you, so I observed. Time was not on my side. I
was born a few decades too soon to participate in trading like it is possible
today. I had to go and live my early life and you went about yours.
When you went through the devastating bear market of 1973, I was just
learning to walk. When you roared with anger during the crash of 1987, I
was just finishing school. When you took the first steps towards the epic
1990s bull market I was almost ready. But not quite there yet.
So, you sent me a message that would change my life, and I took you up on
the invitation, leaving everything behind me to pursue you. I studied you at
university, two degrees in fact. I toiled for hours and hours, trying to
understand you through the eyes of the conventional economic thinkers,
through the eyes of Nobel Prize recipients, and through the eyes of well-
meaning journalists and experts.
I wish you could have told me back then not to bother. You are not an
equation to be solved. You are far more complex than a model could ever
capture. Over and over, you prove yourself to be the elusive mistress that no
one every truly understands. You are everywhere and you are nowhere.
Universal laws do not apply to you.
My love for you was deep. You gave me so much joy. I gave you my all.
You were there when I woke up, and you were there when I went to sleep.
You have elevated me when I was fluid, rewarded me beyond my wildest
dreams when I was flexible. You have punished me when I was rigid and
stubborn, taking all your gifts back – with interest.
And boy did I pursue you. I pursued you like a lovestruck teenager. I
approached you from all angles, from Fibonacci ratios to Keltner Channels,
to Bollinger Bands, to Trident strategies, as well as mythical vibrations of
Gann and Murry Math.
I developed models of the tide swell in the Hudson River to see if you
responded to that. I printed out thousands and thousands of charts, applying
lines and circles, trying to find a way to dance with you so that my feet
didn’t get stamped on so much.
I had sore toes, my love. Sometimes my toes were so sore that I had to go to
the beach and just throw stones in the water for hours on end, angry that
you didn’t want to do the tango with me.
You gave me sleepless nights. You gave me tears in my eyes, anger in my
body, hurt in my soul, and yet I couldn’t let you go. I knew there was more
to it, and I knew I had to keep looking.
I gave you everything because you made me feel alive. You gave me a
purpose. You gave me challenges so hard even a drill sergeant would have
to give you a nod of respect. And I will always love you for it. You kept me
on my toes, like a parent wanting only the best for their child.
But you made the lessons obscure. You designed it to look easy. But it was
never easy. You made everyone believe that you could be danced with
through models, through equations, through indicators, through
conventional thinking and through logic. But often there is little logic to
you. And I struggled to dance with you for years, until one day by chance
you told me your secret. You told me to stop trying to understand you. You
told me to understand myself.
I stopped trading. I took the time to understand myself, and I came back.
And when I returned to the dance floor, you welcomed me with open arms,
smiled, and said, “Welcome back, I see you get it now. Did you bring the
band-aids?”
And I did. Best loser wins.
PREFACE
HOW YOU FEEL about failure will to a very large degree define your growth and
your life trajectory, in virtually every aspect of your life.
You may want to close this book and think about that for a while. It is quite
frightening how deep that sentence is.
What 99% of tra

eBooks\Tom Hougaard - Best Loser Wins.pdf


arms,
smiled, and said, “Welcome back, I see you get it now. Did you bring the
band-aids?”
And I did. Best loser wins.
PREFACE
HOW YOU FEEL about failure will to a very large degree define your growth and
your life trajectory, in virtually every aspect of your life.
You may want to close this book and think about that for a while. It is quite
frightening how deep that sentence is.
What 99% of traders do not realise is that they are looking for answers in
the wrong places. Knowledge of technicals, fundamentals, indicators, ratios,
patterns and trend lines… well, everyone knows about them – and everyone
loses, except the 1%.
What do the 1% do that the 99% is not doing?
What am I doing, enabling me to have the success in trading that I have,
which the others are not doing?
The answer is as simple as it is complex. I am an outstanding loser.
The best loser wins.
I have conditioned my mind to lose without anxiety, without loss of mental
equilibrium, without emotional attachment, and without fostering feelings
of resentment or desire to get even.
