Trading for a Living: Psychology, Trading Tactics, Money Management

An eminent futures trader explores crucial factors in the markets that most experts overlook time, volume and open interest and describes little-known indicators to profitably track them. Covers all the popular technical approaches to futures, options and stock markets including Elliott Wave, oscillators, moving averages, Market Logic, point-and-figure charting. Explains why most traders sabotage themselves and how to avoid doing the same.

You have just taken a big step away from the crowd of amateurs. By opening Trading for a Living, you've resolved to become a successful trader.

Dr. Alexander Elder is a professional trader; a world-class expert in technical analysis, and a practicing psychiatrist. He believes that successful trading is based on three M's: Mind, Method, and Money. First, you will see that the key to winning is inside your Mind. You will find out how to develop discipline and how to avoid the traps of emotional trading. Second, you will learn how to find good trades by using charts, computerized indicators, and other tools. You will discover how to combine several analytic Methods into a powerful trading system. Finally, you will learn how to manage Money in your trading account. The rules for limiting risks are as vital to a trader as a safety net is to a high-wire walker.

With this book, you are on your way to mastering a new way of trading stocks, futures, currencies, and options. Dr. Alexander Elder helps you embark on an intense pursuit-Trading for a Living.

Table of Contents

Introduction 1

1. Trading -The Last Frontier 1
2. Psychology Is the Key 3
3. The Odds Against You 6

I Individual Psychology 11

4. Why Trade? 11
5. Fantasy versus Reality 12
6. Market Gurus 17
7. Self-Destructiveness 24
8. Trading Psychology 27
9. Trading Lessons from AA 29
10. Losers Anonymous 33
11. Winners and Losers 38

II Mass Psychology 43

12. What Is Price? 43
13. What Is the Market? 47
14. The Trading Scene 51
15. The Market Crowd and You 56
16. Psychology of Trends 61
17. Managing versus Forecasting 65

III Classical Chart Analysis 69

18. Charting 69
19. Support and Resistance 75
20. Trend and Trading Range 80
21. Trendlines 87
22. Gaps 95
23. Chart Patterns 101

IV Computerized Technical Analysis 115

24. Computers in Trading 115
25. Moving Averages 120
26. Moving Average Convergence-Divergence
(MACD) and MACD-Histogram 127
27. The Directional System 135
28. Momentum, Rate of Change, and Smoothed
Rate of Change 142
29. Williams %R 151
30. Stochastic 156
31. Relative Strength Index 162

V The Neglected Essentials 167

32. Volume 167
33. Volume-Based Indicators 172
34. Open Interest 178
35. Herrick Payoff Index 183
36. Time 187

VI Stock Market Indicators 194

37. New High-New Low Index 194
38. Traders' Index and Other Stock Market
Indicators 201

VII Psychological Indicators 209

39. Consensus Indicators 209
40. Commitment Indicators 215

VIII New Indicators 220

41. Elder-ray 220
42. Force Index 227

IX Trading Systems 235

43. Triple Screen Trading System 235
44. Parabolic Trading System 244
45. Channel Trading Systems 247

X Risk Management 254

46. Emotions and Probabilities 254
47. Money Management 257
48. Exiting Trades 263