Eventually, with a decades-long orgy of credit expansion unraveling fast; the meltdown of stock, bond, commodity, and other markets; a cratering economy; and more of the nation’s largest financial institutions precariously on the edge, the Federal Reserve and Washington as a whole will have reached a critical juncture. There will be widespread pressure, bordering perhaps on hysteria, for somebody, somewhere to take action and stem the rapidly rising tide of disaster.

Only then, after being unwilling to react quickly and forcefully enough early on, the Federal Reserve will abruptly shift gears, no longer fearing the consequences of an aggressive monetary response. In a sense, they will have nothing to lose. With immediate effect, they will give up their self-imposed yoke of restraint and move wholeheartedly into money-creation mode. That will mark the beginning of the second phase of the great unraveling.

Sound familiar? Here’s some more from Chapter 6 (”Systemic Crisis”)

No doubt a systemic meltdown will provoke a similar response. For the financial system and the markets, however, the fallout will likely be worse than any downturn in many decades, owing to a unique combination of modern developments and incendiary circumstances. The explosive growth of derivatives trading and leveraged hedge fund investing, hidden behind a shroud of lightly regulated secrecy, means that few people will have a handle on where dangerous risk is concentrated or overall levels of exposure — not until it’s too late…

-SNIP-

Simply put, people will find it difficult to react in timely, logical or focused fashion to the unfolding calamity…

-SNIP-

Despite increased levels of sophistication and the broad use of modern risk management systems, no one can be sure how new or exotic instruments and markets will behave when conditions take an ominous turn. The sheer scale of the unfolding financial crisis—in terms of the number of participants, firms, regulators, products, countries, and markets—will make it difficult to penetrate the problems…

-SNIP-

This time, however, a vast and efficient global communications network will ensure that destructive energies are rapidly transmitted to billions of people. So, too, will trading technology that facilitates and encourages traders and investors to act on their impulses. Many will find it too easy to shoot first — or point and click — and ask questions later in a 21st-century rush for the exits.. Not only will the fastest or sharpest operators look to get out. Firms that have come to depend on leverage, including hedge funds, brokers, and even banks, will also face immediate and rapidly growing pressure to scale back positions because of demands for additional cash collateral or reduced access to financing. Meanwhile, those who still have the wherewithal to initiate fresh positions or act independently will look to dive in and take advantage of the stampede.

-SNIP-

A constant global ripple effect will occur as positions are adjusted to take account of risk management strategies or cash-raising demands. The widespread use of flawed models will further aggravate the situation.

-SNIP-

By the time the systemic crisis is full-blown, there will almost certainly have been a domino-like collapse of more than a few large intermediaries and allegedly sophisticated global financial firms, including hedge funds, insurers, and brokers. As the number of failures grows, concerns over counterparty risk will take center stage. Lenders, investors, and risk managers will fret and gossip about which institution is next. Worries about fraud and chicanery will boost anxiety to a fever pitch. Even firms not in dire straits may suddenly find themselves at risk. In times of upheaval, a lack of information and concern about the ability of others to manage their exposure often spurs a self-fulfilling prophecy, where idle chatter alone leads to institutions being squeezed or cut off—just when they need access to financing most.

-SNIP-

Few areas of the financial system will be unaffected when the meltdown rages. In the insurance sector, for example, debt downgrades and defaults will occur at a quickening pace… At least some of the $2 trillion held in money market funds will anxiously flee to safer pastures as the prices of one or more pools fall below par — “breaks the buck” — because of shaky markets and holdings that turn out to be much riskier than expected.

Pretty much all of this has taken place over the last few weeks. Kudos to Michael Panzner for nailing all of this. And somehow I still have hope that much of the other stuff in the book is worst case scenario and won’t come to pass. But I’m losing hope by the day.

Post from: Trader Mike

Financial Armageddon is in Full Effect

Update: Timothy has offered two signed FINAL copies of the book. So here’s what we’ll do — The two closest guessers will receive the final edition from Tim. I hate to let a book go to waste, I’m gonna give my uncorrected proof to the bronze medalist.

So here’s the deal. Leave a comment guessing tomorrow’s (Friday’s) closing price of the Nasdaq. The person who’s the closest gets the book — U.S. addresses only.

Note: your guess must be entered by 9 PM EST today

Post from: Trader Mike

Book Giveaway: ‘An American Hedge Fund’ by Timothy Sykes

Financial wiz Kedrick Brown says certain aspects of an “unpredictable” market can be predicted with good investment strategy in his book, Trend Trading: Timing Market Tides.

