The title of this book is misleading, this book is not about trend trading. This book is about swing trading. This is a book about specific trading setups for swing trading using technical analysis. It gives you criteria for generating long and short trading ideas using any simple trading software.
This is a very basic book and goes in to very basic information like how to set up broker account, which broker to look for, what computer you need, what kind of Internet connectivity and so on. The first few chapters take beginner readers through these basic things and basic introduction to chart reading and technical analysis..
The second part of the book deals with determining overall market direction. Thomas Carr describes trend trading as he practices as a way to capture bulk of major moves in a trending stocks. For this one must enter after a new trend has started and exit before the trend ends. The author recommends setting up a watchlist of possible trend trading candidates using three criteria:
Price: between 10 and 100
Average Daily Volume: 500000 plus
Beta: greater than 2
Once you set up a list like that the author suggest using technical analysis to enter or exit. How to play these setups is determined by the trend of overall market. Thomas Carr describes five different kinds of market conditions:
Bullish Strongly trending
Bullish Weakly Trending
Bearish Strongly Trending
Bearish Weakly Trending
He suggests focusing on long plays in first two types of market , short plays in the next two types of market, and a long and short approach in last type of market. He uses 20 and 50 day moving average to determine above 5 kinds of market conditions.
Part three of the book talks about specific setups. Specific setups are set of conditions a stock must meet to qualify for a bullish or bearish entry. Thomas Carr describes five bullish and five bearish setups. He provides detailed guidelines for scanning for these set ups and narrowing stocks from these scans. He also provides alternative scans for same set ups.
Five Bullish Setups
The coiled spring
The bullish divergence
The blue sky breakout
The bullish base breakout
Five Bearish Setups
The relief rally
The bearish divergence
The gap down
The blue sky breakdown
The rising wedge breakdown
This section has many good ideas and while the specific setups mentioned in the book may or may not be profitable, this book will give you lot of ideas to create your own setups. All these setups can be easily scanned in Telechart. The author discusses various approach to entries and exits post trend identification. Last part of the book deals with options and how to trade the above setups using option.
Overall this is a very simple book on swing trading with some good ideas for trading setups for beginners. One major negative in this book is blatant self promotion by the author of his own prowess and website. It is excessive and irritating.
John Taylor, chairman and chief executive officer of FX Concepts LLC, the world’s largest currency hedge fund, sees the euro dropping to $1.20 by August, and believes parity is possible. Be very careful, because as of today Goldman is now accumulating euros (as per its just released Sell recommendation). More from Taylor: “It’s going to be quick because things are really falling apart…. Some of these [countries] have to be thrown out [of the EMU]. If you look at a country like Latvia, which has been effectively in the Euro, has been saved by the European Commission and the IMF much like they are suggesting Greece will be, their retail sales were down 30% last year, the GDP was down 18%, it is expected to drop another 8% this year. Latvians are starving, the place is a disaster area: that’s what you have to go through to be a part of the Euro.” On whether his firm has felt any political pressure on putting on bearish euro bets: “None at all. We are SEC regulated and the information is there, but nobody seems to be caring.” Lastly, Taylor ridicules the WSJ story about the restaurant-based collusion: “Yes, they had a meeting and talked about how bad the euro was. But that they in fact had some impact: their assets are 1% of the daily volume. Somebody like us, we have a bigger position against the euro than those people put on.” Taylor says in the next three to six months, the dollar will be strongest against the euro, and Eastern European currencies. In a longer horizon, he says to be long Asia and short the euro. Bottom line: sell Europe, buy everyone else. And join the bandwagon… Just as Bernanke prepares the dollar’s next suicide move with inflation obviously not working.