Long term Secrets to Short Term Trading

When I first picked up this book, I thought Short term trading refers to Intra-day trading using 5 mins or 1 hour charts. But this book is filled with daily charts. So I guess the author's short term is different from my short term.

Since our premise is different , the strategies recommended are for overnight trades vs my preferred intraday, strictly session-only trading. Readers must discern the strategies.... and adjust accordingly to their own preferred style. Eg he mentioned that one needs time to grow the profits, quoting Livermore's quotes of sitting tight during market runs. Good for overnight traders, nightmare for session traders!


However , some POINTS are worth noting :

(1) He goes with a loss in mind. This forces him to place a stop loss order immediately.

( p/s this is very similar to Dr Elder's Loser's Anonymous idea !)

(2) His breakout system makes sense ( after a certain% from the day's open )
( p/s but not all markets behave the same way)

(3) Order within Chaos
(p/s this can easily be identifies using the Zig Zag Indicator )

(4) "There are two primary ways we make money trading ; catching a big price move with a small position or having a large position and catching a small move " - Bill Mehan

(5) Greatest Swing Value ( GSV ) : this is where the Trend changes sentiment

(6) Chart Patterns
    i. SMASH DAY
    ii. HIDDEN SMASH DAY
    iii. SPECIALIST TRAP
    iv. OOPS!

Here are the pictures drawn by me to help explain visually ( hope you like it....;)   ). The charts drawn by the author were bar charts; I prefer candlesticks...

Now , these few pattern are worth looking at.  Maybe some explanation may be enlightening :
SMASH DAY are reversal patterns.
DOWNTREND REVERSAL : the close is lower than previous day's close. The next day, the market closes higher than High of the  New Close. Buy stop upon breakin of the high of the New Close.
UPTREND REVERSAL : the close is higher than than the previous day's high. The next day, the market closes below the Low of the new high day. Stop sell upon breaking of this low.

HIDDEN SMASH DAYS  are Continuation Patterns.
They just serve to attract the unsuspecting public into a "must do " pattern...like a hammer at the bottom of a downtrend. And then "hiddenly" smash through the low of the hammer!. Read the TA books... always look for confirmation in the next day after the hammer before entering long positions!

SPECIALISTS TRAPS are just failed breakouts.

OOPS! are Island reversals.

New traders.... make sure the strategies recommended fit your own style before adopting the ideas suggested by the author.