For a bit more detail on the book, check out Kedrick’s self-review:

Trend Trading: Timing Market Tides by Kedrick Brown

Kedrick Browns Trend Trading is one of those rare books that traders of all experience levels can richly benefit from. Brown traded NASDAQ stocks for over 8 years at Knight Equity Markets, LP, one of the largest NASDAQ trading firms by volume. At Knight, he made thousands of daily trades in hundreds of stocks across multiple industries, profitably trading through a wide range of volatility, liquidity and market structure conditions. In short, he knows trading, and has generously taken the time to share his personal insights on it. His passion for the material shines through on every page, making the book both easy to read and filled with food for thought.

Trend Trading is groundbreaking because of its realism, which bears the authenticity that only a trader can provide. The book hits the ground running with three chapters on trading psychology, which explore the full spectrum of emotions associated with trading with a trend following strategy. He then moves into four tremendous chapters on trading tactics, each of them expanding on the foundation created by previous chapters.

Browns purpose in this book is to explain to investors how to inexpensively adapt the best aspects of the trend following techniques used by CTAs in the futures markets to trade equity trends. He believes that these master traders excelin their trade planning and money management discipline, and discusses in the book how to translate this discipline into equity trading, drawing on quotes from top traders along the way.

Trend Trading also shines because Brown takes both technical analysis and money management in innovative directions barely touched on by other trading books. For example, he introduces a new style of technical analysis in the book that he dubs three-dimensional technical analysis.which involves a focus on not just on how pricebehaves over time in a single stock, but on similar information in multiple stocks simultaneously. Analysis of this type enables traders to trade in line with the consensus of a basket of stocks or the broader market itself.

Three-dimensional technical analysis techniques include methods of objectively defining broader market uptrends and downtrends, which enables a trader to go long during market uptrends and stay out of stocks otherwise. They also include a method of objectively quantifying the trending behavior of an arbitrary basket of stocks, which Brown refers to as stochastic averaging. His discussion of using trend following techniques to rotate between equity indices is also new in a trading book. And finally, he expands the readers thinking even further by discussing how to size positions in a multi-stock portfolio.

In summary, Trend Trading: Timing Market Tides presents a wealth of unique trading and analysis techniques and is also an enjoyable read. Pick up a copy today!

Look for my review once I’ve completed the book.

Post from: Trader Mike

Kedrick Brown on Trend Trading

Somehow, between writing for his own site, his TraderFeed Blog, TradingMarkets.com and various presentaions Dr. Steenbarger found the time to write a new book, Enhancing Trader Performance. I just got my hands on a copy and am looking forward to reading it. Dr. Brett wrote a little bit about the book yesterday in his post entitled ‘Finding Your Performance Niche’. In that post he provided a link to a PDF of the first chapter of the book. So have at it.

More details about the book are below…

From the book jacket:

Trading is a performance discipline, and like Olympic athletes, elite military troops, and performing artists, traders can structure their development to achieve competence and expertise. Through his own trading experiences and those of individuals he has mentored, Dr. Brett Steenbarger is familiar with the challenges that traders face and the performance and psychological strategies that can meet those challenges.

In his first book, The Psychology of Trading, Dr. Steenbarger provided a framework for understanding and overcoming the mental obstacles to successful trading. Now, in Enhancing Trader Performance, he goes a step further and shows you how to transform talent into trading skill through a structured process of expertise development.

Straightforward and accessible, this comprehensive guide:

• Discusses the importance of finding an optimal fit between your trading talents and interests; the markets you trade; and the ways you trade those markets
• Explores how you can enter into a learning process that will cultivate your trading competence and expertise
• Introduces the concept of learning loops, which enable you to make progressive improvements in your trading methods
• Breaks down performance into three components — mechanics, tactics, and strategy — and examines the role of each in generating trading success
• Illustrates how you can coach yourself with practical cognitive and behavioral techniques that rapidly change problem patterns and build new, positive ways of thinking and behaving

PRAISE FOR Enhancing Trader Performance FROM THE BACK COVER

“Brett Steenbarger gives traders the best tool to improve their own trading: a look into themselves. By setting up a quantifiable, positive learning system, Brett allows anyone, from experienced fund managers to beginner traders, to maximize individual potential.
– Larry Connors, CEO, Tradingmarkets.com

“Brett proves that mental toughness CAN be learned and hits the nail on the head when applying performance theory to trading! He shows how classic topics, such as the consistency and habits built from day-to-day routines to the importance of positive self-talk, can be applied to the abstract arena of the markets. Traders of all levels will be inspired by these strategies for performance enhancement in their journey towards mastery.
– Linda Raschke, LBRGroup, Inc.

