"Bur trading doesnt have to be intuilive and intricate at alb In fact, some of tbe best trading Ive ever done has been some of the most straightforward and simple trading of my entire career.

"In this issue, Im going to start showing you some very basic trading techniques. They have served me well for many years. I will start out with the very firsl method I ever learned. I traded successfully with it from the very outset of my trading, and in fact, I ran a S5,000 account up to $28,000 In the first five months I used it.

his method worked for me immediately and still works today. I have no doubt it wiEl always work, because it is based on truth. Truth is constant, it never changes.

"You have heard time and time agairt that the trend is your friend. In this method, I will teach you how to use the trend. You have heard that you need to keep your losses small and stay with your winners. This technique wifl enable you to do that, It is so simple tfiat many of you will not believe it. You have heard that you should fet the market tell you what to do. This concept is the very embodiment of that wisdom.

*lt will be your loss if you dont accept the sheer simplicity of tfie pfain truth Im about to sfiow you. I can tell you this, I made my living for ifie first three years I traded with this one simple way to trade. I did notfiing else except wait until the right event took place.

Are you ready for this? OK, here we go

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"Tfie sitt.iation I was looking for was the abjirty to draw a trend line in a trending market. When I first started trading, [ had no computer. I traded from a set of purchased charts that came out once a week. I ftad to keep them up to date by hand. I drew in tfie bars each day sliowing tfic open, ligh. low, and close. I cant draw a straight line with a juler, so I hated every minute of it.

"Once the daily bars were drawn, 1 drev in ttte trend lines. I connected highs 10 highs in a duwi> trending market, and lows to lows in an uptrending market.

"On a trade such as the one shown above, my job was to trade only wfien I could draw a clrar trend lino. This forced rne to Vait tor my first trade until a market corrected so I could connect tfie previous higfi to the current correction fiigh. Wlicn f coufd do that, I fiad an established trend.

"My first duty was to connect tfie highest high of tfie latest leg to the first correction high. After that, f was afiowed to connect ifie last correction fiigh to the current correction high only if the angle of the trend line remained in the same overall direction or steepened its angle of descerii.

"Once 1 had established a trend fine. I was to try to sell a single contract upon a breakout of the low of each day in whicti the market moved upward Towards the trend line, I was not to trade if prices ypjjed below my sell point. I was to trade only if prices traded through my stHl point. My sell point was always one tick hcfow tiie low of the previous day, vfiich re[)resente(f a breakout of yesterdays low.

When I was in a trade, 1 was to stay in it as long as prices moved away from the trend line by making a lower higfi, ar.d,or a close lower tfian tfie open. tJ\y iniiial slop was to be ticks awny froni the prjce action,

"I was to add to my position as prices m-oved away from the trend line by selling trade-through breakouis of thie low.

was to have a resting sell stop one tick below every Ross hook. A Ross hook is a pivot pomt, created when a market cfiangos directioj for even one day. In the case ot a dowm trending market, this would be created just as soon as prices had a day upon whicfi tfiey failed to make a new low. In an up trending market, a Ross hook is established on any day in which prices fail to make a new high.

At no time was I to allow a correction to go beyond the previous days high, nor was I to allow a correction to go beyond reducing rny [profits for the latest leg to an amount greater than 50% 0! my unrealized paper profits once I had $100 of profits in the trade. Furthermore, once I had $50 of profit in a trade. I was to pul my stot>s to breakeven by the of the close.

"I was to be on my guard and to tighten stops on any day in which the market closed higher than it had openec.

Of course, just tlie opposite of my criteria for handliru] opens, closes, and lows was true in an upttending market. In a market dat was moving up, I would be on guard if the close was lower than the open. I would start trying to buy when prices were moving downward against the grain of the upward trend. I wouid b\>y trade through breakouts ot the high of the previous day. Pvly trend lines would be drawn from low to low.

"With these sirriple rules in mind, lets look again at the bean oil chart.

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"Point on the cfiart is placed just below a horizontal line showing a congestion area. Prices were supporting at or near that line.

"Point on the chart shows a gap down out of \hg congestion area. Prices moved down to point C, and then corrected on the following day, marked E. The failure to roake a new low on day E, created a Ross hook at point C.

Since point D was the high of the previous correction, 1 would have chosen that as the higiiest high for my trend line,

"C-D wovjid have been the first tirne I couEd have drawn a trend line. E represents a ono day correction. I would have tried to sell a breakout of the low of that correction day. I wouid have been filled twice on the next day - once when prices look out th.e low of day E, and once when prices took out my resting soil slop at day C, the location of tfie Ross hook At the close. I would have been sfiowing a small profit on two contracts, a total of five ticks on the first and a total of four ticks on the second. Since nine ticks represented I would have placed my protective stops to breakeven.

