Trading Plan... Wozzat PDF

Paul ‘Yogi’ Nipperess & P.J.
Wells
Copyright © 2003 Paul ‘Yogi’ Nipperess
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Printed in Australia
T
TAAB
BLLE
EOOF
FCCO
ONNT
TEEN
NTTS
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TRADING FOR A LIVING ............................................................................... 6
ARE YOU TRADING MARKETS OR EMOTIONS ............................................. 8
HOPE & FEAR .............................................................................................. 9
WHICH MARKET........................................................................................... 10
TECHNICAL ANALYSIS ................................................................................. 14
CANDLES ..................................................................................................... 20
HARAMI ........................................................................................................ 24
ENTRY STRATEGY ........................................................................................ 27
EXIT STRATEGY ........................................................................................... 29
MORE ISSUES THAT A TRADER NEEDS TO ADDRESS................................ 31
MONEY MANAGEMENT ................................................................................ 32
SETTING STOP LOSS LEVELS ...................................................................... 34
TIME STOPS ................................................................................................. 37
DAY TRADING –TIME CYCLES AND DIRECTION .......................................... 39
DAY TRADING OR OVER TRADING?............................................................. 41
YOUR TRADING PLAN CHECK LIST.............................................................. 44
ELEVEN TRADING GUIDELINES .................................................................. 46
WALKING THROUGH A TYPICAL TRADE ...................................................... 47
MATHS AND THE MARKETS There Is A Relationship – Time ........................ 49
SOME FINAL THOUGHTS ............................................................................. 51

Trading plan…wozzat??
Introducing – Supertrader FROOP
legend…in his own lunchbox
More FROOP ‘toons at http://www.beanbelly.com

$Page 4
F
FOOR
RWWA
ARRD
D
Hi Folks,
There's just so much to absorb from all the books, videos, websites & forums it is
sometimes difficult for traders to sort the wheat from the chaff…and for new
traders it can be especially confusing.
A lot has been written about having a trading plan, yet little has been presented
in the form of a concrete trading plan. Why? Because anybody who has a
successful trading system would be busy trading it, not sharing it or even selling
it.
So from here, we'll look at the issues traders must address in developing a
workable trading plan, from the ground up. Assuming that the traders have
attained enough knowledge to realise the risks in trading and they have opened
an account with a broker.
From there, between us, we will come up with a basic plan that individual
traders can modify to suit their own trading personalities.
There are some notes we have prepared on different aspects of a trading plan
that may be useful, so we will start with the topic, ‘Trading for a Living’.
Top trades all
P.J. Wells
$
TRADING FOR A
LIVING
No matter what your background has been, nothing can
prepare you for these markets properly – the only way to
learn is by doing it – for real.
Before trading, have a plan. Not important whether it

was developed by you or it came from a book, so long as
1
you have a plan and you have the discipline to execute
your plan, as you wrote it.
Your plan should address, which market to trade, risk/reward

ratio, stop loss placement, time stops, entry and exit levels and
money management techniques.
Expecting to ‘earn-while-you-learn’ places some stress on traders, even though

they may have deep pockets from the outset.
Looking from another angle, it probably took you 5 or 6 years to learn the basics
of your first trade (job, career) and learning to trade the markets is no different
for most traders. There have been a lucky few that are born traders, but for the
most part, trading is a learned process and your losses should be considered as
paying your dues.
For most traders, the personal issues of overcoming their emotions, whilst
trading, are the greatest hurdles.
Emotions of hope, fear, greed, elation (and more ), all help to mould a profitable
trader into a disciplined individual, with mechanical trading habits.
Let's take look at some of these emotions and how they affect an undisciplined
trader.
$ Page 6
More Trader FROOP ‘toons at http://www.beanbelly.com $

Page 7
ARE YOU TRADING

MARKETS OR
EMOTIONS?
Tuition in these markets can cost thousands of dollars in
market losses and many hours of study, but learning to
trade properly and profitably makes the investment worth
the effort, in both time and dollar terms.
Here's a different approach to the markets and ‘knowing

yourself’.
2
Trading these markets requires commitment to study and a realization that
traders are not successful overnight – just like learning your first trade. Maybe it
took you 4-5 years to learn as an apprentice (mechanic, carpenter, painter, etc),
so too it takes time (and effort) to learn the BASICS of trading successfully. Then,
if you want to be a good tradesman (trader) you must keep up with the latest
technology in your trade – again, this is an ongoing commitment to self-
education.
Not everybody has a temperament suited to trading the markets. Most traders
are very emotional about their trades, especially in their early experience – this
may well be the main reason for the high attrition rate amongst new traders.
Overcoming emotions can only be done by experience, that means trading,

trading, trading...
Sorry, paper trading can only teach you about the methodology of your trading
system and the idiosyncrasies of the markets – to learn about yourself, you must
trade for real.
Here's a discussion on HOPE and FEAR – just two of the emotions to affect
traders daily.
$Page 8
HOPE & FEAR

Posted by Noone on Sunday, 5 March 2000, at 4:31 p.m.
We all hear that hope & fear control the markets?
Can anyone explain one or both?

Can either one be seen on a chart?
Can either one be explained enough, to be able to write an indicator etc. to be
shown on a chart, that will help in trading?
If it can be seen, is it too late to use, or would it be helpful to a trader?
Anyone have any ideas or explanations of Hope or Fear as far as trading?
Posted by Yogi-in-Oz on 06 March, 2000 at 18:58:06:

Hi Noone,
Not sure where you are going with this, but here goes:
1. HOPE is entering a market without a trading plan.

HOPE is holding a position after it has blown through your stop
(if you had one).
HOPE is holding that 3-day trade for 3 months or more.
HOPE is watching a market approaching your PRICE STOP, long after
your TIME STOP has expired.
FEAR of loss is not pulling the trigger, when your system posts an entry
signal.
FEAR of getting out too early is not pulling the trigger, when your system
posts an exit signal.
FEAR of missing a trade is being in a market before your entry signals
have been confirmed.
HOPE and FEAR are two of ten emotional words that should never be part
of a trader's vocabulary.
GREED, EGO, ‘Coulda, woulda and shoulda’ are five more negative
trading words.
2. HOPE and FEAR can always be seen on the chart of any marketit's
called the PRICE.
3. To represent traders' emotions (HOPE and FEAR being just two

emotions) in an indicator, then that indicator would need to
$
accurately reflect the variations in such emotions. This is
measured by the Law of Vibration and the Law of Resonance,
both of which are reflected in PRICE, so no need to write a new
indicator – just use the one you have more effectively.
Page 9
4. PRICE (a measure of traders' emotions) can easily be seen and is never too
late to use, in a well-laid trading plan, which is most helpful to all traders.
5. Control your emotions (including HOPE and FEAR) and become a better
trader.
6. A portrait of FEAR can be seen in this chart of the Australian Gold Index,
which reflects many traders' FEAR of LOSS as they sold out of physical
gold from 1996 to 2000. Three moving averages have been used to confirm
the general down-trend.
GOLD INDEX
Fig.2.1
2300 GOLD INDEX 2300
2200 2200
2100 2100
2000 2000
1900 1900
1800 1800
1700 1700
1600 1600
1500 1500
1400 1400
1300 1300
1200 1200
1100 1100
1000 1000
900 900
800 800
700 700
1996 1997 1998 1999 2000
$
Page 10
WHICH MARKET?
What have we started here!!
This may help and you may well be able to add some
different ideas to identify tradeable markets or indeed
make it simpler – KISS is best.
$ WHICH COUNTRY?
3
$ WHICH EXCHANGE?
$ WHICH SECTOR?
$ WHICH COMMODITY OR STOCK?
In Australia, our choice is largely limited on the first two questions by our remote
location. However, with better communications and more secure money transfers
on the internet, trading on foreign exchanges will become more commonplace
amongst traders in the future.
WHICH SECTOR?
Dead sectors tie your money up for extended periods, with little return. So do a
little research, open a chart on each of the market sectors and let the graphics
tell the story.
For stock traders, a sector that has started to recover and is showing an uptrend
has started is what is basically required. Likewise for futures traders, trending
sectors, up or down, are needed before we select an individual commodity.
Sectors can trend down and bounce along the bottom for years before they
recover.
Gold since 1996 would be a good example, where the gold price has been
trending down for four years and the gold stocks have followed suit. Only a
couple of price spikes in recent times have eased the pain for long-term holders
of gold stocks or gold bullion.
So now, you have identified a trending sector and it's time to evaluate some
individual stocks in that sector.
$
Page 11
WHICH STOCK or COMMODITY?
Watch for market clues in newspaper articles, on television, in