“Successful traders know that winning has less to do with technical knowledge and more to do with understanding yourself, pinpointing your strategy and process, and implementing it in a consistent, disciplined manner. Enhancing Trader Performanceshows that your personal success lies at the intersection of your talents, skills, and opportunities. Brett guides you toward identifying your talents, developing your skills, and applying both as opportunities arise. For anyone interested in improving their trading, reading this book may be one of the best trades you ever make.
– Jim Dalton, trader, coauthor of Mind Over Markets and Markets in Profile, and Senior Vice President and Director (Retired), ICS Integrated Products and Research, UBS Financial Services Inc.

“The one statement in the book that stands out, ‘You cannot have trading consistency if you do not have emotional consistency,’ says it all. This book must be read, and reread, if you want to succeed in the trading arena.
– Ken Wood, “Woodie” of www.woodiescciclub.com

AUTHOR BIO

BRETT N. STEENBARGER, PHD, is Clinical Associate Professor of Psychiatry and Behavioral Sciences at SUNY Upstate Medical University in Syracuse, New York, and an active trader of the equity index markets. He has published over fifty peer-reviewed journal articles and book chapters on topics related to brief therapy, and is the author of The Psychology of Trading, also published by Wiley. As Director of Trader Development for Kingstree Trading, LLC, in Chicago, Dr. Steenbarger has mentored numerous professional traders and coordinated the training of new traders.

Post from: Trader Mike

Dr. Brett’s New Book, Enhancing Trader Performance

He knew what he was doing was contrary to everything he knew about trading discipline. He referred to this crazy reaction being done by the ‘nut within’. At the same time, I was also doing battle with myself. Taking my clue from him, I went a step further, and identified my ‘nuts within’. I had three of them! The one that wanted to control every tick in the market. The one that had to be immediately gratified by the market. Last but least, the one that lived only to be entertained by the market. These ‘nuts’ managed my trading turret. Every once in awhile, the sane trader would make an appearance and trade well, but not for long. The ‘nuts’ were too potent and too numerous.

I then recalled a book that I read a long time ago, called, Taming your Gremlin, written by Rich Carson. I no longer had a copy, but I remembered one aspect of the approach to dealing with self-sabotage. That aspect was to identify the gremlin, to be conscious of its existence, while not trying to banish it. If you try to stop your nonsense all at once, it won’t work. Maybe for awhile, you will trade like a sane person, but then the self-sabotage will appear once again.

I remember the British singer, Marianne Faithfull, when asked why she almost destroyed herself through drug addiction, responding the why did not matter, only that she knew she could stop taking drugs. Do not reason with yourself, nor scold yourself, or go into deep analysis why you trade like an idiot at times, just identify the kind of sabotage you do. Shine the light of recognition on the beast–chase that thing from the shadows. Don’t yell at it, don’t try to destroy it, just know it is there and see it in all its beastliness. Its power lies in it being secret, hidden, and vaque. Name it by name.

Gremlins scuttle back to their hiding places when exposed to light. They don’t mind popping out into the light of your consciousness disguised as the greatest trader ever known and make you trade like a jerk. But, that is their choice. However, they have no tolerance when you decide to shine the light on them. They don’t appreciate that. After awhile, they just don’t bother to come out. If they do manage to come out, they don’t stay long. But, they are always there, they never go away. You have just tamed them, so you can function in a positive manner.

Of all of my gremlins, the control freak was the hardest and took the longest to tame. However, if it does appears now, and says, do not honor your stop loss because you have planned the trade PERFECTLY, you have researched EVERYTHING to ensure the trade will work, so if it does not work, just IGNORE that fact, my response is laughter. I know I cannot structure the market, I can only structure my interaction with it, and that my trading plan just has a probability of working. The control freak scuttles back under its rock, and the stop loss stays.

When the gremlin which wants to be immediately gratified pokes its head out, and insists I book a profit earlier than my target, I review the reasons why I have decided on such a target, and if the reasons are still there, the trade stays on, and that gremlin slinks away.