It is because of how my mind works that I am able to trade in the way that I
do. My knowledge of technical analysis is average at best. My knowledge
of myself is what sets me apart.
The true measure of your growth as a human being is not what you know,
but rather what you do with what you know.
I wrote this book to describe how I transformed myself into the trader I am
today, and how I was able to bridge the gap between what I knew I was
capable of, and what I actually achieved.
INTRODUCTION
MY NAME IS Tom Hougaard. I am 52 years old. Thirty years ago, I left my
native Denmark. I wanted to trade the financial markets and I wanted to do
it in London.
I had an idea of what I needed to do to become a trader. I got a BSc in
Economics and MSc in Money, Banking and Finance. I thought I had
everything I needed to become a trader: the right kind of education; a good
work ethic; and passion for the markets.
I was wrong.
On paper, I was qualified to navigate the financial markets. In reality,
educational qualifications mean little in the dog-eat-dog world of trading.
This book describes the journey I went through to get to where I am today.
Where am I today?
As I type this, I have not had a losing day in 39 trading days. I run a
Telegram trading channel, where my followers witnessed me make
£325,000 in the last month alone – in real time, with real-time entries,
money management, position sizing, and ultimately the exit of the position.
No time delays. No lag. All done before their eyes – time stamped.
This book dispels the myths of what it takes to be a home trader, or any
trader for that matter. It has been a journey that saw me initially pursue the
path that everyone else takes – a lot of books about a lot of indicators,
patterns and ratios – before finally realising that the real answer to the
elusive quest for trading profits was right inside of me all along. It truly was
the last place I ever thought of looking.
A PROMISING BEGINNING
After completing my university degrees, I started working for JPMorgan
Chase. It wasn’t a trading job, but it was close enough. Then in 2000 I
became a home trader for a year and a half. It only lasted 18 months
because I ran out of money.
I had befriended the staff at the broker I traded with. They hired me as a
financial analyst. I say analyst, but I was a glorified media whore. My
mandate was to get the brokerage seen on TV and my credentials were an
understanding of technical analysis.
I started that job in the summer of 2001. My first customer-facing
experience was when the CEO brought me to Royal Ascot – a significant
event in the social calendar of the rich and famous. It is a horse racing
event, mixed with champagne, funny-looking hats and big cigars.
Only the best and most lucrative clients were invited to this VIP event. On
board the executive coach taking the prestigious clients to Ascot, I was
introduced as the new financial analyst. “Ask him anything,” declared the
CEO.
One client asked me what I thought of Marconi. Marconi was a member of
the FTSE 100. It had seen better days. It had declined from 1,200 pence to
450 pence over the preceding 12 months.
“Do you think Marconi is cheap?” asked a pharmacist from Luton.
I didn’t know it at the time, but my answer – and a similar one on TV a few
months later – would eventually get me fired from my job. Even if I had
known, I would not have changed my answer:
Marconi is garbage, gentlemen. Why are you chasing stocks that have
fallen in price? The stock market is not like a supermarket, where it
makes sense to buy toilet paper when there is a sale on.
Sure, it makes sense to buy toilet paper at a 50% discount, but it makes
no sense to buy a stock that has fallen more than 50%. Concepts like
‘cheap’ and ‘expensive’ may work in the world of Saturday grocery
shopping, but not in the financial markets.
My answer hung in the air like a morbid joke at a funeral. I had barely
finished my verdict before I noticed the death stare from my boss. All these
clients were long Marconi and they would go on to lose fortunes. Later that
year I was on CNBC and I was asked to do a chart analysis of Marconi.
By that point Marconi had fallen to 32 pence – from 1,200 pence. And still
people were buying it. I suggested that on the basis of the chart pattern,
Marconi would go to zero.
A few newspaper outlets picked up on the story and a few days later I was
called to the offices of Sporting Index. The CEO wanted to ask me if it was
possible to get these Marconi comments deleted from “that internet”.
Marconi went to zero and I was asked to find another job. Fortunately, City
Index hired me the same day I left Financial Spreads. I spent seven years on
the trading floor at City Index. In 2009 I was made redundant and I have
been a private trader ever since.