"The followir>g day I would have been stopped out at itie open. 1 would have lost one tick on my first contract and two ticks on my second. I would have been down $68.

: 14

"The subsequent cotrection broke ihroucjh where the trend iine would have been, tfiercby ending the series, but leaving behind Ross hook at point

"I woufd now tiave been without a trend line, but dny G would liave taken out the Ross hook at point and so 1 would have been short one contract. At the close I was showing profits of $120. I then woufd move my stop to a point at wfiich I would be able to salvage at least 50% of my unrealized paper profits.

"I would have been stopped out the following day at ttie open with a five tick profit. Of 30. Subtracting costs would have leii rne with a $20 loss. I would have then been down $38.

"Day H would have seen me short again as prices took cnit tho Ross hook created by the failure of tlie previous day to make a new low.

"By tfie time of the close. I would have had $103 in profits, so I would have moved my protective stop to protect 50% of those profits.

"i would have been stopped out the next day (I), having salvaged nine ticks. Subtracting costs, I would have made $4 on the trade, and so would then have been down a totfjl cf S84.

"IK was a correction. I would have tried each day to sell a breakout of the low.

"When the market finished correcting at K, 1 would ttien have been ybfe to establish a trend line from point J tu pojnt K.

"I would not have been ablo to enter a trade the day following day K, nor the next day, because of yap openings below the low of tfie previous day.

"I v/ould have gone short on day L as it took out the low ot the previous day. I would have been stopped out for a loss of 85, That, adtfed to my existing loss of $84, would have [jut me in the fiole by an amount of $169.

"Day M woufd fiave seen the higfi of the correctton, and so f would have connected day to day M. fviy tfend line would have been intact, and so I would have kept trying,

"I woufd not have been able to sell short on any of the five days following day M,

"Day N created a Ross hook by failing to make a new low. Tfie following day. m, prices made a higher low by one tick, and reached the height of the correction. I would have drawn niy trend line to connect M to m.

On day 0, would have sold one contract as prices hjok oui tfie fow of tfie previous day. and another contract as prices took out tfic Ross tiook. At the close of day O, I would have fiad no profits to show fur the trade, Tlie olfowing day prices moved lower, and by tfie close 1 fiad 18 ticks of profit between the two contrEicts. I would have moved iTjy [jrotuctive sinp tu salvage at least one-haJf of tfiose ticks,

"From tfiat point on, until my exit at day Z, my two contrficts were never in trouble. My 50% trailing slop would never liave been .

Lets continue, because theres more.

"Day P opened one tick above wfiere 1 would have fiarJ a resting sell stop to sfiort a breakout of the previous days low. I would have been sfiort a third contract on day P, and been showing profit uf 22 ticks at the close- I would have protected tl of tfiose tJCks wrtfi a buy sEOp.

"On day 0, prices moved down even more, and by the close I would have been showing an unrealized paper profit of 2 ticks. I would have protected 15 of tfiose ticks and been stopped out the following day, R, with a profit of less costs of $25, for a net profit on that contract of $65 That would have reduced my [osses to $104, with tvo contracts still open and making ntoriey.

"Prices corrected to point R, and so day R would have becoriic the next point for conrsecting my trend line.

"On day S, prices traded through the Ross hook of day Q, I vvOuld have added contract number 3 at that point. At the close, tfie [josition would have been showing a 16 tick profit. I would have protected one-half of that.

"The protective stop would have held, and on day T, 1 would have added a fourlfi contract as prices took out tfie low of day S.

"At the close of day T, I would have moved my stop on contract number three to protect 14 ticks of profit 2 oi 27 ticks made}, and would have pulled my stop on contract number four to breakeven, I had nine ticks of profit in it.

"On day U, I would have been stopped out of contract nornber 4 at breakeven. All rny other positions were safe. 1 would have been down Sl54 less the value of my open positions,

"Day also would fiave seen rre short a breakout of tfie low of ifie

jjrevious day. By the close I was protecting 50% of 37 ticks, contract number four

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"Day V would have seen me protecting 50% of an additional 16 ticks for a total of 27 ticks of profit.

"The following day would have seen mie cashing that profit for $162. From that, 1 vould fiave had to subtract 525, leaving me with SI 37 to apply to my debit of $ 1 54. That would have loft triy actual cash at a loss of $ 1 7. Place against that the ualtJe of rriy three open positions and I would have been doing we