SF 5 mmrz

This is tliG breakout

Long

This is yesterdays Iiigh ->

0016

True CDii«restiaii-

]f I take tlie first breakout of tlie bigb I an in effect takiug- the mure t isky trade. There lias heEi> wo canijestion yet.

If I uait until there is coiirfeEt inib phj clmnces for success are yreatcr anJ 1 dont hauB to increase ny risk.

10 11

7 8

III;

ip.il J

7576

7%0 795Z 7 44 7336 79Za

7920 7512

7SG1 7396

7

70B0 7872 786 7B56 7818 784Q 7B32 70Z4

10 11

Since Ihe hreakout of the high was good for entry earlier, I went long when it hfoke ou[ again. This time I had no trouble at afl in making aJl rny objectives.

Simultaneous to the trade in the Swiss, I did one in the D-mark, Tfm onfy difference was that the D-mark never gave the false breakout that the Swiss gave shortly after the operiinc

Cluipief 14

Mi(ul-Sct

iVe t>cen reveafinrj my traciing secrets. Many wiJI he skeptical of wlia! Irn saying. After all, what kind of a nut would go around telling everyone liow t(j make money in the markets?

Many have beconie somewhat jaded by the plethora of garbagr itiat fias be<jn S{.)ld over the years claiming to show the "magic" way m trade.

Id liko to answer some of the many cuestions f>eople ask nle, arid then snake a nun;i"*er of commerds tfiat will sfiovj my approacf* and mind-sut for trading th(j ifiarkets.

In the fall 01 1987. following a couj)lo of days of sevou atKfommal pain, I iiecame very ilh I didnt know wfud. was v/roruj, so I riiore ( u>ss took to my bed, allJiough I tried to continue functroning as a trader.

After about eight days, t devcioped severe case of hiccougfis and visited my docirjr lo see if he cntdd do aiiyifiing about ii. Wfule I was 1 : , he did a rouiine hlood test and took a uruie specimen. Tfie resulis of tfie tests V/ere alarming eno.jgfi that fie suggested I immediately ref>tj"t to the emergency ruorTi at tho hospital.

My wde drove me tiiere, and aher a series of brief convijrsations wtli various doctors in tfie t;mer(jency room, I was admaterl Inr oxplorLitory stjrgery. 1 liave absolutely no recollectiort of ever leaving the . loom. My next memory of anything other \han nightmarjsh droanis about suffocating to death, was 2 1,.2 months later someone telling mc that my broker was hrjuidanng a December corn trade 1 had tiecn m because tlce contract was aboLit to expire and the broker didnt tfiink I wanted to take delivery on a load of corn.

From ifiar point, I drdted in and out of sleep for another couple of weeks tjcforu I was made aware tfiat no one had ever thouglit I would Irve, I was siifjposci:! to have tieon dead on several occasions due to complications of surgery, severe respiratory distress. Staph pneimionia, Spin-jl MiMiingths, and Mononucleosis, following what Ilad been a burst appeiulix witii stevere peritonitis,

I then became aware tfiat the doctors thougfu that even though I had som.ehow survived, f would probably never walk again. Tfiey a!so thougtit tfiat there was a distinct possibility I migiit never talk again.

I was starving to death, and could not retain food. I was pretty sure in my ov,n PlKuI I was aboui ready to go where my ancestors beiure nic had go ne.

f anynne thinks that an experience such as I had is anythino ifiat can be easily sloughed o!f, tfien think a{aifi. What hafipened to me chanrpid my lilr;, and tt changed the way I trade. It gave mc a wliole new mmd-set. That change in my ihinking is wfiy I was willirg to publish this book,

Up until the lime oi my "siynificnnt cmoiionnl experience/ t wds toially n private trader. I was cssemielty unavare of ulher trideis. their activilies. the publications they read, the concepts with which Ihey traded, or that most traders were losing rmost of the time.

My education in trading was derived from sources lar removed fjom those that m<ost traders have ever encountered. It would take far too much space in this hook to go into all of tliat, {I do icll more about this iji rny book, rading fs a Business-)

"TrarlJny 27 years and only fiiive had 1 v.inning year - and tiiat by accident."

Vly experience wds first in die long term aspects of trading frorri daily charts. Later, I applied the lecfuuques and methods I had acquired to the intraday charts, n-jodifying the tactics used in order to accorr:modate tfie clifferentJal in tirne.

As I began my long recovery (its still going onh I had ample time to tfunk about a great many things.