company reports, on internet forums, by your own observation of a
company's results and progress, market newsletters and other sources.
Some traders use seasonal trades and dates as a guide for entries and exits.
There exists, a number of websites, where commodity traders can obtain detailed
information on seasonal trades.
For share traders, seasonal trades would, for example, include diamonds stocks,
where weather patterns affect the annual drilling and work programmes.
Whilst some brokers do have good information at times, be aware that they
usually have a vested interested in the stocks that they are recommending –
thank them for the information, but do your own thorough research and
analysis, before you invest your money.
INFORMATION OVERLOAD.
Information overload, ‘analysis paralysis’ – call it what you will, affects each
trader differently.
Some traders try to follow too many markets at one time & so the information
load becomes overbearing, often resulting in poor trading decisions.
Remedy: Take a break and then trade fewer markets better.
Unfortunately, some traders use research as an excuse not to trade. Maybe they
cannot pull-the-trigger or they have a fear of loss or ‘fear-of-some-other-trading-
issue’ and to avoid facing that fear they dodge the issue by doing more ‘research’.
Remedy: Plan the next trade properly, take the trade, trade the plan and face the
fear, armed with the confidence that you have in a workable trading plan.
Specialising in a sector can narrow the field, but being exposed too much to one
sector can mean disaster. Gold is a typical example, there are traders who
bought gold stocks in the last gold boom and are still holding them today, some 4
years after the last major peak in the sector.
Now that's dumb...but they are specialising in one sector. That's an extreme
case, but it does highlight the need to trade in growing unrelated
market sectors.
$
Page 12
Diversifying into a relatively small number of promising stocks or commodities,

across a few healthy sectors is probably the safest way to trade – and less
stressful.
By monitoring the local indices, it will soon become evident which market sectors
are performing well. Some data providers will include this information in their
daily download of market information, though it is also readily available in the
financial press.
Some of us may trade only across a couple of sectors in the stock market, but
will diversify into the futures markets to spread the risk. This is especially true of
some stock traders who concentrate on only one or two sectors of the market
By specialising in one sector, say the oil stocks, then the amount of actual
trading information to be absorbed on a daily basis is greatly reduced.
For example, there's about 60 oil stocks in the Australian market, with less than
a dozen having current wells going down – so they are relatively easy to monitor.
Though the oil sector as a whole has not been a great performer over recent
years, there is always a few companies with current drilling programs and lots of
blue sky...take BPT, WON, NWE and more, drilling ahead as we speak.
One last point. Information overload is sometimes the motivation for traders to
ditch fundamentals and rely on the charts.
Some chartists will disregard most of the fundamental hype and rely on their
charting programs to explore the sector that interests them for signs of life. Their
exploration will take minutes to narrow the field from hundreds of possibilities to
maybe 5 or 10 markets that will deserve closer scrutiny. These explorations are
programmable, so that markets are selected according to the trader's set
parameters.
NOTES
$
Page 13
TECHNICAL ANALYSIS
O.K. Now that we have identified some possible markets it
is time to evaluate the short list, using some simple
technical analysis.
All the evaluation here can be done by printing out the free
charts from the internet and using a simple tools, like
pencil, ruler, calculator and good price versus time
4
analysis.
ALL ORDINARIES INDEX

Fig. 4.1
3300 3300
3250 3250
3200 3200
3150 3150
3100 3100
3050 3050
3000 3000
2950 2950
2900 2900
2850 2850
2800 2800
2750 2750
2700 2700
2650 2650
2600 2600
2550 2550
2500 2500
2450 2450
2400 2400
2350 2350
2300 2300
2250 2250
2200 2200
2150 2150
2100 2100
2050 2050
2000 2000
1996 1997 1998 1999 2000
$
Page 14
TRENDLINES and TRADING CHANNELS

Print out a free chart of a market that interests you and draw in the obvious
current market trend, by joining all the price lows for an uptrend or join all the
price highs to identify a downtrend. Easy, yes?
If that market is trending sideways, as many do, get on with the next one.
Remember missing a bus is not a big deal , there's always another bus following
– likewise, when trading the markets – there's always another chance, just
around the corner.
Having identified the main trend of the market, maybe you can draw an obvious
parallel line to your main trendline, across the price highs for the uptrend or
scribe a line across the lows in a down trend. Now, we have a trending, trading
channel that is often a very obvious feature on the chart.
In the chart of the ALL ORDINARIES INDEX refer fig.4.1, we have ruled in the
obvious uptrend channel (in blue) and the countertrend channel too (in red).
Sometimes, there is no trading channel, but we still have that basic trendline,
which is enough to execute trade entries and exits. A trending market, with a
regular range and continuation signals is best.
With the price contained within the trading channel, we can now anticipate
where our trade entries and exits should be executed, usually at trend channel
extremes, either top or bottom +/- 5 points.
Sometimes, a chart will show price trending within a trend. In this case, we will
trade in the direction of the main trend, especially when market is trading in a
narrow channel.
Retracements bouncing off support or resistance lines are often good entries,
when confirmed by subsequent price action.
Breakouts from previous trading channels, present another trading opportunity

and we will trade with confirmed signals on a breakout from previous trend.
Remember, this is not rocket science, the only tools we have used is a chart,
pencil, ruler and brains.
Another feature shown on free charts off websites may be moving averages.
$
Page 15
MOVING AVERAGES
Whilst, by nature they are a lagging indicator they are often used as confirmation
of trend direction. This is clearly shown in the following chart, with the three
moving averages confirming the uptrend from
November 98 through to May 99
Often good entries on the long side will be confirmed by converging moving
averages, where the shorter term average will cross above the longer term
average. This is known to chartists as a golden cross and can be seen in the
chart below in early November 1998.
On the other hand, a negative signal will be evident when the shorter term
moving average crosses below the value of the longer term average. This is known
technically as a dead cross and can be seen in the chart below occurring in early
August 1998.