I have spent the last 12 years of my life perfecting my craft. I am what
brokers call a high-stake trader. The average stake size amongst reta


rconi went to zero and I was asked to find another job. Fortunately, City
Index hired me the same day I left Financial Spreads. I spent seven years on
the trading floor at City Index. In 2009 I was made redundant and I have
been a private trader ever since.
I have spent the last 12 years of my life perfecting my craft. I am what
brokers call a high-stake trader. The average stake size amongst retail
traders is about £10 per point risk. I risk anywhere from £100 per point to
£3,500 per point.
On volatile days I have traded in excess of £250 million in notional value. I
once made a little more than £17,000 in less than seven seconds. One time I
lost £29,000 in eight seconds.
That kind of stake size sharpens the senses. Yes, it is a great life when it
goes well, but a very challenging one when adversity sets in.
This book describes my journey from an unemployed financial broker in
February 2009 to the high-stake trader that I am today. But it is not a
conventional trading book.
JUST ANOTHER TRADING BOOK?
The world does not need more trading books. So, I decided not to write one.
I know enough about technical analysis to write a few books. I also know
that technical analysis does not make you a rich trader. It doesn’t even make
you a good trader.
I had no ambitions of wanting to write a book, but one day, while I was
watching a documentary on YouTube, an advert appeared on my monitor. I
recognised the face immediately.
It was a guy who once attended a few speeches I gave on technical analysis,
while I was working as a trader at City Index in London. Now he appeared
in an advert, promising to reveal the secrets to the financial markets through
his courses.
The advert proudly declared that if you wanted to learn to trade like a pro,
then this course was what you needed.
As it happened, a friend of mine had attended the course. It took place over
a weekend in some plush offices in London. The place was packed and the
hopefuls hung on every word of this self-proclaimed guru as he took them
through one chart after another.
There was no critical thinking present. No one questioned his claims.
Everyone left that office building on Sunday night thinking they would
make a small fortune by the coming Friday.
I saw the course notes. It was hundreds of pages of regurgitated material
from a standard textbook on technical analysis. There was no original
thought behind it. There were no new contributions to the field of technical
analysis.
Anyone with half an afternoon at their disposal could find the same material
free of charge on the internet. More importantly, my friend told me, the
guru never missed an opportunity over the weekend to pitch additional
products such as personal mentoring and the advanced course.
THOSE WHO CAN, DO
There is a saying that those who can, do. And those who can’t, teach.
I don’t agree with that. There are many people who “can” and who also
“do”. One is not exclusive of the other. Many great “do’ers” see it as part of
their life mission to pass on knowledge to those around them. When I
worked at City Index, I might not have been an oracle of technical analysis,
but I certainly knew more than most of our clients. For that reason I gave
technical analysis lessons most evenings to our clients and the many white
label clients that City Index had, such as Barclays Bank, Hargreaves
Lansdown and TD Waterhouse.
I truly enjoy passing on knowledge and I did the best I could with the
knowledge I had. However, what I didn’t realise back then was that
technical analysis is rather pointless unless it is combined with behavioural
response training.
My main beef with the many gurus teaching outrageously expensive
weekend courses is their outcome focus. They are driving their agenda by
the use of external stimuli, such as portraying themselves in a helicopter or
on a private jet, and they portray trading as an easy profession to master, or
one where there is a secret to be learned, and once in possession of this
coveted secret you become your own ATM. Rarely if EVER will these
gurus risk their reputation by disclosing their trades in real time. It is always
after the fact. We never hear about their losing trades. This gives the illusion
that losing is a mere inconvenience you experience from time to time when
trading.
It is only when you sit down in front of the screen on Monday morning,
after your overpriced weekend course on trading, and the market is moving
in front of you, and you don’t have the after the fact chart in front of you,
that you realise this game is not as easy as the guru told you during the
weekend course.
I have written a book that is an antidote to all the rubbish that is being
peddled in the trading arena by charlatans who are 99% marketing and 1%
trading. They preach their message to unsuspecting people – who sadly
believe them – with neither the teacher nor the student realising that they
only got 10% of the story.
