Long-Term Secrets to Short-Term Trading E-Book

Larry Williams

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: Wiley Trading Series
• Sprache: Englisch
• Veröffentlichungsjahr: 2011

Seitenzahl: 480

Beschreibung

Hugely popular market guru updates his popular trading strategy for a post-crisis world From Larry Williams--one of the most popular and respected technical analysts of the past four decades--Long-Term Secrets to Short-Term Trading, Second Edition provides the blueprint necessary for sound and profitable short-term trading in a post-market meltdown economy. In this updated edition of the evergreen trading book, Williams shares his years of experience as a highly successful short-term trader, while highlighting the advantages and disadvantages of what can be a very fruitful yet potentially dangerous endeavor. * Offers market wisdom on a wide range of topics, including chaos, speculation, volatility breakouts, and profit patterns * Explains fundamentals such as how the market moves, the three most dominant cycles, when to exit a trade, and how to hold on to winners * Includes in-depth analysis of the most effective short-term trading strategies, as well as the author's winning technical indicators Short-term trading offers tremendous upside. At the same time, the practice is also extremely risky. Minimize your risk and maximize your opportunities for success with Larry Williams's Long-Term Secrets to Short-Term Trading, Second Edition.

Leseprobe

Contents

Cover

Series

Title Page

Copyright

Acknowledgments

Introduction: You Are Already a Commodity Trader

MY MOST IMPORTANT MARKET BELIEF

THE BEGINNING OF MY CAREER AS A SPECULATOR

THE RIDE OF A LIFETIME

Chapter 1: Making Order Out of Short-Term Chaos

HOW I LEARNED ABOUT THE MARKET

CHARTING THE MARKET

THE NONRANDOM MARKET

UNDERSTANDING MARKET STRUCTURE

MARKET STRUCTURE WILL NEVER CHANGE

SHORT-SELL PATTERN

TARGET TIME AND TRAILING STOPS

RECAP

Chapter 2: It's a Question of Price and Time

ALL YOU WILL EVER NEED TO KNOW ABOUT CYCLES

THE NATURAL CYCLE OF RANGE CHANGE

WHERE THE TREND IS WITH YOU—THE SECOND POWER-PLAY PRICE PATTERN

RECAP

Chapter 3: The Real Secret to Short-Term Trading

IT'S ALL ABOUT TIME

BANKROLLING HOTSHOT TRADERS

PROVING THE POINT

HOW TO MAKE THE MOST MONEY

RECAP

Chapter 4: Volatility Breakouts—The Momentum Breakthrough

SIMPLE DAILY RANGE BREAKOUTS

A LOOK AT VOLATILITY IN THE S&P 500

SEPARATING BUYERS FROM SELLERS TO FIND VOLATILITY USING MARKET SWINGS

RESULTS

ONE STEP FURTHER

RECAP

Chapter 5: The Theory of Short-Term Trading

WHAT IS WRONG ABOUT THE INFORMATION AGE

E. H. HARRIMAN'S RULE OF MAKING MILLIONS

RECAP

Chapter 6: Getting Closer to the Truth

THE MARKET IS NOT A COIN FLIP: RANDOM WALK OR COOTNER VERSUS COHEN (COHEN WINS)