Fig. 4.2
3200 3200
3150 3150
3100 3100
3050 3050
3000 3000
2950 2950
2900 2900
2850 2850
2800 2800
2750 2750
2700 2700
2650 2650
2600 2600
2550 2550
2500 2500
2450 2450
2400 2400
2350 2350
2300 2300
2250 2250
2200 2200
2150 2150
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 1999 Feb Mar Apr May Jun Jul A
$
Page 16
Here the ALL ORDS shows us the lagging nature of moving averages. Mid April
1998 saw the index make a high and break down from the top of the up trending
channel that had already been established .
In fact, the moving averages did not signal the down turn for another 6 weeks!!
Then, the shorter average crossed down (dead cross) to usher in the
countertrend.
Conversely, the moving averages made a golden cross, early in November 98, to
signal a return to the major trend. More timely signals were given early in
September 98, then again in mid-October 98, when the index bounced of the
lower trendline of the up trending channel. Our trade would now be taken in the
direction of the major trend – UP (long).
Often, 3 (or more) moving averages are used by traders to anticipate market
moves, where the price span across all the moving averages is 5 points or less.
This tight formation by the averages, combined with very small price ranges, will
often be the precursor to an announcement or event that will result in a major
market move. Be warned, this condition may remain in place for weeks before the
news eventually hits the streets. It is just another technical tool that may
forewarn of an impending market move, but should not be used in isolation from
other indicators.
Conversely, three or more moving averages equally diverged (i.e. Equally spread)
may also indicate an impending event or news that may move the market. This
signal is harder to use however, as it is more difficult to judge the distances
between the moving averages.
That leads us on to the next feature of our chart, which is volume.
VOLUME.
High volumes on breakout or bounce off support usually indicate renewed buying
interest in that market. After the initial bounce off a trendline or breakout from a
channel, a pullback to retest that trendline often occurs, with lower volumes on
the retest. This is a good sign that less sellers are in the market and soon the
market will rally off the trendline again.
Conversely, if the volume increase on a failed retest of the support after a bounce
or a breakout, then it may indicate that the market is set to go lower, with more
sellers fuelling the move. This action is known as a false breakout.
Now for the most well known tool for market evaluation – price.
$
Page 17
PRICE
There are too many price evaluation techniques to go into a lot of detail on each
one, but suffice to say, a thorough understanding of market price action and its
resulting patterns is a basic requirement for a serious trader.
Candlesticks and bar charts present the price action in a much more graphical
way, than simple line charts that are limited to closing price details.
There is some excellent books and websites, listed at the end of this work, for
further reference on candlesticks and other price analysis methods.
TIME
Time is probably not the best known tool for traders, but it is certainly the most
important.
With correct trade timing, we can almost disregard price, using it only to
calculate profits (or losses).
Time entries for action days i.e. Time by degrees, major announcements, natural
disasters, wars, etc.
These events will often lead to significant moves in markets, particularly for
commodity traders.
Time exits for slow days of uncertainty at trading channel extremes. Here we can
see there is often plenty of time to exit trades at the top of a trading channel,
where prices will slowly curl over. At the low side of the trading channel, it is not
unusual to see sharp V-shaped patterns, so our entries near the price lows need
to be more precise.
Some other indicators that may be helpful, if you have access to a charting
package is a momentum oscillator and the popular Williams %R indicator.
Some of the above suggestions may help you to identify a possible market to
trade.
So now, we have identified a particular market and we may even have some idea
of where we are going to enter the trade. But is that enough? NO, we still have to
address many other aspects, BEFORE we take the trade.
$
Page 18
SUPPORT and RESISTANCE
More traders prefer to go long , possibly because they started trading in the stock
market.
So if the price has been at a particular support level, then falls away only to rise
again, the traders that were long when that level was previously support are
happy to get out – breaking even in their trade.
This also explains, why it takes several attempts to break through some areas of
resistance. Extra supply will come on the market from these previous losing
traders, in addition to new shorts who have seen that level as previous
resistance.
To overcome this supply at these levels some of the big players will actually bid
the market up over this resistance levels – this has three effects. First, we see it
as a gap up, next the traders that were previously losing are now winners so that
part of the supply is overcome and lastly, those traders short at the resistance
level will now cover, adding fuel to the bull's fire. It also can happen to the
downside, but to a lesser extent as less traders will short the market concerned.
NOTES
$
Page 19
CANDLES
To assist with your evaluation of candlestick formations
in your charts, the following details may help some:
LONG WHITE CANDLES

$ Very bullish.
5
$ Expect support at 50% level or candle low,
including shadow.
$ Body length should be 3 times previous candle.
$ Height of long candles is important – the longer the candle,
the stronger the signal.
OPEN and CLOSE is of most relative importance

$ Wait for a close under long white candle support to confirm break.
$ WEEKLY candle = Monday open and Friday close.
$ ***Look for tower tops & bottoms formed by opposite colour long candles.
$ Use any bounce to long candle support or resistance to enter or exit a
trade.
$ THEN – Look for targets to exit at previous long candles.
$ For stocks – opening prices above or below 50% lines on long candles
are significant.
HAMMERS and HANGING MAN
A hammer should appear after a significant downturn or in an oversold market.

The first rally from a hammer may fail and then may test the hammer support
with a double bottom. A hanging man must appear after rally, possibly after a
consolidation at the top.
For confirmation the close after the hanging man should be under the hanging
man's real body, as seen in the All Ordinaries Index Fig.5.1 on page 21.
$
Page 20
All Ordinaries Index

Fig.5.1
2850 ALL ORDINARIES INDEX 2850
2800 2800
2750 2750
2700 2700
Hanging man near the top of
a rally, just before the next
2650 decline in the market. 2650
v
2600 2600
^
2550 2550
Doji shows day of
market indecision.
2500 2500
2450 2450
2400 2400
^
Hammer at an extreme low.
29 6 13 20 27 3 10 17 24 31 7 14 21 28 5 12 19 2
July August September October
$
Page 21
DOJI
Do not use doji as outright buy or sell triggers!
A doji should be considered as a transition or indecision signal – so wait for

confirmation!
A doji shows that the market is in balance – Bulls = Bears.
The more overbought or oversold the market is, the more significant is the doji.
A Gapping Doji – in an uptrend or downtrend – wait for next session confirmation

for a continuing trend or for the window to be broken for a trend reversal.
STARS
Stars are three-candle patterns.

Collapsing Doji Star – shows a doji gapping down from a long white candle in
rally, with a third black candle gapping down from the doji.
Evening Star – three candle pattern – occurs after a long white candle in a rally
– its small body should not touch the real body of the long white candle. Third
candle in this pattern has a black body, not usually touching the second candle
(star) body and closing well into the body of the long white candle.
If the second candle is a doji, then the pattern is called an evening doji star.
Shooting Star – should appear at the top of a rally and may form an upthrust
through a previous resistance level.
DARK CLOUD COVER
Ideal dark cloud cover should occur after uptrend. A black candle (2nd in the
pattern) should open above the high of the previous white session and close more
than half way down into the previous session's trading range – if not, wait on
confirmation!!
Dark cloud cover may become future resistance – so too, with congestion areas
that have broken to the downside. Conversely, congestion bands breaking to the
upside will form future support areas.
$
Page 22
PIERCING PATTERN – Opposite to Dark Cloud Cover
After downtrend:
$ 1st candle is long and black.
$ 2nd candle is white with a close above centre of previous black session.
ENGULFING PATTERN
These are similar signals to dark cloud cover & piercing patterns – except the
second candle swamps the previous session with a higher high and lower low.
A bearish engulfing pattern following a doji is a strong bearish signal.
Last Engulfing Top – Bearish signal – occurs with a long white candle swamping a
small black candle in prior session – usually at the top of a rally. By blending
both candles in this pattern, a hanging man emerges.
Last Engulfing Bottom – Bullish signal – this pattern occurs at market bottoms,
when a long black candle swamps a small white candle in the previous session.
Cautious traders may want next-day confirmation before switching to opposite

trades.
High volumes with last engulfing patterns make these signals stronger.
NOTES
$
Page 23
HARAMI
$ 1st candle must be a long one.
$ The smaller the 2nd candle in a harami, the stronger the chance of a
reversal.
After downtrend
White-Black........... more bullish than ............Black-Black
White-White .......... more bullish than ............Black-White
Likewise, after uptrend

Black-White........... more bearish than............White-White
Black-Black ........... more bearish than............White-Black
If 2nd real body is in centre of the first body in the harami, then this harami is
strongest as a reversal signal.
HIGH PRICE HARAMI.

In an uptrend, where the 2nd candle price range is at upper end of previous
candle price range, the high price harami signals a consolidation of future
prices at this level.
LOW PRICE HARAMI
In a downtrend, a low price harami (price range at lower end of previous candle
range) signals a probable sideways shift rather than a reversal in prices.
High and Low Price Haramis may precede periods of low volatility in prices
during periods of consolidation.
HARAMI CROSS – this is a long candle, followed by a doji
Haramis are usually an early warning signal and any close beyond
the harami price range in the previous trend direction will prove that
harami to be a continuation signal rather than a reversal signal.
This shows the importance of next-day confirmation of reversal of the
trend before entering the market.
$
Page 24
S & P 500 Ind55/00

Fig.5.2
420 S&P 500 Ind55/00 1420

Doji forming
410 Harami at the top
evening sta 1410
400 of a rally warns of
top of a rally 1400
an imminent collapse
390
in the index. v before a 1390
380 v fall on S&P 1380
370 1370
Dark cloud cover
360 1360
precedes market
350 fall. 1350
340 v 1340
330
320
^ 1330
1320
310 Hanging man at the 1310
top of a rally.
300 1300
290 1290
280 ^ 1280
270 Another window. 1270
260 1260
250 ^ 1250
240 Window or gap-up which provided significant 1240
support for this market for months.
230 1230
220 1220
210 1210
200 1200
2 1 8 15 22 29 5 12 19 26 3 10 17 24 1
March April May Ju
$
Page 25
WINDOWS – very strong continuation signals
Pullback from a trend will often stop at a window.