More importantly, I have written a book which is all about the aspect of
trading they never teach you, and how to get to the top of the trading
pyramid.
While writing this book, I saw an advert for a technical analysis course in
my home country, Denmark. Only the year before, the person running the
course had lost 35% of their trading capital on a copy trader account for
their followers, before closing the account.
That is the problem with technical analysis. It is very easy to learn, but it
should not be touted as the path to untold riches in the financial markets.
The gurus appear on adverts suggesting that all you need to make money
from the market is to learn technical analysis.
I wish it was that easy, but it isn’t.
IF NOT TECHNICAL ANALYSIS, THEN
WHAT?
There is a law in Europe that states that brokers offering trading services to
retail clients must disclose what percentage of their clients lose money.
I looked up the major players in the industry. According to their websites,
around 80% of their clients lose money.
I called one broker to ask how this n


hnical analysis.
I wish it was that easy, but it isn’t.
IF NOT TECHNICAL ANALYSIS, THEN
WHAT?
There is a law in Europe that states that brokers offering trading services to
retail clients must disclose what percentage of their clients lose money.
I looked up the major players in the industry. According to their websites,
around 80% of their clients lose money.
I called one broker to ask how this number was calculated. The number is
adjusted quarterly. The broker compares the account balances of its clients
from the prior quarter and simply takes the percentage of accounts that have
a lower balance than three months earlier.
If the answer to the trading quest was to study technical analysis, then you
would not have default rates of 80%. Incidentally, the guru who gave a
weekend course to my friend happens to also own a brokerage that he refers
all his attendees to. I looked up its default rate.
More than 80%!
So, either his clients are just awful traders, or he is an awful teacher.
I will come to the rescue of both camps and state that to become a profitable
trader, you need much more than just technical analysis under your belt.
That is why I wrote this book – to describe the path I have taken to get
where I am today. Over the last 20 years I have read many books on
technical analysis and trading techniques. I personally find most of them
boring and pointless.
All I see in these trading books is one perfect chart example after another. It
creates an illusion in the mind of the reader. They absorb these conceited
tales, written by traders who espouse the same material as everyone else –
material that bears little resemblance to the real trading world. It leaves the
reader blindsided to the reality of the trading arena.
Of course, there are exceptions. There are some good books written on
techniques and strategies, but most of them are garbage because the author
suffers under the illusion that he or she should only show perfect trading
examples.
They perpetuate the illusion that trading is an easy endeavour. I think it is
fair to say that with a failure rate around 80%, there is absolutely nothing
easy about trading.
I dare say that if technical analysis as a subject was comparable to
something like dentistry, the vocation would be terminated on account of
the 80% failure rate. You don’t have a 80% failure rate amongst dentists.
THE MILLION VIEWS YOUTUBE
TALK
I was invited by one of the biggest brokers in the world to give a talk about
the life of a home trader. They filmed the event, which lasted a few hours. I
gave the speech a provocative title:
Normal Does Not Make Money
The broker emailed me last year to say that my video had received five
times more views than their second-best video, and that it had now
surpassed one million views on YouTube.
This gave me the confidence to push ahead with the book project, because I
could see that my message resonated with an audience that wanted to move
beyond the conventional teachings in trading.
Although this is not a book about trading techniques, I am not arguing that
you can do without technical analysis, or some form of analysis. There must
be some rhyme or reason to your entries and exits, and your stop-loss
placement.
However, I am also arguing that techniques alone will not make you rich.
Analysis alone will not get you to where you want to be. I imagine you
want trading to give you a meaningful side income or perhaps even be your
main income.
I am arguing that a normal human being, displaying normal thinking
patterns and traits, will never stand a chance of making money trading. In
other words, normal won’t cut it.
One of the best books ever written on trading is Reminiscences of a Stock
Operator. There is not a single mention of trading techniques in that book.
Let’s face it, we can all learn to walk a tightrope suspended one foot off the
ground. However, can you walk across that same tightrope when it is
suspended 100 feet off the ground?
