Trade What You See How To Profit from Pattern Recognition

by Pesavento, Larry; Jouflas, Leslie

• ISBN13: 9780470106761
• ISBN10: 047010676X
• Edition: 1st
• Format: Hardcover
• Copyright: 2007-11-02
• Publisher: Wiley

Summary

Trading the financial markets is extremely difficult, but with the right approach, traders can achieve success. Nobody knows this better than authors Larry Pesavento and Leslie Jouflas, both traders and educators of traders, who have consistently used pattern recognition to capture profits from the markets. In Trade What You See, Pesavento and Jouflas show traders how to identify patterns as they are developing and exactly where to place entry and exit orders. While some patterns derive from the techniques of Wall Street's earliest traders and other patterns reflect Pesavento's emphasis on the geometry of market movements and Fibonacci numbers.. Filled with hard-won knowledge gained through years of market experience, Trade What You Seeoutlines both a practical and sophisticated approach to trading that will be of interest to both novice and seasoned traders alike. Larry Pesavento is a forty-year veteran trader. He operates a Web site,

Author Biography

LARRY PESAVENTO is a forty-year veteran trader who has one of the most extensive trading libraries in the world. He operates a Web site, www.tradingtutor.com, which provides market analysis for subscribers. Pesavento speaks regularly at trading conferences and is a private trader for a large hedge fund. The pattern recognition approach he uses eliminates the random nature of market action.

LESLIE JOUFLAS has been trading for over ten years and went professional in 2000. She coaches and tutors trading students as well as moderates and runs www.tradingliveonline.com. Jouflas also trades privately managed money as well as her own account.

Table of Contents

Preface	p. xi
Acknowledgments	p. xv
About the Authors	p. xvii
Introduction to Trading with Pattern Recognition
Opening Thoughts	p. 3
How to Use This Book	p. 3
Succeeding or Failing in Trading	p. 4
Steps to Take for Successful Trading	p. 7
Geometry of the Patterns and Fibonacci Ratios	p. 9
History of Geometry in the Markets	p. 11
Fibonacci Ratios	p. 13
Applying the Fibonacci Ratios	p. 15
Summary	p. 18
Harmonic Numbers and How to Use Them	p. 19
Where the Term Harmonic Numbers Originated	p. 19
Defining a Harmonic Number	p. 20
Vibrations in Price Swings	p. 22
Repetition in Price Swings	p. 24
Finding Harmonic Numbers	p. 28
Harmonic Numbers Found in Other Markets	p. 34
The Price Patterns and How to Trade Them
The AB=CD Pattern	p. 37
History of the AB=CD Pattern	p. 37
AB=CD Pattern Description	p. 39
AB=CD Pattern Structure	p. 39
Important Characteristics of the AB=CD Pattern	p. 42
CD Leg Variations	p. 43
Slope and Time Frames	p. 46
Psychology of the AB=CD Pattern	p. 48
Trading the AB=CD Pattern	p. 49
The Gartley "222" Pattern	p. 53
History of the Gartley "222" Pattern	p. 53
Gartley "222" Pattern Description	p. 55
Gartley "222" Pattern Structure	p. 56
Important Characteristics of the Gartley "222" Pattern	p. 57
Psychology of the Gartley "222" Pattern	p. 59
Trading the Gartley "222" Pattern	p. 60
The Butterfly Pattern	p. 67
History of the Butterfly Pattern	p. 67
Butterfly Pattern Description	p. 69
Butterfly Pattern Structure	p. 70
Important Characteristics of the Butterfly Pattern	p. 71
Psychology of the Butterfly Pattern	p. 72
Trading the Butterfly Pattern	p. 73
The Three Drives Pattern	p. 81
History of the Three Drives Pattern	p. 81
Three Drives Pattern Description	p. 82
Three Drives Pattern Structure	p. 83
Important Characteristics of the Three Drives Pattern	p. 84
Psychology of the Three Drives Pattern	p. 84
Trading the Three Drives Pattern	p. 85
Retracement Entries and Multiple Time Frames	p. 91
Fibonacci Retracement Entries	p. 92
Fibonacci Retracement Pattern Structure	p. 92
Trading the Fibonacci Retracement Pattern	p. 95
Opening Price Retracement Setups	p. 98
Market Setup for the Opening Price Retracement Trade	p. 99
Trading the Opening Price Retracement Setup	p. 100
Multiple Time Frames	p. 103
Classical Technical Analysis Patterns	p. 113
A Brief History of Technical Analysis	p. 114
Basics of Technical Analysis	p. 115
Double Bottom and Top Patterns	p. 115
Head and Shoulders Pattern	p. 120
Broadening Top and Bottom Patterns	p. 126
Learning to Recognize Trend Days	p. 131
Identifying a Trend Day	p. 132
Patterns Found on Trend Days	p. 135
Fibonacci Ratios on Trend Days	p. 138
Controlling Risk on a Trend Day	p. 140
Trading a Trend Day	p. 141
Essential Elements of Trading
Trade Management	p. 149
Thinking in Probabilities	p. 150
Warning Signs and Confirmation Signs	p. 151
Money Management	p. 155
Using Options with the Fibonacci Ratios and Patterns	p. 161
Call and Put Options Defined	p. 161
Factors That Influence the Price of an Option	p. 162
Controlling Risk with Options	p. 163
Examples of Using Options with Extension Patterns	p. 164
Building a Trading Plan	p. 167
Daily Trading Plan	p. 168
Trading as a Business	p. 174
Disaster Plans	p. 177
Summary	p. 181
Daily Routines	p. 183
Trade Preparation	p. 183
Mental Preparation	p. 187
Physical Preparation	p. 188
Appendix	p. 191
Index	p. 195
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