If a pullback closes past a window, then the previous trend can be considered
broken.
An intraday puncture of a window is not a signal of a break in trend.
A rising window opened with a long white candle is called a running window.
After 3 rising or 3 falling windows, look for a change in trend soon after.!!
Two black candles after a falling window is very bearish and called 2 black
gapping candles.
SUPPORT and RESISTANCE
The longer the base of support or resistance, the more solid that
support/resistance area will be.
Accumulation
$ High volumes and a spinning top at a market bottom signals an
imminent trend change – there should be little price movement here.
Accumulation bands that break to the upside will form future support
areas.
Distribution
$ High volumes and frozen prices at market tops – this is the market
‘topping out’ Spinning tops are typical here. Distribution areas that
break to the downside may become future resistance.
In flat markets count positive and negative candles and compare their size to
determine overall sentiment in that time frame.
Blend a group of candles to determine overall sentiment from a SINGLE candle.
For stocks, opening prices above or below 50% lines on previous long
candles are significant.
$
Page 26
ENTRY
STRATEGY
GANN LINES
$ Identify channels and triangles of support and
resistance.
$ Trade entries to be made at channel or triangle
6
extremes.
$ Watch for changes in momentum.
MOVING AVERAGES
All moving averages should be confirming direction of MAIN trend.

Watch for reversal at three equally spaced moving averages in trending markets.
Three converging moving averages may indicate trend change.

$ Go SHORT under falling moving averages.
$ Go L-O-N-G above rising moving averages.
$ Trade with the MAIN trend.
Watch for action at a golden cross or dead cross of moving averages.
TIME CYCLES
Use Anglers' Almanac as a time cycle guide to time by degrees.
Project time and price targets – use previous ranges as a guide and watch for
38%−50%−62%−80%−100% projected targets and retracements.
CANDLES
$ Watch for high-wave day, spring, upthrust, doji, rickshaw man, tweezers,
etc…
$ Wait for confirmation of reversal signal – dark cloud, piercing
pattern, star…
$
$ Identify flagship reversal signals for each commodity.
i.e. hammer, hanging man…
Page 27
$ Check previous gaps to anticipate support or resistance.

Double and triple bottoms or tops may signal a significant
reversal.
VOLUME
Hi Volume as confirmation of trend reversal.

Lo Volume as indication of pullback.
Lo Volume retest of support or resistance.
WILLIAMS %R
Divergence predicting short tend.

Convergence of Williams, 29 M.A. and -80% or -20% lines is
strongest signal.
Where possible apply all these techniques to underlying contract
first!
Then evaluate the trading contract using the same techniques!
Remember BOTTOMS BOUNCE SHARPLY, while TOPS CURVE
SLOWLY!
ENTRY
On extreme discount or premium.
By trendline target.
By CONFIRMED reversal signal.
On overbought or oversold Williams crossing its 29 unit moving
average.
On CONFIRMATION, by momentum increasing in the
direction of entry.
By acting upon a previously projected time and/or price
that have been confirmed as a market turn.
$
Page 28
EXIT
STRATEGY
GANN LINES
Identify long term trend channels and

triangles of support and resistance.
Identify short term trend channels and
7
triangles of support and resistance.
Trade exits to be made at channel or triangle
extremes..
MOVING AVERAGES
All moving averages should be confirming direction of MAIN trend.

Watch for reversal at three equally spaced moving averages in
trending markets.
Golden cross or dead cross may be the LAST exit signal.
TIME CYCLES
Use Anglers' Almanac as a time cycle guide to time by degrees.

Project time and price targets – use previous ranges as a guide and
watch for 38%−50%−62%−80%−100% projected moves and
retracements.
CANDLES
Watch for high-wave day, spring, upthrust, or star etc…

Wait for confirmation of reversal signal – dark cloud, piercing pattern,
etc.
Identify flagship reversal signals for each commodity
Check previous gaps to anticipate support or resistance.
Double and triple bottoms and tops may signal a significant
reversal.
$
Page 29
VOLUME
Hi Volume as confirmation of trend reversal.

Lo Volume as indication of pullback.
Lo Volume retest of support or resistance.
WILLIAMS %R
Divergence predicting short tend.

Convergence of Williams, 29 M.A. and -80% or -20% lines is
strongest signal.
Where possible apply all these techniques to underlying contract
first!
Then evaluate the trading contract using the same techniques!
Remember BOTTOMS BOUNCE SHARPLY, while TOPS CURVE
SLOWLY!
EXIT
By stop.
By trendline target.
By CONFIRMED reversal signals.
On extreme premiums or discounts.
On overbought or oversold Williams crossing its 29 unit moving
average.
On CONFIRMATION , by momentum increasing in the direction of
exit.
By achieving projected price and/or time targets.
NOTES
$
Page 30
MORE ISSUES THAT A

TRADER NEEDS TO
ADDRESS
What other issues do we need to address in our trading
plan?
Firstly, you need to understand that the best lager in the
world comes from Western Australia and is called EMU – it
is first chilled to the max, before letting it cascade over your
tonsils. Ah,... mother's milk.
Do not get sucked in by imitations…

8
Participating in market-related discussions on the internet forums will help us
put together a trading plan.
A firm plan, that we have formulated and therefore we will feel comfortable
trading that plan on a daily basis.
Before we enter a trade, we will know:-

1. Exactly where our entry and exit points will be, with special regard to price
and date (or time, if day trading).
2. How much of our risk capital will be assigned to this trade.
3. How much is the reward/risk associated with this trade.
4. Where our normal stop-loss is placed.
5. Where our ‘disaster stop’ will be placed.
6. Where our time stop is located.
7. How many contracts and where we will add or offload them.
8. What POP has said about entries, stops, adding to positions and exits.
Read ‘Phantom of the Pits’ and his ‘Phantom's Gift’ – many times – here's
the URL:http://www.futuresmag.com/library/phantom/phantom.html
9. Lastly, before dismounting from the soap box, enjoy your work.
$
Page 31
MONEY
MANAGEMENT
So much has been written on this subject, that we feel
compelled to leave a detailed discussion to the ‘experts’.
Suffice to say, for the purposes of our trading plan, that we

have identified our total risk capital at say, $200,000. Since
we recognise the risk of trading in the markets, we have
invested some $120,000 in diversified investments away
from the stock market or futures market. This leaves us
with $80,000 to trade the markets. 9
Of that $80,000 trading capital, according to our trading plan, we will not risk
more than 30% in the market at any given time and we will not risk more than
10% ($8,000) on any one trade. With $8,000 invested, we will not risk more than
10% of that money on a ‘disaster stop’ – absolute maximum – more likely we will
use a 5% stop loss, that's $400, for most trades. More on setting stop losses
later.
So initially, with total risk capital of $80,000 we may be exposed to a maximum

of three markets at any given time, with an absolute maximum risk exposure of
$800 in each market.
With this strategy in place, we know that we will be in the markets for the long
haul, even if we have a string of losses, which frequently happens when trading.
Money management is where the discipline starts for all traders-commit the
funds, according to our trading plan and ‘pull-the-trigger’ at stop loss points,
when they are reached. Sometimes, traders find this discipline the hardest part
of trading, but once mastered, it becomes a routine part of our trading.
So now we have identified the maximum dollars we will commit to any one trade
and the maximum dollar risk that we intend endure, in a worst case scenario.
That dollar risk should also address the expected reward from our trade and
should be adjusted accordingly.
$
Page 32
Reward/Risk Ratio
In setting our stop loss initially, we need to estimate the expected profit from the
trade. For example, our market has been trading in a regular channel that
represents a return of about $3200 from top to bottom. Since our trading plan is
to take a chunk out of the middle, we will shoot for about $2400. But what is a
fair amount to risk in achieving this end?
Depending on the market being traded and the trader’s aversion to risk, will
determine the reward/risk ratio.
In our example our expected profit is $2400 and our maximum stop (according to
our money management is $800 or 10% of funds committed to the trade)
represents a reward/risk ratio 2400:800 = 3:1.
If we can only see a potential of $1500 dollars profit in a trade, then to maintain
our 3:1 reward/risk ratio, as per our plan, we will risk a maximum of $500 on
that trade.
If the trade moves against us $500, then we will exit the trade immediately.
PULL-the-TRIGGER , accept the loss, no questions asked.
Some traders will use a 2:1 or even a 1:1 ratio, depending upon the market being
traded. What is important here is to recognise that the expected reward is worth
risking the money, time and effort in taking the trade.
By trading our plan in the marketplace, we gain faith and confidence in our plan,
that will help us to identify and manage risk of future trades, within our own
comfort zone of trading.
NOTES
$
Page 33
SETTING STOP LOSS