In the same vein, we can all trade bravely and aggressively when we are
trading one lot, but can you trade with absolute clarity and emotional
detachment when you are trading a 10-lot or a 100-lot?
I can’t guarantee you will trade 100-lots, but I will describe the process that
got me to trade that kind of size.
I am leaving no stone unturned. I have described every facet of life as a
trader, from the mundaneness to the excitement, and I have described the
exact steps I take every day, week, month and year, to ensure that I am up to
the job.
And let me immediately make an important declaration: I am not going to
sugar-coat my message. It is an insanely difficult profession, one that is
beyond the apparent mental abilities of almost everybody, yet at the same
time a profession that will reward you with wealth beyond your
imagination, once you understand how this game really should be played.
This book describes how to play the game of trading.
Now you know the end destination. If you don’t like the sound of it, now is
a good time to put down the book and go to the YouTube and TikTok videos
and watch the Ferrari-driving 20-year-old trading coaches tell you how it is
all done.
If, however, you want lasting change – not only in your trading, but in how
you live your life – then stay with me. Your transformation into a consistent
trader will permeate other parts of your life. It will give you a deep
understanding of who you are and what you can do to better yourself. The
end result is not just more money on your trading account, but a more
harmonious and exciting life journey.
LIAR’S POKER
MY JOURNEY AS a trader started when I came across a book called Liar’s Poker.
I was home from school with flu and my dad brought me some books from
the library. Liar’s Poker was one of them.
It is a period piece, written by Michael Lewis, the man behind the book The
Big Short, which was made into a Hollywood blockbuster.
In Liar’s Poker, Lewis describes life as a bond trader during the excesses of
the 1980s. In his own wo


arted when I came across a book called Liar’s Poker.
I was home from school with flu and my dad brought me some books from
the library. Liar’s Poker was one of them.
It is a period piece, written by Michael Lewis, the man behind the book The
Big Short, which was made into a Hollywood blockbuster.
In Liar’s Poker, Lewis describes life as a bond trader during the excesses of
the 1980s. In his own words it was meant to serve as a warning to future
generations about the gluttony of the finance industry, as well as a warning
to young people wanting to work in the financial industry.
I think it had the opposite effect. I suspect thousands of young men and
women like me read the book and thought to themselves that Wall Street
was the place to be.
The book describes a young man travelling from America to Britain to
study at a London university and subsequently being hired to work for an
American investment bank. It describes what it was like to work on a
trading floor and observe some of the big traders there.
I was hooked, and I knew trading would be my vocation. I have since read
many other trading books that are perhaps more specific about trading than
Liar’s Poker, but as a starter book, I could not have asked for anything
better.
My life changed after reading that book. It was a wake-up call. I went from
being a skateboard-loving football fanatic, to being a focused and driven
individual. I had found my calling.
I started applying to university degree courses around Europe. I already had
a job at a pension fund as an office trainee. After reading the book, I knew
that would not be my end destination.
I got accepted to a university in Britain for the following year, but I had a
problem. There was no funding. I had to pay my own way. I worked all
hours, day and night. During the day I would work at the pension fund, then
in the evening I would skate five miles to an amusement park to work there
until 1 am.
I absorbed as much information as I could from the Danish finance pages. I
would read English books to improve my language skills.
My family was less than supportive. On the big day of departure, I had to
make my own way to the airport. They eventually came around and shared
my trials and tribulations throughout the years. My sister once told me she
chewed her nails the first time she saw me on TV. She was so nervous I
would freeze on air.
MY FIRST BIG TRADE
There is a saying in the financial markets that perfectly sums up my first
brush with speculation. Don’t confuse talent with luck. I was blind to the
ways of the financial markets, but I got incredibly lucky.
It was September 1992. I had just been accepted to my university. I had
worked hard to earn enough money to finance the tuition fees and living
expenses for three years, although I was a little short. I figured I would
work through the holidays to make up for the shortfall.
As I was packing up my home and preparing myself to journey to the
United Kingdom for my first year as a university student, there was a
proverbial hurricane blowing through the currency markets.
The UK was a member of the European Exchange Rate Mechanism (ERM).