The silly gremlin which thinks the market is a show, and want to get its kicks from being entertained in exciting ways, still visits, and screams in its frenzied voice, hey, why don’t you jump aboard that hot stock to just see how far it goes? I check out the support and resistance on various timeframes, and if I cannot perceive an opportunity, I decline the urge to trade without an edge. That gremlin slithers away also.

Depending on the ferocity and different kinds of self-sabotage, it can take quite awhile to tame these inner beasts. At first, the self-saboteur will hate what you are doing, and will raise a fuss, making the gremlin appear stronger and even more powerful. Don’t argue with the beast, just keep shining the light of recognition upon it, enabling you, the trader, with your knowledge and skill to rise to the occasion and manage your trading turret.

Post from: Trader Mike

Taming of the Trader’s Gremlin(s)

I have read The Disciplined Trader around ten times, roughly once for each year I have been trading. It has been only with the most recent reading I could say I have finally grasped 90% of what he is trying to teach me to do. My focusing such a long time on trying to understand and apply what Douglas is saying may appear to be silly, but that is the challenging nature of the problem facing traders, and also the degree of psychological damage I sustained by trading without discipline when I first started.

Recently, I had reduced my trading rules to three, and I proudly presented this reduced list to my husband, who often plays the role of trading counselor. He was quiet, but his eyes said, two rules too many. So I had a think, and realized that the only rule is this one: Execute perceived opportunity according to my risk parameters. When a trader is surrounded by a flurry of rules, he wastes his focus and energy on not breaking them. They are actually a hindrance and not an aid. The rebel within says, no way, I am not going to obey these rules. Many rules also assuage the gnawing doubt that one does not really have a methodology, and therefore that problem, the fact that one’s methodology is non-existent, risks never getting solved.

The market is in constant flux. We cannot structure it according to our needs. We can only structure ourselves in relationship to this free flow of information and participant interaction. We are the money maker, not the market. Lack of discipline begets trading losses which beget lack of confidence which begets even deeper trading losses, etc., until your account balance is a mere shadow of its once robust self, and you are spinning within a black vortex of losses. To counter this vicious circle, one gradually replaces it with a virtuous circle, where honest recognition and acceptance of your existing skill level is the first step to take.

In the world of regular jobs, we strive to present ourselves in a favorable manner, sometimes creatively misrepresenting ourselves on our resumes, dropping names in job interviews to boost our image, and taking expensive and often useless continuing education courses so it can appear that we have an ‘edge’ in the job market. Our work culture encourages us not to accept and be honest about our present skill levels, not only to others, but to ourselves. If we admit our lack of perfect skill than we would be anxious we do not have what is required to compete successfully in the cut-throat job market. Not admitting this anxiety actually leads to what we fear, because we cannot increase our skill level if we are unable to identify and accept our present level so we can find out what to do in order to advance to the next level.

Douglas emphasizes listening to what the market is telling us what we need to learn in order to perceive the opportunities it is presenting, instead of listening to our preconceptions, often emotionally based. For example, a trader insists that a losing long position must return to his point of entry because it has already been there, without listening to what the market is saying about that probability. Being in hope mode means we forgo the opportunity to learn from the market, and all we do is stay locked within a lesser skilled level.

We don’t expect beginning pilots to fly huge planes at high altitudes all alone, and yet we expect that we can somehow do the equivalent in trading when we are first starting out. This common perception is fueled by the fact that making money by trading appears easy. It is possible that a trader can make the amount of money in an hour or even less which had taken several days to make at his previous job. This rather exciting aspect makes him think that trading must be easy; he does not need to have years of schooling and training as a surgeon needs to do in order to move up the salary ladder. He can just jump right in and mint the coin. Instead, he gives his money back to the market, again, again, and again, completely flummoxed as to why he cannot accumulate profits. Ironically, down the road, when he does trade in a consistently disciplined manner, making money does become easy–what he first thought it would be like before it turned into a nightmarish struggle with himself and the market.

Because of books like The Disciplined Trader and because of blogs written by more experienced traders, perhaps this vicious circle will never start for some traders, only the virtuous, where basic skill begets confidence which begets more skill, and then more confidence, etc.

If in a trade, focus on if you feel uncomfortable. If so, ask yourself why. Often you will reply because you are pushing the limits of your skill level, either by trading a very demanding stock, or with too big of a lot, or too many stocks at the same time, or too deeply margined, or without a methodology, and last but not least, without money/risk management (or all of these at the same time!). If you are trading within your methodology and risk parameters, and you are accumulating profits, but you are still uncomfortable, ask yourself why. The answer probably will be that you should be doing better, making more money. You are not pleased with the level of skill that you have developed, because you want to be a jet pilot making sonic booms in the clouds, and all you are doing, is just plodding along, like a lowly snail.