LEVELS
Comments on stops from here, may not be the conventional
view espoused by those who have written reams & reams on
this subject.
Stop losses may be refined by placing them outside of
obvious and resistance levels.
As we already know our maximum risk as per our

reward/risk, we can now check the charts to refine their
placement further. Since we will most likely be entering
the trade near a likely support level, it is important to
allow the trade enough space to allow for normal trading
volatility.
10
Some traders set stops a little more than 3 times the average true daily range for
that market – this approach more than takes care of daily volatility. Other
traders will simply have a set dollar amount, where their stops are set, or a fixed
percentage of the dollars invested or simply a stop set just beyond the low of the
past three days or even a weekly low. A strategically placed moving average may
also be a graphical way to show where our stop loss is placed.
No matter how the stop is set it will not exceed our maximum planned stop, as
per our money management and risk/reward policies.
More exotic methods have been espoused, such as CBL and DGL methods.
However, by keeping it simple, it is easier to understand and execute our stop
system.
For day-traders, who keep a continuous watch on the market there should be no
need to set stops at all – except mentally – using ‘POP’S No.1 Rule’. Some days
you will take a trade and it will immediately move in your direction, but suddenly
it will retrace the move and looks very negative. At these times, it is good to have
a mental stop in place, should you wish to exit the trade early, before it hits your
‘disaster stop’.
Day-traders, with depth on their live feed can see stops ‘being run’ every day,
before reversing and trending back into the original trend.
So why become a statistic, apply ‘POP's No.1 Rule’ and be out before
your ‘disaster stops’ are hit, then reposition at a better price, after
the stops have been triggered and the market is even more in your favour.
$
Page 34
Using stops in less volatile markets, during short-term trades may also result in
‘stop running’ by the larger traders.
It is very obvious now to the large traders, where the weak traders will place their
stops, that's why ‘springs’, ‘upthrusts’ and false breakouts occur at obvious
support and resistance.
For position traders, this is not usually a huge problem, as they have long
pockets and their stops are set wide anyway.
Some people could not sleep without placing a stop in any market they are
holding overnight – those traders need to look at typical volatility and brief
thrusts past support and resistance areas. Armed with this knowledge, a trader
may then place ‘disaster’ stops outside the zones of natural volatility for that
particular market. Make this part of your research, then incorporate it into your
trading plan, if it makes you sleep better.
Popular trading systems, like 50% retracements, A-B-C, 1-2-3, all have stops
placed at obvious levels, just beyond technical support or resistance. This makes
easy pickings for the big players – so be out before these stops get triggered or
suffer excess slippage while the masses try to bail out.
For day traders it is even more important to pull the trigger early, because once
the rush is on, sometimes you can't even get through to your broker on the
phone (or the internet) to place your order!
Even traders with longer term trading time frames need to have a stop – a
predetermined point where we exit the trade. We DO NOT WAIT until the
financial pain is too excruciating to bear any longer.
‘Buy and hold, no matter what’. Some traders look at markets like that – it's
nothing short of masochistic! Why put yourself through that pain? If a trade is
going against us, we risk no more than we figured in our trading plan – before we
took the trade.
Traders will often let trades become ‘investments’ as the market moves against
them. Why?
It's an ‘ego thing’ – traders would rather be proven right in the longer term, no
matter how much pain they suffer in the short term.
Some stocks take years to recover – eventually the trader may be proven correct –
but the stress and loss of working capital in the meantime can often take its toll.
Evaluate your losing trades in an effort to improve timing of your

trade entries and exits. If you have your timing and direction right,
$
price then becomes a means to calculate profits.
Page 35
Above all – do not let winning trades become losing trades – taking a small profit
in the short term is surely better than accumulating losses over a longer period –
and less painful.
Use both time and price stops – cut your losses early and get on with the next
trade.
NOTES
$
Page 36
TIME
STOPS
Trading futures has given us bulk experience with stop losses
and one approach that we've found to work well is a TIME-
based stop, rather than a price-based stop.
Essentially, what this means is – if a stock does not perform
11
in a given time period, bail out. In trending markets this time-
stop will be a shorter period than in a choppy, non-trending
market.
For programming into spreadsheets time-based stops are

much easier than price-based stops too.
Determining likely entry and exit dates can be done simply with cycle analysis
and trendlines or channels.
Timing trade entries and exits requires the most skill on your part as a trader,
this includes the setting of your time stops.
One example for a channel trader may be:

Check the length of time that the price in the market usually hovers at
channel extremes, if the longest time we can see on the chart is about five
days, then we may put a time stop in for 3 days hence. (given that we
entered the trade when the price has been at the channel extreme for 4
days already). So, if at close in 3 days from our entry, the market is not
performing for us, we exit the trade and get on with the next one.
In recent times, simple mathematics have been developed to determine likely

price and time swings. This methodology can help us project our time and price
targets quite accurately, thereby helping us to determine likely ‘speed lines’ for
the market and our time stops as well.
Speed lines, Gann lines and Gann rays are tools incorporated into
many charting packages, such as Metastock, Bourse Data, etc...
$
Page 37
TIME, time stops, timing of trades, new methods of time and price projections
and lots more will all be covered in a new book by the author later this year.
A trader on an internet forum made comment about different patterns that

emerge in every trade to seemingly wipe out small accounts – a variation on the
‘hunting-for-stops’ theme. To that we posted:
‘Your comments are typical of many traders – yes every trader has seen all
those patterns in almost every market...What your post does, is to
reinforce the need for most traders to get a handle on TIME – to enable
them to place entry and exit orders more effectively.’
Many gurus will try to tell you not to pick tops and bottoms, but those 10% who
make money at this game are doing just that – by timing their trades better.
If you watch live data in any market on any day, you will see huge volumes going
through just before market tops and bottoms. This is the bigger players moving
the markets – if you're not with them, you will be just one of the other 90% who
fail in this game.
What POP has said about entries, stops, adding to positions and exits is
especially helpful when planning our trades. This link to ‘Phantom of the Pits’ has
a couple of small gems regarding time-based stops and may help some:
http://www.futuresmag.com/library/phantom/phantom.html
NOTES
$
Page 38
DAYTRADING 
TIME CYCLES
AND
DIRECTION
Market timing is one thing, direction is another...
In recent times, day traders have found another tool –

time cycles. These are actual times of the trading day
where intraday market turns may be expected and
these times are particularly helpful to traders of
12
currencies and indices. Some of these forecasts are amazingly accurate and can
help traders fine-tune trade entries and exits.
Fortunately, with time you have a handle on the hardest part, no matter what
time frame you are trading.
With direction, despite being able to move in two directions (or stay stationary),
we can often get it wrong.
Disregard stationary, as our time stop will take us out of the trade, if it does not
perform inside a given time frame or eventually price will breakout anyway –
either up or down.
There's many methods on determining direction – take ten traders and you will
have ten different methods.
Some of these will be included:-