This was a system introduced by the European Economic Community to
reduce exchange rate variability and achieve monetary stability in Europe.
The UK joined the ERM in 1990, but by 1992 the UK was in a recession.
The Bank of England found it more and more difficult to honour their
commitment to maintain the British pound within a tight band against other
currencies in Europe. Speculators were actively betting against the pound,
thinking that it was heavily overvalued.
As I was walking to my local bank in Denmark with my savings, looking to
exchange my Danish kroner for British pounds, a major drama was
unfolding in the financial markets. It was called Black Wednesday.
On 16 September 1992 the British government was forced to withdraw the
pound from the ERM after a failed attempt to keep the pound above the
lower currency exchange limit mandated by the ERM.
I found the following information about Black Wednesday on Wikipedia. It
sets the tone well for what I was about to experience, and what caused a
massive windfall for a 22-year-old aspiring trader:
Soros’ Quantum Fund began a massive sell-off of pounds on Tuesday,
15 September 1992. The Exchange Rate Mechanism stated that the
Bank of England was required to accept any offers to sell pounds.
However, the Bank of England only accepted orders during the trading
day. When the markets opened in London the next morning, the Bank
of England began their attempt to prop up their currency as per the
decision made by Norman Lamont and Robin Leigh-Pemberton, the
then Chancellor of the Exchequer and Governor of the Bank of
England respectively.
They began buying orders to the amount of 300 million pounds twice
before 8:30 am to little effect. The Bank of England’s intervention was
ineffective because Soros’ Quantum Fund was dumping pounds far
faster. The Bank of England continued to buy, and Quantum continued
to sell until Lamont told Prime Minister John Major that their pound
purchasing was failing to produce results.
At 10:30 am on 16 September, the British government announced a
rise in the base interest rate from an already high 10%, to 12% to tempt
speculators to buy pounds. Despite this and a promise later the same
day to raise base rates again to 15%, dealers kept selling pounds,
convinced that the government would not stick with its promise.
By 7:00 that evening, Norman Lamont, then Chancellor, announced
Britain would leave the ERM and rates would remain at the new level
of 12%; however, on the next day the interest rate was back on 10%.
This was of course all unbeknownst to me, yet it had a material impact on
my studies. Had I walked down to the bank just a few days earlier I would
have had to pay close to 12 Danish kroner for one pound. By sheer luck I
walked straight into, and benefited from, one of the biggest modern-day
currency crashes, and I was able


level
of 12%; however, on the next day the interest rate was back on 10%.
This was of course all unbeknownst to me, yet it had a material impact on
my studies. Had I walked down to the bank just a few days earlier I would
have had to pay close to 12 Danish kroner for one pound. By sheer luck I
walked straight into, and benefited from, one of the biggest modern-day
currency crashes, and I was able to convert my Danish kroner at an
exchange rate of about 9 kroner to the pound.
I made an extra £4,000 from my savings. My annual budget with tuition and
lodging was £2,500. ‘Uncle George’ made my university education debt
free.
Although the day was called Black Wednesday, many historians argue it
was a Golden Wednesday, because the cheaper pound attracted investment.
It set the stage for an economic growth spurt in the United Kingdom.
THE PRICE OF A HOTDOG IN PARIS
I wasn’t the only one who made a life-changing amount of money that day.
George Soros made a billion dollars. It cemented his name as one of the
greatest speculators of all time.
And he wasn’t the only one who had noticed stark value differences
between the European currencies before that fatal day in September 1992.
Another trader had too. Actually he wasn’t a trader at all. He owned a
printing company in East London. We shall call him the Englishman.
When I started working in the City of London, I heard the story of a client
who had been holidaying in France. During a visit to Paris, he found
himself buying a hotdog at a corner stand, down by the Eiffel Tower.
When it came to pay for the goods, the price for the hotdog was so shocking
to our Englishman that he was thinking the hotdog stand owner was trying
to cheat him.
He was assured that this was the prevailing price for a hotdog in Paris. He
decided to buy another hotdog somewhere else, just to make sure he had not
been cheated the first time around. The outcome was the same.