My chikJren were not yet ready to trade, they simply were not mature enougfi. My wife didnt fiave tho foggiest notion of what trading is. I decided TO write finwn what I knew. That way, in case they ever wanted to use tfio niarkei to eirn their Ijving, tfiey would at leas! hnve some inpul from mc,

Before I evert fiad ih.c book finished, I rtientioncd what I was doing to another trader. He Iwd called me for support on trading software f was using at the tirne. Tiie programmer was going out of town, and referred the trader to me. I agreed to answer fiis gucstions as best I could, Ijecause I fiad been given similar support from the programmer io the past.

Wfien th.e other trader heard I was wntmn a book, he asked me for a copy of It. I was rekrctant at first, but in jest I said I would sell it to him for S750 dollars. I wlis sure this would blow him away. Instead, he sent mie a ctieck for t]ie hook - to be sent to him upon completion. Then I received anotiier call front stnneone i Jiad riever rnet. He. loo. wanted Ihe book, again at a price of $750. He asked me what the book was called. I didnt have n title for it, but blurteti out "Weil, how about "Trading by die Book?" He said, "Send it just as soon as you hnish a."

I sold a numtier of books this way 1 didnt mind sharing what I knew. As I got to know some of these individuals by their calling to ask questions and thje subsequent conversations, eventually tutoring some of them. I became aware? of the vast wastelijnd of commodity trading. It hurt me deeply \o lind out flow iTiijny traders were being taken advantage of in the markets.

had been given a riew Ido. J found out I difJnt hove to live as intensely as I hari. The condition of my devastated bociy wouldnt allow it. For quite some time I coudnt even watch a live data feed. Ihe exciiement of caytradrng was more than I could bear. The pain in my stomach when the

adrenalin flowed would cause me to doubly over jn agony, orily cas.;at tradirrg ui the daily cfiarts.

was reduced to

Stil. pG0[)ie were catJing or writing and sending for my book. My conversations them were demoralising to say tfie Ica.st. Here are some pica I quotes.

Trading for 15 years, and lost 2 1/2 million dollars.

1

Trading for 12 years, and have lost my entire inheritance.

vo f)ut my family into poverty wilfi rny trading over the ast 30 years - our whole nest egg is gone. Now Ill fiave to work in the days when I exiiocted to he retired."

I have talked to eminently sLfcccssfiil businessmen - men with giant incomes. Men vho hove succeeded in everything else they ever tried - but they have failed miserably wfien it cornes to trading in the futures markets.

One foreign ambassador I know of had lost $700,000 in 1939 alone.

I am a compassionate rrran. Much oi my compassion was born of excruciating pfiysical pain and misery. Nut just from ny illness, but frorTi past problems with my health.

The few guoE{}s above, coupled wilh dozens of other similar and even worse disaster stories about the maikeis, made me want to reach out and help.

Yes, I have a sincere desire to help others to succeed in die markets. So f have made Tradmo.by the Book, Trading by tfie Minute. Trading Isa Business and IrMLLlILLf3e BQSSjHcH>k available. Anyone who cant understand that will have to live with his skepticisrn. He wont get much out of this book.

The greatest single problem [ encounter when I am tutoring others is unbridled greed. People cannot bring diemselves to take a small profit when it is there to take. They hesitate because they want more. Whats wrong with making SI00 in the SP? Vvhats wrong with covering costs first, then seeking profits? I get out when there are profits. 1 can always get back in.

Part arid parcel of this terrible greed is beir:g in a hurry. The traders I tutor are in such hurry to get into the market. Its as if ihis were the last spaceship leaving from a dying Earth, It should be just tfie oiher way around. My advice is, be sow gettmcj into the rnarkct and in a hurry gei out!

The next biggest problem I come across as regards ottier traders i. that they dont know Jiow to vo somethirig Piat works without irymg to fix it. They say they want to know how to tiade, but wfiat they realty want to do rs to re-invent Ifie wheel. This lack of discipline is the ruination of many a woufd-be trader. If something works, leave it alone. I am sure that amidst all the rubble out tfiere, tfiere must be some motfiods and systents that work. Bui there are few indeed who can follow arthers system.

"hat is why I did not even attempt to present tfiis book as a system, know that only a few will folSow it. Instead, Ive tried to present the fundamental tools and understanding that are needed to win in die markets.

Another prohJom that crops up when cfeafing with other traders is their incredible seffishness. They thinl< that sorncthfng works, it shojld be kept secret. Why? Because They tear that if everyone starts doimj it. il will ne longer work.