Tossing a coin.
Go with the COT crowd.
Go against the COT crowd.
Check your horoscope.
Go with the main trend.
Go with the reactionary trend.
Too many ways...
However, for intraday, if there has been a trend in place for at least
20 minutes, immediately before the predicted cycle time, then trade
against this trend, especially if your other indicators confirm your
action soon after.
$
Page 39
Here you will see a degree of anticipation is required – you will be right or wrong
– it's that simple. Some traders will reverse at their stop, with double the
contracts, in case their decision was wrong initially.
Having entered the trade on a time basis, give it a time limit to perform positively
or exit the trade – again read ‘Phantom's Gift’ on this.
NOTES
$
Page 40
DAY TRADING
OR
OVER TRADING?
If you look at the price action for any day, in any
market, the optimum gain may be taken out in no
more than three trades, in any one day. From the
chart below we can see why this is so:-
ALL ORDINARIES
Fig. 13.1 13
3100 ALL ORDINARIES INDEX 3100
3090 3090
3080 3080
3070 3070
3060 3060
3050 3050
3040 3040
3030 3030
A two-trade day
3020 3020
3010 v 3010
3000 ^ A one-trade day
3000
2990 2990
2980 2980
2970 2970
2960 2960
2950 ^ 2950
A three-trade day
2940 2940
or doji.
2930 2930
2920 2920
14 21 28 5 12
July
$
Page 41
ONE-TRADE day
Starts on its lows or highs and finishes at the other extreme – easy to do in
hindsight – but can produce some high anxiety for day traders as price retraces
intraday and bounces off support or resistance close to your stop. These days are
likely to trend strongly from the start.
TWO-TRADE day
Where price moves from the open to a high or a low, then closes at the other
extremity. This formation is often found at trend highs or lows.
THREE-TRADE day
Where price moves from the open to a high or low, then to the other extreme,
only to turn again and it may even close where it opened to form a doji. These
days are often found one or two sessions ahead of important news or holidays.
Now, rarely is a trader going to pick exact tops and bottoms in any market,
pulling the ‘meat’ out of any trend is what we aim to do.
So, how do we know for sure, what type of day it will be ahead of time – we don't.
But some days we can be reasonably assured of the general market sentiment
and we should also know the general direction of the longer trend. When the
daily and weekly trend are in agreement, there is only one way to trade – with the
trend.
For some day traders, the use of pivot points in determining entry and exit levels
can be a useful tool, since these points are determined before the market opens.
Use the following formulas to determine likely support and resistance for the
trading day ahead, where H, L, C are the previous day's high, low and close,
respectively:
Pivot point (P) = (H + L + C) / 3
First resistance level (R1) = (2 x P) - L
First support level (S1) = (2 x P) - H
Second resistance level (R2) = P + (R1 - S1)
Second support level (S2) = P - (R1 - S1)
Honing your entry skills by ‘timing’ the market better, is the easiest
way to improve your entries (and exits).This is especially important
on choppy trading days, where it is very easy to get whipsawed.
$
Page 42
Whether you do this by the clock or by support and resistance levels (or both] is
not important, so long as you develop a routine that can easily be incorporated
into your trading plan.
One aspect that is rarely mentioned is tracking live volume intraday. If you have
access to course of trades and depth – this can also confirm support and
resistance levels.
Regular day traders can see increases in volumes, due to the bigger players
changing sides, then the small traders can also react accordingly. Wide spreads
in the bid and offer may also signal a reversal as unwilling buyers or sellers enter
the market. However, these techniques can only be mastered with live
information and the need to be glued to the screen throughout the trading day.
Your risk management of breaking even as soon as possible is a good ploy.

(Phantom's No 1 Rule).
Overtrading is an important issue. Besides, if we can stay in for a few points

longer for less trades, that's less we pay the brokers...
NOTES
$
Page 43
YOUR TRADING
PLAN
CHECK LIST
Basically, your plan will address the following
topics:
MONEY MANAGEMENT TECHNIQUES
$ How much of your risk capital is

committed to the markets?
$ How much capital is risked in the
market at any given time?
$ How much capital will be risked on any one trade?
R ISK /REWARD RATIO

14
$ From your evaluation of the market, does the risk justify the reward?
WHICH MARKET TO TRADE?
$ Which country, which exchange, which sector and which market?
WHERE IS THE ENTRY LEVEL ?
$ How is it determined, by price, by time, by trendline or cycle time?
WHERE WILL WE ADD TO WINNING TRADES?
$ How do you determine where to add to your position?
WHERE IS THE EXIT LEVEL ?
$ How is it determined, by price, by time, by trend line or cycle time?

$ Stop loss placement
$ How are your stops placed as a percent of capital, fixed dollars, etc?
MENTAL STOP
$ Where is your intraday stop, to cut losses early?
$
T IME STOP PLACEMENT
$ When will you exit the trade, if it does not perform within
your time stop?
Page 44
Some other issues that you may want to address in addition to your written
trading plan:
What types of trading systems are available and which one should
you use?
What size account should you start with; and can you be a
successful trader starting with a small account?
Is your trading based on a fundamental or technical approach?
As a technician, what indicators should you use?
Should you buy a ‘black box’ trading system?
Emotions, how will they affect your trading?
Brokers, do they encourage overtrading and do we accept their tips?
Loss management, how do you manage a losing trade?
How do you manage a winning trade?
Preservation of capital – the 10% rule and stops, do you understand
these concepts?
Do you understand fundamental indicators as predictors of price
movement?
Do you understand technical indicators as predictors of price
movement?
How are my trading accounts handled and who is responsible for
recording the details?
Which accountant?
What are my responsibilities and rights regarding income tax?
NOTES
$
Page 45
ELEVEN TRADING
GUIDELINES
1. Always have a trading plan, knowing entry, planned exit, disaster stop-
loss level and mental stop (to cut losses early).
2. Always use TIME CYCLES to anticipate trades and use other indicators
as CONFIRMATION only. If you know WHEN, then price is almost
irrelevant.
3. Always cut losses early, preferably before it hits your disaster stop.
4. Always trade with a clear head, with no outside distractions.
5. Always let profits run their course, within the scope of your trading
plan.
6. Never make trading decisions upon broker’s advice, without doing more
thorough research.
7. Always trade with money that will not affect your lifestyle substantially,
if lost. Trade within your means.
8. Always keep accurate records of trades and review them to learn what
you did right with the winners and what went wrong with the losers.
9. Always ‘pull-the-trigger’ when your system gives you a signal.
10. Always be gracious about wins and losses – be generous with your
winnings and don't be too hard on yourself when you lose (because it
happens often). Reward yourself first, when you win.
11. Continue to strive for market knowledge from books, videos and
other traders' resources.
$
Page 46
WALKING THROUGH
A TYPICAL TRADE
Once your overall trading plan has been established, execution of a typical trade
may go like this:
1. PREPARATION OF INFORMATION
Evaluate the overall market and decide which sector to trade.
Analyse your end-of-day-data and decide on a particular market. Chartists

will probably narrow the field by using exploration programs within their
charting packages.
Fundamentalists may compare similar companies within a sector by

comparing results of standard formulae run across the both historical and
recent financial results of each company.
A simple mathematical approach of calculating pivot points may also

reveal sensitive support and resistance levels.
2. MONITOR MARKET FOR ENTRY SIGNALS
As per your plan, you will monitor the market for a particular set entry
signals from your indicators. Usually, this will be a number of unrelated
indicators confirming each other, but KEEP IT SIMPLE.
One overbought/over old indicator, one momentum indicator, time cycles,

price, volume and trendlines are probably more than enough to analyse
any market.
Be patient and wait for the market to confirm the set-up, as per your
trading plan.
3. PULL-THE-TRIGGER
Once you have confirmation of an entry signal from your indicators, pull-
the-trigger. Call your broker, take the trade and maybe even put an order
in at your exit target.
4. SET YOUR STOPS – NOW
While the broker is on the telephone – set your ‘disaster stop’.