Our Englishman was laying the foundation for one of the greatest single-
man bets in the history of the retail trading industry. He walked into a
supermarket in Paris and started making a note of the prices for food, drink
and other household items.
Back in London our Englishman compared the French prices to the prices
for the same goods in his local supermarket, and he concluded that the
French franc was hugely overvalued. He called his financial trading house,
and spoke to a young broker, who was later to become my boss.
My boss loved to tell the story of how his client managed to turn a £5,000
account deposit into an £8m (that is eight million pounds!) profit. He
relentlessly pursued the idea that the French franc was hopelessly
overvalued, and he profited hugely from it.
The reason for sharing this anecdote is not merely to tell you a good story,
but also to prepare you for what this book is all about. You see, this might
have been a great story, had it not been for the fact that the client later went
on to lose all of that money, and then some.
Isn’t successful trading all about making the money and holding on to it as
well?
What 99% of people do not realise is that when you win, there are things
happening in your brain chemistry, which – if left unnoticed and unchecked
– will have a detrimental effect on your decision making.
ECONOMIC THEORY AND
ECONOMIC HISTORY
Studying at university taught me what there was to learn about economic
theory. It taught me how the financial markets were put together and how
current economic theory tried to make sense of the world around us.
However, it didn’t teach me how to trade. It didn’t teach me how
momentum, psychology and sentiment have a major influence on the
financial markets. My degree course did little to prepare me for the real
world. I thought that taking a master’s degree would change that, and while
it was a little more industry relevant, I still felt the market was a big
mystery to me.
The idea that you can test variables within an economic system by holding
other components constant didn’t sit well with me. I am not sure I was
consciously mindful of it then, but I saw the world differently.
I didn’t think that the markets were efficient. I had a strong belief that the
markets were anything but rational. The markets are driven by humans, and
if there is something humans are not, it is rational or logical when exposed
to stress.
RICH MAN’S PANIC
I enjoyed studying economic history more than I enjoyed studying
economic models. One of the pivotal moments came when studying the rich
man’s panic of 1903 and the panic of 1907. Bernard Baruch, a famed Wall
Street speculator, made a substantial amount of money by correctly
anticipating the consequences of a failed corner of a railroad stock.
A corner is when a group of people or a syndicate inflates the price of a
stock in order to create a buzz, thus trying to entice more gullible investors
to join the bandwagon, and then offloads the stock to the latecomers. Today
it would be called a pump and dump. Just think GameStop!
What made an impression on me was how Bernard Baruch anticipated the
sequence of events. He started to sell short a broad range of popular stocks
because he reasoned that the syndicate would have to raise money to keep
their ill-fated corner alive. He was right. The general market declined
rapidly. The Dow Jones Index fell 49% in a few months, and Baruch
profited from it.
From then onwards I found it difficult to study economic models. I found
them rigid and too theoretical in concept. I felt they made fallible
assumptions. They argued that humans always act rationally.
But mankind most certainly does not always act rationally. As I write this
page, I am looking at my quote monitor. The Dow Jones is called down 500
points. The DAX Index is already down 250 points. “Why is that?” I hear
you ask. It is because there is a serious virus called coronavirus spreading
through the world. Some 80 people have died already.
The market is not so concerned about the 80 people. The market is
concerned it is


not always act rationally. As I write this
page, I am looking at my quote monitor. The Dow Jones is called down 500
points. The DAX Index is already down 250 points. “Why is that?” I hear
you ask. It is because there is a serious virus called coronavirus spreading
through the world. Some 80 people have died already.
The market is not so concerned about the 80 people. The market is
concerned it is going to get worse. The markets are ALL about perception,
sprinkled with economic reality. I don’t understand the fundamentals behind
a virus, and I don’t need to.
My job is NOT to understand the implications of a virus. My job is to
understand the players in the market and what they are feeling. They are
scared, and I have spotted their fear. So of course I am short. I am not short
the market because I think a virus is going to wreak havoc on the global
economy. I am short because I think they think something terrible is about
to happen.
Whatever happens, my job is to read the sentiment and to keep my own
emotions in check.
