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35

Figure 30 In 4 days Im looking at /, On the sixth day Im looking at . Guess what? Bonds are back in a trading range. I draw the envelope.

Although the size of the / is quite large, this is not unusual for the Bonds. The large individual swing legs can be traded from support to resistance and back again. This will be shown later when I discuss trading inside a trading range.



V In this section of the manual I have shown how 1 trade 1-2-3 highs and lows. I use l-ll-lll for the highs and 1-2-3 for the lows to differentiate them on my charts. Ive shown a year of Bond trades that had only one loss.

The period covered has been a year. The chart shown is for the September contract throughout for the sake of consistency. The trades normally would have been made on the December of one year, and March, June and September of the following year contracts. In actuality, I made none of the trades shown until late December due to an extended hospital stay. The trades up to that point are purely fictional, but I put them down as best I could in the way I would have actually traded them.

My method of trading is very consistent and 1 seldom vary from it. It works, and it works better than anything eise that I have ever seen or read about - and it works in all markets.

Why? Because it is in harmony with the markets. It uses no indicators that try to tell the market what to do. It sets no boundaries real or imaginary on the markets. It lets the markets speak for themselves. Fortunately for me, all markets speak the same language. Some are louder and bolder than others, like the Bonds, meats. Lumber and the S&P. Others are more soft spoken like the Eurodollars, Corn and Soybean Oil. But they all have something to say, if I will only shut-up and let them talk to me. They all have their quieter moments and any of them can become quite rowdy at times. If they overwhelm me with their antics, I just get out and stand aside. The Grain markets during a drought are a perfect example of that. At the height of the drought they were absolutely hysterical. Screaming and carrying on like a pack of elephants that just saw a mouse. To stay In there would be to risk getting trampled to death. Nevertheless, my trading method would have worked just as well in those crazy markets as it does in more sane markets.

Markets talk, and when they speak they tell me what they are going to do. All i have to do is listen. They write their actions on funny looking things called bar charts. These charts can be read. Anyone can learn to read them and know what the markets are going to do.

Heres a review:

1. Gaps are an alert, something is going to happen soon, maybe in one day, maybe in several, but soon.

2. Large magnitude days, where prices make giant moves from high to iow relative to other days, are also alerts, I treat the same as I do gaps. I tighten up my stops where I feel they are appropriate and begin to watch the market more intently. Tightening is done by moving my stop closer to the price action.

3. / or \ are indications that the market may be going into a trading range. ! start thinking about getting out at the highest {or lowest) point as the case may be. I draw the envelope.

4. and W tell me that the market is in congestion, I use the envelope when the congestion has been 25 bars long. Prior to that I use 1-2-3 lows and l-ll-lll highs for the breakout.



place sell order here>

Figures 31 a,b shows this concept in action. The risk on placing this kind of order is very slim, tf I get filled I usually make a bunch. Lots of times I dont get filled and the market moves away from my order and I cancel it. The hook can be traded as a breakout of a one-two-three high or low.

Placement of my order is automatic. Whenever I see a hook, I pick up the phone call my broker and place a resting order at the point of the hook. Most are winners, especially if you look for short term profits. Get in, set an objective, then get out. Although I have shown the hook here, be sure to trade it only in an established trend. How to identify an established trend will be shown in Part iii.

I can take dozens and dozens of sets of charts and show the things repeatinc over and over again. To that extent, markets are predictable. They say the same things over and over again, just like the people who are the component parts of the markets. But they dont always say them in the same order and quite the same way. Their moods vary, and their attitudes change. Sometimes they are in congestion a very long time. At other times they are trending. Markets are very limited in their moves. They can only do three tricks. They can go up, down, or sideways - not much talent there.

But they make me a lot of money when I listen carefully to them. Trading the two techniques that i have shown in Parts I and II of the manual are all anyone really needs tc know to get rich trading futures. Yet there are four more parts to this manual. Each of them has a place in trading the markets.

But before leaving this part of the manual, I want to show just one more trick that makes me a lot of money in the markets.

The Ross Hook

I call it the "Ross hook". Others have done it, so 1 cant be blamed for wanting to have a hook named after me, can I? Here is the Ross hook.

In a strongly trending market, or one that is chopping around but making sharp turns and corners, yvhenever I see the market do the following, I immediately place a buy or sell order at whai would-be a continuation of the shaft of the hook.

<place buy order here



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