This is the maximum risk that you wish to be exposed to in this
trade.
$
Page 47
Throughout a trade you may wish to employ a trailing stop, to preserve a

percentage of the profits, in the event of a sudden market reversal.
5. CHECK ON YOUR EMOTIONS
Control your emotions and you will be able to manage the trade better.
Note in your trading diary how you feel – stressed, hopeful, fearful or in
control of the trade.
Discipline yourself to trade mechanically, without emotions. Plan your

trade, then trade your plan.
6. WATCH FOR EXIT SIGNALS
As trades move in your favour watch for exit signals, particularly at known
areas of previous congestion or near your exit price or time targets.
7. EXIT THE TRADE
When your trading system signals an exit, just do it! Call your broker and
pull-the-trigger !
On exiting the trade, feel good about taking a profit.
8. RECORD YOUR TRADE
Record, honestly, the following info in your trade diary for future review:–
$ Entry and stop loss

$ Exit
$ Trade analysis and how you rate the trade.
$ What went right?
$ What went wrong?
$ How did your emotions react?
By reviewing your trading diary periodically, your trading weaknesses
soon become apparent and then you can take action to strengthen that
area.
9. UPGRADE YOUR PAPERWORK
Complete entries in your running tally of trades, your trading diary

and your trading accounts.
Balance your accounts against your broker's statements

regularly, since they have been known to make mistakes.
$
Page 48
MATHS
AND THE
MARKETS
There Is A
Relationship – Time
In the future, a trader's ability to step back from
the short-term noise and look at a larger trading
15
time frame will probably help in making better
trades. This will likely be aided by a software
package that has a TIME AXIS orientation.
Looking ahead to the next generation of technical analysis packages, it is not

hard to see that more use will be made of computers' number-crunching
capacity, especially when utilised on advanced market timing packages.
Mathematics can help approximate turn-times, dates and price levels to a point
where they can be integrated confidently into a trading plan.
It's also easy to understand some traders' negative views on Gann and others,
given that none of these approaches has ever really been reduced to a tradeable
system. In truth, this goal will probably never be achieved, due to the fact that
the principles espoused by Gann, Fibo, Pascal, Rudhyar, etc, are only stepping
stones to more accurate mathematical forecasting tools. As such, they will be
bypassed in favour of more current views.
One aspect, that has brought Gann theory into disrepute, is the obsession by
traders to ‘square’ time and price. In researching this aspect, traders have found
that it is a unique case and not the norm in most markets.
In view of the substantial progress made in most other technologies over the last
century, common sense must tell us that relying on any one of these dated
theories is fraught with trading danger.
What all these past principles have done, is to provide a sound basis
for further research and development of more sophisticated forecasting
tools.
$
Page 49
As with all trading tools, they are not 100% correct at all times, but at today's
level of understanding, they can be incorporated into a trading plan with more
confidence.
Some examples of up-front forecasting can be given, where price levels or time
frames have been accurately posted. To accurately forecast both price and time
together requires a unique set of market conditions, hence it is rarely achieved.
By having a mathematical approximation of price levels and time frames, we can

then tailor a simple trading system around these forecasts. In doing so, we will
be shooting for an exit at about 80% of the projected move. This leaves some
money on the table, but usually ensures easy entries and exits before the panic
sets in.
As each market has it's own rhythm, it is necessary to identify the correct ratios
to calculate the next swing.
Faraday said, ‘There is nothing in the universe, but the mathematical points of
force’.
So let's throw the challenge back to the sceptics, please post a tradeable system
that is NOT based on mathematics (remember, even charts are based on
numbers).
NOTES
$
Page 50
SOME FINAL
THOUGHTS
In developing your overall trading plan, there are some
more issues that need to be mentioned.
While the paperwork involved in trading is minimal, it is
essential that traders have enough discipline to complete
16
the details on a regular basis.
Use an individual trade plan for each trade to detail the

mechanical parts of your trades. It will, at least, detail
your anticipated entry, exit, price stop and time stop for
each trade. Details on price and time targets, anticipated
levels where you plan to add to a winning trade or take profits may also be
included.
Space for trade evaluation and review can also be added, so your final trade plan
for individual trades may look similar to that shown at the end of this chapter.
Do not mistake this form for an overall trading plan, it only addresses the
mechanical aspects of your trades.
Once a trade has been entered, you can stay abreast of market action by tracking
your trades daily and updating them on a form similar to that in presented at the
end of this chapter. So, you can now see at a glance whether that trade is
profitable or not and it helps to make tracking of multiple trades easier.
Similarly, each trade entry and exit is entered on a running tally of all trades.
Again, there is a sample of such a form at the end of this chapter. This can be
used as a simple trading record to balance your trades against your brokers'
statements.
This record may be sufficient for your accountant and the taxation office too.
We have deliberately omitted addressing the issues of accountants and income

tax, as they are covered by a myriad of laws in every country. Suffice to say they
are two issues that you should also address as part of your overall trading plan.
For some traders, paper trading their plan for a short period of time may
help them to become more familiar with the mechanics of the markets.
If a trader is not comfortable trading after six weeks of paper
trading, then maybe trading markets is not a suitable occupation.
$
Page 51
Let's face it, trading the markets is not rocket science, so the mechanics should
be mastered easily in a about a month.
Be warned that paper trading offers none of the emotions that you feel trading
real money in real markets. That's when you really know, if you are suited to
trading the markets as a career. Emotions, self-discipline and many other
personal issues are brought to the fore, when you trade real money in real
markets.
One suggestion that is useful for most traders is the regular recording of trades
in a personal trading diary. By diligently recording all aspects of how you feel
about each trade, you can very quickly reveal some interesting, and sometimes
unexpected emotional issues within yourself whilst trading. By reviewing your
trading diary on a weekly or monthly basis, you may be able to pinpoint weak
spots in your personality or trading plan. In this way, you can apply a special
focus on continual improvement of your overall trading plan.
Please feel free to post comments or suggestions about this trading plan overview
on our website.
http://www.egroups.com/group/trading_plan_wozzat
Top trades all
Yogi
$
Page 52
TRADING RECORD
O
OVVE
ERRA
ALLL
LPPR
ROOF
FIIT
T//L
LOOS
SSSB
BYYT
TRRA
ADDE
E
Buy Stock Profit
Order Date Order Option Entry Entry Exit Exit
0r QTY Code or
Date Filled Type Code Order Filled Order Price
Sell Futures Loss
Total Profit or Loss
PLEASE PHOTOCOPY BEFORE USING
$
Page 53
DAILY UPDATE
PROFIT/LOSS BY TRADE
Trade Code: Trade Code:
Trade Entry Date: Trade Entry Date:
Entry Price: Entry Price:
Date Closing Price Update Profit (Loss) Date Closing Price Update Profit (Loss)
Trade Code: Trade Code:

Trade Entry Date: Trade Entry Date:
Entry Price: Entry Price:
Date Closing Price Update Profit (Loss) Date Closing Price Update Profit (Loss)
PLEASE PHOTO COPY BEFORE USING $

Page 54
TRADING PLAN FOR:…………………………………………….Trade Number:..………

(Insert Stock code or Futures Contract here)
A. DAILY CHART PROJECTED TIME TARGETS
DATE PRICE
Price 1 Previous Range Enter By
Price 2 Time Stop
Price 3 Time exit 80%
Entry Projected new price range 100% Time exit 100%
Exit Time extension 1
Profit/Loss Time extension 2
Time extension 3
Actual exit time
Exit: 1 Disaster stop loss:____________________
2 Time stop expired:____________________
3 Trailing stop loss: PULL the TRIGGER!
4 Time or price target reached:____________
B. WEEKLY CHART PROJECTED TIME TARGETS

DATE PRICE
Price 1 Previous Range Enter By
Price 2 Time Stop
Price 3 Time exit 80%
Entry Projected new price range 100% Time exit 100%
Exit Time extension 1
Profit/Loss Time extension 2
Time extension 3
Actual exit time
Exit: 1 Disaster stop loss:____________________
2 Time stop expired:____________________
3 Trailing stop loss: PULL the TRIGGER!
4 Time or price target reached:____________
C: Add to position at:

Stop Limit
Date Price ANALYSIS Quantity Risk
Loss Order
D: Liquidate position at:

Residual
Date Price ANALYSIS Quantity Final Qty Held
Held
Profit Loss Trade Rating