That is essentially what I am going to teach you in this book. I am aligned
with reason when it comes to explaining bull markets and bear markets. The
health of the underlying economy will drive a market up or down. However,
as a day trader I need to have a mental flexibility that is never described or
accounted for in economic theory.
I also need to know “when to hold, and when to fold,” as Kenny Rodgers
sings in ‘The Gambler’. Am I a gambler? If I say yes, you might think there
is no difference between me and the guy who visits a casino for a bit of
excitement.
What if I were to tell you that I make more money than the average
professional football player, and I do so not because I am gifted with special
abilities to read the markets, but because I have learned to control my
emotions?
I am not an unemotional sociopath. I feel. I love. I cry. I ache. I mourn. I
laugh. I smile. You can be a nice guy and still finish on top. But you do
need to learn to think differently than the 99% does, when you are trading.
We will get to that soon enough.
JPMORGAN CHASE
After my graduation I interviewed for many graduate jobs within the
banking and finance industry. I didn’t get my dream job, working as a
trainee trader, but I did get a good job working for Chase Manhattan Bank,
later called JPMorgan Chase.
It was an invaluable experience. I arrived with a bagful of enthusiasm.
Working for an American investment bank was probably the best thing that
could have happened to me.
I was able to channel my enthusiasm for the financial markets into my
work. I worked with portfolio analysis and performance benchmarking,
which meant I was able to observe the financial markets unfold before my
eyes every single day.
I happened to sit right next to a Bloomberg terminal. I loved that machine. I
would often sneak into the office building on Saturdays and Sundays to
devour analysis and trading stories, and download data.
The great thing about working for an American bank is that there is a very
different work ethic to typical European companies. This may have changed
in the last 20 years, but when I was working at JPMorgan we were literally
allowed to work as many hours of overtime as we wanted.
I worked for JPM for close to three years, and in those three years I never
had a month where I didn’t do at least 40 hours’ overtime. You got used to
working long hours with focus because the job required forensic attention to
detail.
By the time I left the bank, I was a hardened and seasoned workaholic. I
don’t say that with pride, but I don’t think there is any point in hiding the
fact that the reason for my success was not due to immense intelligence, but
rather my work ethic. I just worked longer hours than the others. I made the
sacrifice for what I wanted.
My attitude reminds me of the ethos of Navy Seals, the American special
forces unit: anything in life worth doing is worth overdoing. Moderation is
for cowards.
My dream finally did come true, when I walked onto a trading floor for the
first time.
THE TRADING FLOOR
WALKING ONTO A trading floor is a special experience. I vividly remember being
interviewed for a trading job after my university graduation. This took place
on the trading floor of Handelsbanken, the Scandinavian bank, and the guy
who interviewed me was the head of trading.
I could tell that he was intensely focused on something else, and I was an
inconvenient distraction. I have been in that situation many times in my
trading life. Having a big position on in the market and then having to deal
with the trivialities of the world outside of trading can be a peculiar
experience.
Boxing Day 2018 is a great example. I was trading the biggest one-day rally
in the history of the Dow Jones Index, while eating Christmas pudding. I
had to hide my mobile phones under the dinner table so as not to offend my
host, and I had to fake numerous trips to the toilet so I could watch the chart
on one phone and the broker platform on another.
I arrived at the trading floor of Financial Spreads with a very different
attitude to most of my colleagues. As I know many of them will read this
book, I owe it to them to explain that I am not accusing them of being lazy.
I had lots to learn, including the fact that when the markets are quiet, there
really isn’t much for brokers to do.
What I found was that people would sit around and read the newspapers or
comic books. If the phone didn’t ring, you could hardly force a broker to do
anything. I think this was the biggest culture shock I experienced – the
contrast between a normal office job and a trading floor.
Working on a trading floor is intimidating at first. As the months go by, you
become immune to the money changing hands. It is all just numbers on a
screen. I once walked in at 6 am to find that a Russian client was on a
margin call for $10m. I quickly calculated that it would take me 133 years
on my current salary to make $10m. By 7 am he had wired the funds over