That kind of thinking Jlres in the face of fact and [rutfi. I seriously doubt that of all the peo[)le who porchased aiy first book, that even b% have corsistently utilietl the methods, tricks, and tociiniques 1 presented there. In fact, 1 doubt If 5% of them sliil trade the rriarkets at alJI

The same will be true of this book. Of the thousands oi traders who might buy this book, only a few hundred wilf actually purcfiase it. Of those, a tiny percent will actually do what it says. Within a year or two, ruost of the others will no longer be trading.

i am appalled at the lock of a business-like approach 1 t?nd to be overwhelmingly prevalent among traders. I meet and speak witfi rnen who are fantastically astute businessmen. But when it comes to trading in the futures markets, ihcy compfetcly abandon a business approach, becoming instead reckless gambfers.

Men who are masters of good management seem to fall apart at the seams when it romos to managing risk and rrioncy. \1 who are cool, cafm, and collected under everyday job and business stresses, seem to turn into hysterical, raving fools when it comes to hbding in the markets,

Tlie markets are such that every weakness and flaw of character is revealed when trading. A fiian who is a liar, no rtatter how clever, wilf lie to himself. He will lell himself that a market is going up vien any moron can see that it ts going down.

A man who is greedy will be destroyed because he will stay too long.

A man who is dishonest will end up being dishonest wiifi himself and wil[ be annihilated by the market,

A man who is skeptical wilt never have the faith antl confidence to trade successfully.

A man who is distrustful will never have the courage of his convictions and will soon lose his margin money. To make matters worse, most of the "pfofessionals" he win encounter in tfic markets will give him Ijtile to encourage sucfi trust. In general, traders are prey to a whole host of vultures whose only goaf is to part the trader from his money as quickly as possible. Such a situation hardly encourages trust snd confidence.

If 1 were to try to devise the most fantastic character building device ever created. I could do no better than the markets. The markets represent the ultimate challenge to self-mastery, self-discipline, and self-control.

The rtiarkets attack the greatest tiLirnari failing of all - vanity. There is nothing I can think of that can quickly make a man as humble as tfie markets can.

Tfie only way I know to consistently vifi is to lujtntjly ajjfiroacli die rrtarkets with great a\ve and respect, Tfien, in the lul) of fiow awesome ifu? rnrirkcis truly can be, determine to master ev[?ry human flaw one can find in oneself.

Sinceie, deep, and thorough self cxarTuiahon must come before the markets, or oneself, can be mastered,

The scarcfi must be for the simplest things, not tho most complicaied.

It is absolutely moreCililo to see how complex people try to make their trading. It seems (hat die more cornplicatcd □ formula is presented to be, the more people think tfuit somehow "tfiis" is the holy grail of tjadirtg. What nonsense! The truth o! the markets is in the simplCrty of their movement. A market is going Lip, down, or sideways.

If it is going up, and if Im honest, 1 can see that it is 0*"43 M need a logantfir-nic. parabolic, standard deviation band to teN rue that, could tell m.e tfiat. "On look. Daddy, that market is go;ng ufi."

1 dont A cli;ld

II a market is coming down, I dont care hovj many trend lirujs or moving averages I draw on my chart, they will not contain It. Does drawing a trerid line underneath a trend somehow magically stop j>rices from coming dov.n? When prices roach the bottom of yuur comtputer screen, does that rnt?an they can go no furhier?

Ivr had traders tell me that ii prices break through a ireni[ iiiie, we are witnessing a significant event. Is dial true? Would we Ijoih draw the trend Imo m the same place? Would one of us draw it exactly the same twrco? And if prices make a new low and then rally back, do we now draw a nv.w trend line at a lesser angle? Is that now somehow the miagic lino drawn in the sand that says "Prices, you cant cross This line!"?

Give niG a break! Thats as Ijad as saying that the divergeru:e of an oscillator from prices means sor"rething. Look, fm no great miatlieaiatician. but I know tiiat when you detrend an oscillator, it ts going to drift, Tfiere will be plenty of times when a market ; to trend seemingly forever, wfien the oscilidtor (any oscillaior) will trend in exactly the opfDosito direction. If a market is trending up and tfie oscillator is trending down, does tliai prove divergence? Someday, of course, that market will start to move down. But that could be months from now. When il does, al! the great prognosficators wi;i say, "See, you could have known the market was going to come down, just look at dial divergence!"

Pardon me, but I think just about arty four year old chHd could have told you that vhat goes up wilt eventually come down. VJi\o needs an oscillaior lo tell you that?

If traders spent the time r-riastering themselves that they Sfierid on mastering the markets with teclmical analysis, there woufd be far fewer dro()outs and many more successful traders in the markets today.

If traders spent as much energy in seeking simplicity and truth as tfiey Spend making things complicated and false, there woirld be traders sli wrih us today.