Trade Like a Casino

A detailed look at the common characteristics found in mostsuccessful tradersWhile there are a variety of approaches to trading in thefinancial markets, profitable traders tend to share similarunderlying characteristics. Most have a methodology that theybelieve will prove profitable over the long run and are willing toendure short-term setbacks. If you're looking to make the most ofyour time in today's markets, you need to understand what separatesthe best from the rest. And with Trade Like a Casino, you'llgain the knowledge needed to excel at this challengingendeavor.Engaging and informative, this reliable guide identifies andexplains the key techniques and mental processes characteristic ofsuccessful traders. It reveals that successful traders operate verymuch like a casino in that they develop a method that gives them"positive expectancy" and they unflappably implement the method inthe face of changing, and oftentimes volatile, market conditions.Page by page, the book explores the intricacies of methodology,mental control, and flexibility that allow traders to develop andmaintain the casino-like edge.* Reveals how many successful traders tend to follow the samegeneral principles, even if their approach to trading maydiffer* Explores how to account for the risk of being wrong and themarket moving against you* Discusses how to develop an approach that combines tradeselection with sound risk management, avoids emotional attachmentto positions, exploits volatility cycles, and focuses on marketactionRegardless of how you approach markets, the insights found herewill help improve the way you trade by putting you in a betterposition to distinguish the differences between successful andunsuccessful traders.

Preface xiAcknowledgments xviiPart I The Casino Paradigm 1Chapter 1 Developing Positive Expectancy Models3Why Technical Analysis Helps 3The Inefficient Market 6If It Feels Good, Don't Do It 10"Just Make the Money" 15Final Thoughts 21Chapter 2 Price Risk Management Methodologies 23One Sure Thing 23Base of Pyramid 26Middle of Pyramid 37Apex of Pyramid 47Pros and Cons of the Risk Management Pyramid 49Putting It All Together: A Case Study 49Final Thoughts 51Chapter 3 Maintaining Unwavering Discipline 53Defining Discipline 53Discipline and the Positive Expectancy Model 55Types of Traders 61Discipline and Price Risk Management 64Patience and Discipline 67Final Thoughts 70Part II Trading Tools and Techniques 71Chapter 4 Capitalizing on the Cyclical Nature of Volatility73The Only Constant 73Defining Volatility with Technical Indicators 76Building Positive Expectancy Models with Volatility Indicators89Final Thoughts 94Chapter 5 Trading the Markets and Not the Money95Ten Thousand Dollars is a Lot of Money! 95"Baby Needs a New Pair of Shoes" 99Trading with "Scared Money" 100Time is Money 101Final Thoughts 104Chapter 6 Minimizing Trader Regret 105The Softer Side of Discipline 105Issues for Trend-Followers 106Issues for Mean Reversion Traders 113Final Thoughts 123Chapter 7 Timeframe Analysis 125Traditional Timeframe Analysis 125Timeframe Confirmation Trading 131Timeframe Divergence Trading 131Final Thoughts 142Chapter 8 How to Use Trading Models 143Mechanical Trading Systems 143Nonmechanical Models 162Equity Trading Models 170Final Thoughts 175Chapter 9 Anticipating the Signal 177Always Trade Value, Never Trade Price 177Support (and Resistance) Were Made to be Broken 179Don't Anticipate, Just Participate 181Final Thoughts 187Part III Trader Psychology 189Chapter 10 Transcending Common Trading Pitfalls 191Characteristics of Market Behavior 191Obstacle Makers to Growth as a Trader. 195Final Thoughts 202Chapter 11 Analyzing Performance 205A Due Diligence Questionnaire 205Trading Journal 225Final Thoughts 236Chapter 12 Becoming an Even-Tempered Trader 241The "I Don't Care Guy" 241The Master Trader 244Reprogramming the Trader 247Flexibility and Creativity 248Meditation 250Visualization 251Somatic Exercises 253Final Thoughts 254Notes 257Bibliography 263About the Author 265Index 266