Trade What You See: How To Profit from Pattern Recognition

by Larry Pesavento, Leslie Jouflas

Overview

Praise for Trade What You See

"Larry Pesavento and Leslie Jouflas, the quintessential traders of chart patterns and the techniques of past masters of technical trading, have put together a compilation of their studies. Their experience extends over forty years. This book covers the essence of chart patterns trading plus the mental preparation necessary for successful trading. There is something in this book for both the beginner and experienced trader. Highly recommended."
—John Hill, President, Futures Truth Co.

"Pesavento's innovative work has been an invaluable part of our firm's technical approach. This book covers new ground and should be in every serious trader's library."
—Craig Columbus, President and Chief Market Strategist, Advanced Equities Asset Management

"Larry Pesavento and Leslie Jouflas have done a brilliant job with this book. Whether you are a professional or novice, this is a must-read book to gain more confidence in trading."
—Dickson Yap, Publisher, The Trader's Journal magazine

"An in-depth conversation on overall trading knowledge, even for the advanced traders!"
—Dar Wong, Acute Precision & Studies Research Inc.

"Excellent book on pattern recognition technical trading—well written and thorough with plenty of good illustrative charts."
—Mark Douglas, author, The Disciplined Trader and Trading in the Zone

Product Details

ISBN-13:	9781118044933
Publisher:	Wiley
Publication date:	12/29/2010
Series:	Wiley Trading , #302
Sold by:	JOHN WILEY & SONS
Format:	eBook
Pages:	224
File size:	4 MB

About the Author

LARRY PESAVENTO is a forty-year veteran trader who has one of the most extensive trading libraries in the world. He operates a Web site, www.tradingtutor.com, which provides market analysis for subscribers. Pesavento speaks regularly at trading conferences and is a private trader for a large hedge fund. The pattern recognition approach he uses eliminates the random nature of market action.

LESLIE JOUFLAS has been trading for over ten years and went professional in 2000. She coaches and tutors trading students as well as moderates and runs www.tradingliveonline.com. Jouflas also trades privately managed money as well as her own account.

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Table of Contents

Preface     xi
Acknowledgments     xv
About the Authors     xvii
Introduction to Trading with Pattern Recognition
Opening Thoughts     3
How to Use This Book     3
Succeeding or Failing in Trading     4
Steps to Take for Successful Trading     7
Geometry of the Patterns and Fibonacci Ratios     9
History of Geometry in the Markets     11
Fibonacci Ratios     13
Applying the Fibonacci Ratios     15
Summary     18
Harmonic Numbers and How to Use Them     19
Where the Term Harmonic Numbers Originated     19
Defining a Harmonic Number     20
Vibrations in Price Swings     22
Repetition in Price Swings     24
Finding Harmonic Numbers     28
Harmonic Numbers Found in Other Markets     34
The Price Patterns and How to Trade Them
The AB=CD Pattern     37
History of the AB=CD Pattern     37
AB=CD Pattern Description     39
AB=CD Pattern Structure     39
Important Characteristics of the AB=CD Pattern     42
CD Leg Variations     43
Slope and Time Frames     46
Psychology of theAB=CD Pattern     48
Trading the AB=CD Pattern     49
The Gartley "222" Pattern     53
History of the Gartley "222" Pattern     53
Gartley "222" Pattern Description     55
Gartley "222" Pattern Structure     56
Important Characteristics of the Gartley "222" Pattern     57
Psychology of the Gartley "222" Pattern     59
Trading the Gartley "222" Pattern     60
The Butterfly Pattern     67
History of the Butterfly Pattern     67
Butterfly Pattern Description     69
Butterfly Pattern Structure     70
Important Characteristics of the Butterfly Pattern     71
Psychology of the Butterfly Pattern     72
Trading the Butterfly Pattern     73
The Three Drives Pattern     81
History of the Three Drives Pattern     81
Three Drives Pattern Description     82
Three Drives Pattern Structure     83
Important Characteristics of the Three Drives Pattern     84
Psychology of the Three Drives Pattern     84
Trading the Three Drives Pattern     85
Retracement Entries and Multiple Time Frames     91
Fibonacci Retracement Entries      92
Fibonacci Retracement Pattern Structure     92
Trading the Fibonacci Retracement Pattern     95
Opening Price Retracement Setups     98
Market Setup for the Opening Price Retracement Trade     99
Trading the Opening Price Retracement Setup     100
Multiple Time Frames     103
Classical Technical Analysis Patterns     113
A Brief History of Technical Analysis     114
Basics of Technical Analysis     115
Double Bottom and Top Patterns     115
Head and Shoulders Pattern     120
Broadening Top and Bottom Patterns     126
Learning to Recognize Trend Days     131
Identifying a Trend Day     132
Patterns Found on Trend Days     135
Fibonacci Ratios on Trend Days     138
Controlling Risk on a Trend Day     140
Trading a Trend Day     141
Essential Elements of Trading
Trade Management     149
Thinking in Probabilities     150
Warning Signs and Confirmation Signs     151
Money Management     155
Using Options with the Fibonacci Ratios and Patterns     161
Call and Put Options Defined     161
Factors That Influence the Price of an Option     162
Controlling Risk with Options     163
Examples of Using Options with Extension Patterns     164
Building a Trading Plan     167
Daily Trading Plan     168
Trading as a Business     174
Disaster Plans     177
Summary     181
Daily Routines     183
Trade Preparation     183
Mental Preparation     187
Physical Preparation     188
Appendix     191
Index     195

Editorial Reviews

"…should prove valuable to those already practicing technical analysis and who want to take their trading to the next level." (Investors Chronicle,  Friday 28th March 2008)

From the Publisher