Be patient, pat yourself on the back, and focus on adding to your existing skill base, instead of detracting from it by taking on more difficulty than your present skills can manage. Create a virtuous circle from the very beginning, and nurture its development at all costs, because your mental capital is as precious as your financial capital. When beginning your trading day, focus only on trading well, that is, executing perceived opportunities within your risk parameters, and not on making money. The money will follow. If you focus on making money, then you will not be focusing on what makes you money.

Post from: Trader Mike

Out of the SKILL(let) into the Fire

The book is divided into three sections. The first, called “Trader’s Boot Camp”, contains a lot of information that both novice and experienced traders will find useful. The introduction to futures was very helpful to me. John provides an overview and explains the advantages and disadvantages of some of the most popular contracts including the Mini-sized Dow (YM), the E-Mini-S&P (ES) and the E-Mini Nasdaq.
The final chapter of section one is one of my favorites. In it John lays out seven indicators to watch to help gauge intraday market direction. He explains how and why he uses TICKS, TIKI, TRIN, the put/call ratio, pit noise and a sector list. (John’s article on TICKS is what convinced me to start watching that indicator.)

The next section contains various trading setups and is appropriately titled “Specific Intraday and Swing Trading Setups for Futures, Stocks, Options and Forex”. John presents twelve setups that range from intraday scalps up to trades that you may hold for weeks or longer. One of the things I like best about the book is John’s view on reward:risk ratios. We often hear that traders should only take setups with potential for a minimum 2:1 or 3:1 ratio. My favorite setup from the book, the gap fade, is only 1:1 or 1: 1.5 depending on the size of the gap. The key here is that it’s a high percentage setup, so over time the expectancy is positive even though the reward:risk is so low.

Another of John’s setups that I like is the TICK fade — when conditions are right, fade the market when $TICK reaches +1,000 or -1,000. This is another “risk 1.5 to make 1″ setup and it can be scary to execute especially for momentum traders. I’m still trying to get comfortable with this setup.

The third and final section of the book covers important topics for those who are serious about trading as a business. John walks the reader through his pre-market and weekly checklists. He goes on to provide guidance on writing a detailed business plan. That’s something that too few so-called serious traders have.

I always enjoy books that give me a different perspective on things. After reading “Mastering the Trade” I’m considering adding futures trading to my account so that I can trade setups like the TICK fade without using all my buying power. It’s also made me broaden the types of setups I focus on. After doing some of John’s gap fades I realized that I could do well to go after some other setups that I often see that may only return a 1:1 risk-to-reward ratio. I think that traders of all levels would do well to have “Mastering the Trade” in their libraries. Newer traders will find value throughout the book and more seasoned traders should be able to find some new setups to exploit.

John Carter and his trading partner Hubert Senters were kind enough to hook me up with their Professional Trader’s Workshop DVDs “How We Trade for a Living” to review. The DVDs are of a live seminar that they do in Chicago. There are 12 discs that cover much of what’s in “Mastering the Trade”. The DVDs go deeper than the book in many areas though. One of the things that I found most interesting was how John and Hubert manage their trades differently although using the same setups. They do some live trading at the seminar in which you can see how these two traders have adjusted the setups to fit their own personalities. Hubert, is much quicker to scale out (take profits) than John. It was also enlightening for me to see how they use pit noise to help read the market. You also get a a lot of nuances that aren’t in the book from the Q&A sessions.

The DVDs aren’t cheap but I guess they’re cheaper than taking a trip to Chicago and paying to attend the seminar in person. If you’re looking for a seminar the DVDs may be worth considering.

Post from: Trader Mike

Review of “Mastering the Trade” by John Carter

Book Description
The definitive look at Wall Street in the 19th Century

Perhaps the 19th century’s best book on Wall Street, Fifty Years in Wall Street provides a fascinating look at the financial markets during a period of rapid economic expansion. Henry Clews was a giant figure in finance at that time, and his firsthand account brings this colorful era to life like never before. He reveals shocking stories of political and economic manipulation and how he helped bring down the mighty Boss Tweed. He writes eloquently about the madness of the markets and how the era’s greatest speculators amassed their fortunes. This book provides an expansive view of Wall Street in an era of little regulation, rampant political corruption, and rapid financial change.