GOLD TDOM STUDY

BOND TDOM STUDY

MONTHLY ROAD MAPS

RECAP

Chapter 7: Patterns to Profit

THE COMMON ELEMENT

THE QUESTIONS TO ASK

MY SMASH DAY PATTERNS

HOW TO USE SMASH DAY PATTERNS

SPECIALISTS’ TRAP

A VITAL NOTE—THIS WORKS ON SHORTER TIME FRAMES AS WELL

OOPS! THIS IS NOT A MISTAKE

S&P OOPS! TRADING

RECAP

Chapter 8: Separating the Buyers from the Sellers

GREATEST SWING VALUE

STOCK INDEX TRADING WITH GREATEST SWING VALUE

SOME POINTERS

RECAP

Chapter 9: Short-Term Trading from a Quote Screen

HOW A QUOTE-SCREEN TRADER MAKES MONEY

SWING POINTS AS TREND CHANGE INDICATION

THE THREE-BAR HIGH/LOW SYSTEM

A NEW INDICATOR FOR SHORT-TERM TRADERS: WILLSPREAD

WILLSPREAD AND THE S&P 500 STOCK INDEX

RECAP

Chapter 10: Special Short-Term Situations

MONTH-END TRADING IN STOCK INDEXES

TARGET MONTHS

MAKING IT BETTER

MONTH-END TRADING IN THE BOND MARKET

GETTING SPECIFIC

BETTER AND BETTER

A TIME TO SELL

RECAP

Chapter 11: When to Get Out of Your Trades

Chapter 12: Thoughts on the Business of Speculation

EXITS BEFORE ENTRIES

WHAT SPECULATION IS ALL ABOUT

IT'S ABOUT TIME

ESSENTIAL POINTS ABOUT SPECULATION

RECAP

Chapter 13: Money Management—The Keys to the Kingdom

MOST TRADERS USE A HIT-AND-MISS APPROACH

APPROACHES TO MONEY MANAGEMENT—ONE IS RIGHT FOR YOU

THE GOOD, THE BAD, AND THE UGLY OF MONEY MANAGEMENT

LOOKING IN NEW DIRECTIONS, DRAWDOWN AS AN ASSET

BACK TO RALPH: 2011 MONEY MANAGEMENT BREAKTHROUGH

THE KELLY RATIO MIRAGE

RECAP

Chapter 14: From Kennedy to Obama, Thoughts from 50 Years of Trading

TRADING AND COLLECTING HONEY

LOW-HANGING FRUIT

LOOK BEFORE YOU LEAP

REMEMBER THE GAME CALLED PICK UP STICKS

AND IT CAN GET WORSE BY FAR …

LOCK-UP TIME

ENOUGH ON GREED … NOW LET'S DEAL WITH FEAR

RUNNING, TRADING, AND LOSING

DOING THE WRONG THING … IT'S SO EASY, ISN'T IT?

IT'S NOT THE TRADE, IT'S THE BATTLE

THE ART OF FLY-FISHING REVISITED

FEAR AND GREED, LOOKING THEM IN THE FACE AGAIN

WHY MOST TRADERS LOSE MOST OF THE TIME

A REVIEW OF LOSING TRADES SHOWED THAT

THE NUMBER ONE REASON WE LOSE MONEY TRADING

THE MOST IMPORTANT TRADING BELIEF YOU HAVE

THE WORST DOG I EVER HAD COST ME THE MOST

ATHLETICS ARE SUCH A PARALLEL TO TRADING

WHAT CAUSES STOCK AND COMMODITY MARKET TRENDS

HOW TO MEASURE THE PUBLIC VERSUS THE PROS

FOLKS, IT JUST CAN'T BE DONE

THE RUSH OF TRADING

BEATING THEM TO THE PUNCH

IT'S JUST OVER MY HEAD

I LOOKED FEAR AND GREED IN THE FACE

THE SHOW MUST GO ON

BROKEN NOSES, CAULIFLOWER EARS, AND BAD TRADES

LEARNING HOW TO LOSE MONEY

HILLARY, HIGH HOPES, AND HEARTACHES

NERVOUS NELLIES—HEAVEN BOUND

SECRETS OF SYSTEM DEVELOPING AND TRADING

THE DIFFERENCE BETWEEN WINNERS AND LOSERS

RECAP

Chapter 15: Just What Does Make the Stock Market Rally?

LOGIC 101

THESE WORDS ARE MY BOND

A LOOK AT DATA A AND DATA B

LET'S BREAK SOME BAD HABITS

HOW TO BREAK BAD HABITS

COMMENTS ON SETTING STOPS—DOLLAR LOSS AND UNPREDICTABILITY

AN OVERVIEW OF HOW I TRADE

MY TRADING STRATEGY … HOW IT WORKS

RECAP

Chapter 16: Hard Facts about a Very Hard Game to Win

IT IS JUST LIKE LIFE

MAYBE YOU ARE NOT CUT OUT FOR THIS …

YOU ARE IN A TOUGH SPOT …

BUT THERE'S A LITTLE BIT MORE …

IN CLOSING

Index

Founded in 1807, John Wiley & Sons is the oldest independent publishing company in the United States. With offices in North America, Europe, Australia, and Asia, Wiley is globally committed to developing and marketing print and electronic products and services for our customers' professional and personal knowledge and understanding.

The Wiley Trading series features books by traders who have survived the market's ever-changing temperament and have prospered–some by reinventing systems, others by getting back to basics. Whether you are a novice trader, professional, or somewhere in between, these books will provide the advice and strategies needed to prosper today and well into the future.

For a list of available titles, please visit our web site at www.WileyFinance.com.

Copyright © 2012 by Larry Williams. All rights reserved.

First edition published in 1999.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data:

Williams, Larry R. Long-term secrets to short-term trading / Larry Williams. – 2nd ed. p. cm. – (Wiley Trading series) Includes index. ISBN 978-0-470-91573-8 (hardback); 978-1-118-18468-4 (ebk); 978-1-118-18467-7 (ebk); 978-1-118-18469-1 (ebk) 1. Commodity futures. 2. Speculation. I. Title. HG6046.W539 2011 332.63′28–dc23 2011032043

Acknowledgments

This book is not the product of research—it is the culmination of a career that has included a great deal of research, personal introspection, and, along the way, I hope some personal growth.

It is heartwarming to acknowledge almost the exact same people I did when this book was first written. I never realized, then, that people like Tom DeMark, Ralph Vince, Glen Larson, Greg Alesandra, Harvey Levine, Kurt and Jimena Hallock, Richard Joseph, and yes, Gene Iredale would play such an active role in my life.

