Table of Contents
Acknowledgments xiii
Part I Foundations of Successful Trading 1
Introduction 3
The Invention of a Commodity Trader 3
Why I Wrote This Book 7
This Book's Audience 9
The Book's Road Map 14
Chapter 1 The History and Theory of Classical Charting Principles 19
My Perspective of the Principles 20
Three Limitations of the Principles 21
Summary 22
Part II Characteristics of a Successful Trading Plan 23
Chapter 2 Building a Trading Plan 25
Trader Personality and Temperament 25
Adequate Capitalization 29
Overall Risk Management 30
Points to Remember 32
Chapter 3 Identifying the Trades and the Trading Vocabulary 33
Trade Identification 35
Vocabulary of the Factor Trading Plan 35
Points to Remember 54
Chapter 4 Ideal Chart Patterns 55
Reversal H&S Pattern in Copper 56
Reversal Rising Wedge in AUD/USD 56
Continuation Wedge and Reversal Failure Top in Soybean Oil 57
Reversal Triangle Bottom in Sugar 58
Continuation and Pyramid Patterns in USD/CAD 58
Reversal Top in Silver 59
Continuation H&S Pattern in the Russell 1000 Index 60
Continuation Rectangle in Kansas City Wheat 61
Continuation Rectangle and Pyramid Triangle in Crude Oil 61
Continuation H&S Top in the Dow Utilities 63
Continuation Triangle, Reversal M Top, and Flag in the EUR/USD 63
H&S Reversal Top and Three Continuation Patterns in the GBP/JPY 65
A Reversal Symmetrical Triangle in the AUD/JPY 66
Two Continuation Patterns in GBP/CHF 67
A Triangle and Running Wedge in Sugar 67
An H&S Bottom in Apple Computer 68
A Major Continuation H&S and Symmetrical Triangle in Gold 68
A Series of Bullish Patterns in Copper 70
A Failed Ascending Triangle in the USD/CAD Crossrate 71
A 12-Week Rectangle in the Dow Jones Transport Index 72
A Rare Horn in Brent Sea Oil 72
An H&S Bottom Launches the 2009 Bull Market in the S&Ps 73
Summary 74
Points to Remember 74
Chapter 5 How the Factor Trading Plan Works 75
Trade Identification 75
Trade Entry 84
Trade Risk Management 85
Trade Order Management 86
Points to Remember 89
Chapter 6 Three Case Studies Using the Factor Trading Plan 91
A Remarkable Technical Event in the Dow Jones 92
A Year Trading Gold 94
A Year Trading Sugar 104
Points to Remember 113
Chapter 7 Characteristics of a Successful Trader 115
Intimate Knowledge of Trading Signals 116
Discipline and Patience 117
Analysis of Self and of the Trading Plan 117
It Takes a Leap of Faith 120
Points to Remember 121
Part III A Five-Month Trading Diary: Let The Journey Begin 123
Chapter 8 Month One: December 2009 127
Trading Record 129
Summary 143
Chapter 9 Month Two: January 2010 145
Identifying Trading Opportunities 146
Amending the Plan 151
Trading Record 152
Summary 170
Chapter 10 Month Three: February 2010 171
Sticking to the Plan in Choppy Markets 171
Trading Record 173
Summary 187
Chapter 11 Month Four: March 2010 189
Trading Record 190
Summary 201
Chapter 12 Month Five: April 2010 203
Relying on Classical Charting Principles 204
Trading Record 205
Outlook for the Future 210
Summary 214
Part IV The Wrap-Up 215
Chapter 13 Analysis of Trading Performance 217
How the Trading Plan Performed 221
How the Plan (and the Trader) Evolved 227
Summary: Best Practices Going Forward 228
Chapter 14 The Best Dressed List 231
A Seven-Month Double Bottom in AUD/USD 231
A 14-Month Coil and Nine-Month Descending Triangle in EUR/CHF 233
A Six-Month Wedge in EUR/USD 234
A 16-Week Horn in GBP/USD 235
A Four-Month H&S in Bottom NZD/USD 236
A Six-Month Ascending Triangle Failure in USD/CAD 237
An Eight-Month H&S Bottom in the S&Ps 238
A 14-Month Symmetrical Triangle in Sugar 239
A Seven-Month Triangle in Gold 240
A Series of Continuation Patterns in Copper 242
An H&S Bottom in Crude Oil 243
Summary 243
Postscript 245
Appendix A Factor Trading Plan Signals 249
Appendix B Quick Reference to Charts 257
Appendix C Recommended Resources 269
Author's Note 271
Index 275