Henry Clews was born in England in 1836 and emigrated to the United States in 1850. In 1859, he cofounded what became the second largest marketer of federal bonds during the Civil War. Later, he organized the “Committee of 70,” which deposed the corrupt Tweed Ring in New York City, and served as an economic consultant to President Ulysses Grant.

From the Back Cover

Author Henry Clews was a giant figure in finance during the late nineteenth century, and his firsthand account brings this colorful era to life like never before. This abridged version of an investment classic touches on a wide range of important financial issues, including:

* The causes and consequences of Wall Street panics
* The influence of Wall Street on national politics
* How individuals like Jay Gould, Daniel Drew, and Commodore Vanderbilt made their fortunes
* The characteristics of winning and losing speculators
* How operators attempted to corner the markets for individual stocks

I’ve added it to my way-too-long list of books to read. I’ll get to it one of these years…

Post from: Trader Mike

A ‘New’ Old Book: “Fifty Years in Wall Street”

Speaking of books, I’ve been pondering picking up one or both of ‘Stock Trader’s Almanac 2006‘ and ‘The Almanac Investor: Profit from Market History and Seasonal Trends‘. I know that Kirk is a big fan of the annual almanacs but I’m just not sure if they’d be useful to me — especially in my day trading. Well today I noticed that Brett Steenbarger has reviewed both of the books (MS Word document).

My biggest concern with the info in these almanacs is that they’ll bias me. I like the idea of forming my own opinion based on what I see in the charts. But maybe I’ll pick up the 2006 almanac and see if I find it useful next year.

Post from: Trader Mike

How Cool is That?

If baseball has quantified mainstream parts of the game such as batting average, on base percentage, errors, steals, walks, etc., why hasn’t Wall Street done the same with the indicators which it relies upon every day? Trading day after trading day, we are bombarded with information from the media. “The market rose for the third straight day as the bulls are taking charge.” What does this mean? It sounds good, doesn’t it? It sure feels like the market is going to continue to rise. A market rising three days in a row is usually rising because of good news. Isn’t that a precursor of things to come? What about advancing issues and declining issues? On days the market drops sharply and declining stocks far outnumber advancing stocks, the press and the analysts tell us this is bad. Poor market breadth is supposedly a sign of future weakness. It seems to make sense. But is it true? (You’ll soon see that it’s not.)

The authors ran tests against historical data of the S&P 500 (SPX) and the Nasdaq 100 (NDX). Here are the concepts that were tested in the book:

• Short-Term Highs and Short-Term Lows - How does the market perform after making 5- and 10-day highs and lows?
• Higher Highs and Lower Lows - Examines if it’s better to be a buyer after multiple days of higher highs and vice versa.
• Up Days in a Row vs. Down Days in a Row - How does the market perform after after it rises or falls consecutive days in a row.
• Market Breadth - How does the market perform after multiple days of advancing issues outnumbering declining issues? What happens after days with advancers outpacing decliners by 2-1 or 3-1 and vice versa?
• Volume - Another often reported statistic — but how important is it?
• Large Moves - Is it better to buy or sell after the market moves up or down more than 1% or 2% in a day.
• New 52-Week Highs, New 52-Week Lows - Is the market necessarily healthier as more and more stocks make new 52-week highs?
• Put/Call Ratio - What exactly are high & low levels? Is conventional wisdom about how to act upon those levels correct?
• Volatility Index (VIX) - How best to use the VIX.

Each of those tests is presented in its own chapter. Each of those chapters presents the idea being tested and then explains the test results. There’s not a whole lot of text in these chapters, just two or three pages per chapter. The authors do an excellent job of letting the data do the talking. The bulk of the chapters are graphs and tables. The final chapter gives the reader some ideas on how to use the findings presented in the book.

I think most people will be surprised by the findings in at least half of the chapters. The most surprising parts for me were the results with regard to market breadth, volume and new 52-week highs. I think that the information in this book is very important for anybody who’s attempting to create or improve their own trading system. As I read the book I was reminded of a couple of articles that Connors wrote about buying breakouts. If you found those articles worthwhile then I’m sure you will find the book to be extremely valuable.

P.S. For other comments about the book see Bill Cara, Roger, Sharky and Michael Taylor’s blogs.

Post from: Trader Mike

Review of “How Markets Really Work”