There is of course also disappointment, as well as sadness for the (too many) people acknowledged in the first edition who are no longer with us: Don Sarno, Al Alesandra, Bill Meehan, Bruce Babcock, Frank Taucher, and Michele Maggi of Trading Library in Italy. My first broker, Joe Miller and our mutual buddy Don Southard are now with the great trend line drawer in the sky where I know they are still studying OBV charts.

Time teaches us so much and it has taught me who my closest friends are. I have been helped by so many, but by no one more than my running partner, trading associate, and wife, Louise Stapleton.

My career, and therefore this book, would not have been the same without the help, support, and sharing of knowledge with others over the years. Prominent among these people are Don Sarno, who was the first one to invite me to speak for Commodities Magazine, and Bill Meehan and Tom DeMark—both brilliant analysts, yet poles apart—who were most instrumental to my understanding of the markets. There has been no one else in my life like Tom; we have great stories to tell about each other. Both these guys were always willing to swap ideas. I want to thank Mike Stock for his programming and idea exchange; Jake Bernstein for his friendship for over four decades; the brokers, Alberto Alvarez, who I trade with now; Ed Walter, who I used to trade with (the only broker I know that ever retired); and Al Alesandra and now his son Greg, who have put up with my constant questions and phone calls from the beginning of my trading career, and have given me quotes every day of the year for more years than we can remember.

So many fellow analysts have urged me on in one way or another. Bob Prechter was one of the very few big names to stand up for—and pay the lawyer bills of—newsletters trying to establish their first amendment right to publish without being registered with the U.S. government's Commodity Futures Trading Commission (CFTC). Marty Zweig and Ned Davis taught all of us what research should be about. And thanks to the many friends I have developed within the business: Joe DiNapoli; Welles Wilder; R.E. McMaster; Brian Schad; Mark Benjamin; Sheldon Knight; Stan and Gretchem Marzalk; John Hill; Bo Thunman, founder of “Club 3000.”

Ed Dunne, Linda Raschke, Vic Niederhoffer, and John Bollinger—all legends in their own right—are people I have grown to respect and pay attention to.

Here in St. Croix, Charlie Wright and Milo Prochaska have helped me understand the markets better. I have been blessed to know all of you and am certain I have left others off this list who should be here. Internationally there is a debt to Graham and Adel Briggs in Australia that can never be repaid, and deep thanks to the gang at Pan Rolling in Japan. Hiro and Masaki have been lifesavers for me there. In the Czech Republic, I thank Ludvig Turek; in South Africa, Malcolm Buchanan; in Singapore, Aaron Sim; in China, “Dr. E” or Dr. Yi Zhi, who anointed me as a visiting and honorary professor at Zhejiang University. Around the globe I have been blessed to know many interesting traders and people.

Above all the greatest thanks goes to readers, just like you, for following my work and producing some amazing profts. People like Marc Bruel, Michael Poissant, Andre Unger, Brady Preston, and Chris Johnson have proven that what you learn here works. I just opened a gate; they hit the ball out of the park.

My career and this book would never have been possible without people from all over the world who subscribed to my newsletter, Commodity Timing, and my subscribers, seminar attendees, and readers of my other books deserve personal thanks for being with me through the good times as well as some I would like to forget!

Nor would this have seen the light of day, twice now, without the help from Pamela van Giessen at John Wiley & Sons and my marvelous editor Emilie Herman.

You are all a great group of people who pushed me to do better. I have come to know and deeply appreciate each one of you. Thank you.

With best wishes to all.

Larry Williams, 2011 St. CroixUS Virgin Islands

INTRODUCTION

You Are Already a Commodity Trader

In the ensuing years since the first edition of this book was published, more and more people have become stock, commodity, and Forex traders. The guy who does our yard work trades, as does my dentist and favorite chef. Why?

I suspect there is more to it than the thrill of speculation; now, more and more people want a way out. They don't want to be an employee, nor do they want to be a boss. They want to be independent and that seems to be possible only as a trader. It is a dream that many have followed, and which has become a surprising reality for countless traders. There is a way out … that's what this book is really all about: showing you the tricks and techniques of my craft.

Whether you know it or not, you have been trading commodities all your life. Sure, you may have never traded a contract of Pork Bellies, but you have almost certainly traded a possession like a car, house, or antique for someone else's money or possession. If you have never done that, for sure you have traded time for money. You have traded your time as a teacher, lawyer, pipe fitter, or ditch digger for someone else's money. So, you are halfway there, you just never knew it!

When we trade our time, we are actually trading our time plus our skills. That is why a brain surgeon gets more per hour than a knee surgeon. That is also why an outstanding quarterback gets more than a tackle and surgeon combined. He has a greater career risk. It is not that one skill is inherently more valuable than the other, it is that one is more difficult to come by and carries higher risk. This characteristic generates more dollars for the person selling his or her time and skills.

There is no intrinsic value to Michael Jordan's dribbling and shooting skills, but the owner of the Chicago Bulls saw an opportunity to make a great deal of money with those seemingly valueless skills by packing stadiums and getting television revenues. Thus, something of “no value” may have great value.