GOOD BAD
Evaluation of this trade:
$
Trade Entry:________________________________________________________
Trade Exit: ________________________________________________________
PLEASE COPY THIS FORM BEFORE USE
Page 55
Hi folks,
Here's a story that began 2000 years ago and has

been unfolding, ever since .....
Gann Signs - Gann Traders will love it, astrologers

will be amazed, Gann peddlers will hate it and
Christians will be very much divided about this
text ..... however you may look at the "new" bible
codes, you will never look at a Bible in the same
way - ever again !~!
=====
2004 is exactly 77 years, since W D Gann

started to write his book ..........................
“Tunnel thru the Air or looking back from 1940.”
Gann was a respected commodities trader in the

early part of the 20th century and he found
certain time cycles in the bible, by decoding it
using the bible codes, found in the King James
version of the bible.
He also considered that information too sensitive

to be made public, in 1927, so he used the same
bible codes to hide that information in his own
book, TTTTA ...
=====
It is very appropriate then, that the writing of

“Gann Signs” was completed on 09 May 2004,
same day as Gann wrote the TTTTA Foreword.
While researching material for this work it has

become quite apparent, that Gann was simply a
messenger, owing much of his knowledge to
Sepharial and other contemporaries of his day.
Looking back, it is now easy to appreciate why

Gann chose not to reveal his findings in the
Bible, instead he used the bible codes to hide
his methods, until the world was ready for them.
He may well have been branded a raving lunatic

in 1927, if he had publicly revealed these details ... :)
Unambiguous proof of HOW Gann used the bible

codes and astrology in his trading, is available
now, on CD-rom.
"Gann Signs: Title-Bible-Tetragrams" was
released to the public on Robert Gordon's
birthday, on 09 June 2004.
Naturally, a special price will be offered to the readers of my

"Cardinal Astrographs ... easy trading tools," before Gann Signs
is made available to the public next month, in a similar package
to CAETT.
To give you an idea of "Gann Signs'" contents,

here's a breakdown of the main sections:-
Introduction: An updated look at the TTTTA Foreword

and some basics relating to Gann and Sepharial.
Bible: ..... Sepharial's work and why Gann pointed

us towards that astrologer's books and others, too .....
Also, "NEW" bible codes that reveal exactly what

Gann found in the bible and how to apply them to
the decoding of TTTTA and other texts.
Tetragrams ..... More about decoding the texts and

how Gann made his amazing forecasts, in TTTTA.
Practical Astrotrading 1 ... we use Gann's own charts

to explain how he applied that information to his
own trading ... in great detail.
Practical Astrotrading 2 ... we look at that same

market, about 45 years onwards, to verify that
those same methods can be applied to modern
commodity markets, too.
Practical Astrotrading 3 ... here's an example of how

we apply these methods to the stockmarket and we
use a REAL trade and REAL money, in a current
example.
Practical Astrotrading 4 ... further examples of

applying the planetary cycles to modern markets.
Practical Astrotrading 5 ..... more trading examples.
Practical Astrotrading 6 ..... more trading examples.
Practical Astrotrading 7 ..... more practical astrotools.
Loose Ends .... tying all the relevant ends together and
further insight into future Gann Signs
coverage, like the Gann's individual
trading campaigns.
We also look ahead at specific astrological events,
in the future and some suggestions on how to
analyze many more of Gann's bible references.
Milestones and messengers .....

..... a brief look at the SnP500 astrochart.
In short ..... you will never need to speculate about

"how-Gann-did-it", ever again.
========
Like Gann, my role is simply as a messenger.
Unlike Gann, my writing is not in any sort of code,

because NOW the world IS ready for this information,
so Gann Signs has been presented in plain and
simple English.
In fact, the world needs this information, now.
These details will have you looking at the wisdom

of the bible and other old texts in a new light.
WARNING:
There's a LOT of simple mathematics, geometry and

astrology in this ebook, so BE WARNED, up front.
Having said that, this ebook will surely be seen as

a pioneering effort in reviving an old branch of
mathematics, that has been long-forgotten, with
the advent of modern technology.
======
TTTTA and some books on his reading list were

the ONLY publications, where Gann gave us
enough information, to prove that he used astrology
in his trading.
Using Gann's original material, it can now be

proven, beyond doubt, that he used the cosmic
clock to trade stocks and commodities.
Truth is, Gann told us to read other astrologers'

works to find the answers and really, that
relegated Gann to the role of messenger, albeit
that he used that information in his trading.
Astrologers like Sepharial, Raphael, William

Allan and Dr L Broughton, probably all
contributed to Gann's knowledge of
planetary cycles.
One thing is guaranteed, if you have a basic
understanding of astrology, you will never
look at the bible (or other old texts) in the
same way ..... ever again.
-----
Gann Signs and CAETT is now available in one

astrotrading package of THREE ebooks, which
also includes the ISBA Book about business
and financial astrology.
..... 770 pages of PRACTICAL astrotrading information.
Just happy to be a messenger ..... :)
happy trading all
yogi
For Gann Signs, CAETT and ISBA Book:
http://easy-trading-tools.00cd.com
=============
Gann Signs: Title-BibleTetragrams support forum:
http://groups.yahoo.com/group/gann_signs

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Paul ‘Yogi’ Nipperess & P.J.

Introducing ‘Philo R. Froop’ Trader

First Published 2000 - Reprinted 2003.

Published by paul yogi nipperess

Click here to view ebooks by the same author

Email the author: easy-trading-toolz@iinet.net.au

TRADING FOR A LIVING ............................................................................... 6

ARE YOU TRADING MARKETS OR EMOTIONS ............................................. 8

HOPE & FEAR .............................................................................................. 9

TECHNICAL ANALYSIS ................................................................................. 14

ENTRY STRATEGY ........................................................................................ 27

EXIT STRATEGY ........................................................................................... 29

MORE ISSUES THAT A TRADER NEEDS TO ADDRESS................................ 31

MONEY MANAGEMENT ................................................................................ 32

SETTING STOP LOSS LEVELS ...................................................................... 34

TIME STOPS ................................................................................................. 37

DAY TRADING –TIME CYCLES AND DIRECTION .......................................... 39

DAY TRADING OR OVER TRADING?............................................................. 41

YOUR TRADING PLAN CHECK LIST.............................................................. 44

ELEVEN TRADING GUIDELINES .................................................................. 46

WALKING THROUGH A TYPICAL TRADE ...................................................... 47

MATHS AND THE MARKETS There Is A Relationship – Time ........................ 49

SOME FINAL THOUGHTS ............................................................................. 51

legend…in his own lunchbox

More FROOP ‘toons at http://www.beanbelly.com

Before trading, have a plan. Not important whether it

Your plan should address, which market to trade, risk/reward

Expecting to ‘earn-while-you-learn’ places some stress on traders, even though

More Trader FROOP ‘toons at http://www.beanbelly.com $

ARE YOU TRADING

Here's a different approach to the markets and ‘knowing

Overcoming emotions can only be done by experience, that means trading,

HOPE & FEAR

We all hear that hope & fear control the markets?

Can anyone explain one or both?

Posted by Yogi-in-Oz on 06 March, 2000 at 18:58:06:

1. HOPE is entering a market without a trading plan.

3. To represent traders' emotions (HOPE and FEAR being just two

2300 GOLD INDEX 2300

1996 1997 1998 1999 2000

WHICH STOCK or COMMODITY?

Watch for market clues in newspaper articles, on television, in

Remedy: Take a break and then trade fewer markets better.

Diversifying into a relatively small number of promising stocks or commodities,

ALL ORDINARIES INDEX

TRENDLINES and TRADING CHANNELS

Breakouts from previous trading channels, present another trading opportunity

November 98 through to May 99

ALL ORDINARIES INDEX

That leads us on to the next feature of our chart, which is volume.

SUPPORT and RESISTANCE

LONG WHITE CANDLES

OPEN and CLOSE is of most relative importance

HAMMERS and HANGING MAN

A hammer should appear after a significant downturn or in an oversold market.

All Ordinaries Index

2850 ALL ORDINARIES INDEX 2850

A doji should be considered as a transition or indecision signal – so wait for

A Gapping Doji – in an uptrend or downtrend – wait for next session confirmation

Stars are three-candle patterns.

DARK CLOUD COVER

PIERCING PATTERN – Opposite to Dark Cloud Cover

A bearish engulfing pattern following a doji is a strong bearish signal.