Elder Alexander - Trading For A Living

TRADING FOR A LIVING WILEY FINANCE EDITIONS FINANCIAL STATEMENT ANALYSIS Martin S Fridson DYNAMIC ASSET ALLOCATION David A Hammer INTERMARKET TECHNICAL ANALYSIS John J Murphy INVESTING IN INTANGIBLE ASSETS Russell L Parr FORECASTING FINANCIAL MARKETS Tony Plummer PORTFOLIO MANAGEMENT FORMULAS Ralph Vince TRADING AND INVESTING IN BOND OPTIONS M Anthony Wong THE COMPLETE GUIDE TO CONVERTIBLE SECURITIES WORLDWIDE Laura A Zubulake MANAGED FUTURES IN THE INSTITUTIONAL PORTFOLIO Charles B Epstein, Editor ANALYZING AND FORECASTING FUTURES PRICES Anthony F Herbst CHAOS AND ORDER IN THE CAPITAL MARKETS Edgar E Peters INSIDE THE FINANCIAL FUTURES MARKETS, 3RD EDITION Mark J Powers and Mark G Castelino RELATIVE DIVIDEND YIELD Anthony E Spare SELLING SHORT Joseph A Walker TREASURY OPERATIONS AND THE FOREIGN EXCHANGE CHALLENGE Dirnitris N Chorafas THE FOREIGN EXCHANGE AND MONEY MARKETS GUIDE Julian Walmsley CORPORATE FINANCIAL RISK MANAGEMENT Diane B Wunnicke, David R Wilson, Brooke Wunnicke MONEY MANAGEMENT STRATEGIES FOR FUTURES TRADERS Nauzer J Balsara THE MATHEMATICS OF MONEY MANAGEMENT Ralph Vince THE NEW TECHNOLOGY OF FINANCIAL MANAGEMENT Dimitris N Chorafas THE DAY TRADER'S MANUAL William F Eng OPTION MARKET MAKING Allen J Baird TRADER VIC 11: PRINCIPLES OF MARKET ANALYSIS AND FORECASTING Victor Sperandeo with T Sullivan Brown TRADING FOR A LIVING Dr Alexander Elder STUDY GUIDE FOR TRADING FOR A LIVING Dr Alexander Elder TRADING FOR A LIVING Psychology TradingTactics Money Management Dr Alexander Elder Director Financial Trading Seminars, Inc John Wiley & Sons, Inc New York Chichester Brisbane Toronto Singapore CompuTracm is a trademark of CompuTrac Software Inc PageMakera is a registered trademark of Aldus Corporation In recognition of the importance of preserving what has been written, it is a policy of John Wiley & Sons, Inc., to have books of enduring value printed on acid-free paper, and we exert our best efforts to that end Copyright O 1993 by Dr Alexander Elder Published by John Wiley & Sons, Inc All rights reserved Published simultaneously in Canada Reproduction or translation of any part of this work beyond that permitted by Section 107 or 108 of the 1976 United States Copyright Act without the permission of the copyright owner is unlawful Requests for permission or further information should be addressed to the Permissions Department, John Wiley & Sons, Inc This publication is designed to provide accurate and authoritative information in regard to the subject matter covered It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service If legal advice or other expert assistance is required, the services of a competent professional person should be sought From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers Library of Congress Cataloging-in-Publication Data Elder, Alexander Trading for a living : psychology, trading tactics, money management / Alexander Elder p cm Includes bibliographical references and index ISBN 0-471-59224-2 Stocks Futures Options (Futures) I Title HG4661.E43 1992 92-35165 32.64'5 - dc20 Printed in the United States of America 10 To Lou Taylor a trader; a wise man, a true friend Contents Introduction Trading -The Last Frontier Psychology Is the Key The Odds Against You I Individual Psychology Why Trade? Fantasy versus Reality Market Gurus Self-Destructiveness Trading Psychology Trading Lessons from AA 10 Losers Anonymous 11 Winners and Losers I1 Mass Psychology 12 What Is Price? 13 What Is the Market? 14 The Trading Scene 15 The Market Crowd and You 16 Psychology of Trends 17 Managing versus Forecasting CONTENTS I11 Classical Chart Analysis 18 Charting 19 Support and Resistance 20 Trend and Trading Range 21 Trendlines 22 Gaps 23 Chart Patterns IV Computerized Technical Analysis 24 Computers in Trading 25 Moving Averages 26 Moving Average Convergence-Divergence(MACD) and MACDHistogram 27 The Directional System 28 Momentum, Rate of Change, and Smoothed Rate of Change 29 Williams %R 30 Stochastic 31 Relative Strength Index -/V , The Neglected Essentials 32 Volume 33 Volume-Based Indicators 34 Open Interest 35 Herrick Payoff Index 36 Time VI Stock Market Indicators 37 New High-New Low Index 38 Traders' Index and Other Stock Market Indicators VII Psychological Indicators 39 Consensus Indicators 40 Commitment Indicators CONTENTS VIII New Indicators 41 Elder-ray 42 Force Index IX Trading Systems 43 Triple Screen Trading s y s t e r n e 44 Parabolic Trading System 45 Channel Trading Systems X Risk Management 46 Emotions and Probabilities 47 Money Management 48 Exiting Trades Afterword Acknowledgments Sources Index ... Publishers Library of Congress Cataloging-in-Publication Data Elder, Alexander Trading for a living : psychology, trading tactics, money management / Alexander Elder p cm Includes bibliographical references... MAKING Allen J Baird TRADER VIC 11: PRINCIPLES OF MARKET ANALYSIS AND FORECASTING Victor Sperandeo with T Sullivan Brown TRADING FOR A LIVING Dr Alexander Elder STUDY GUIDE FOR TRADING FOR A LIVING. .. Dr Alexander Elder TRADING FOR A LIVING Psychology TradingTactics Money Management Dr Alexander Elder Director Financial Trading Seminars, Inc John Wiley & Sons, Inc New York Chichester Brisbane