High Probability Trading Strategies

1 P1:a/b P2:c/d QC:e/f T1:gfm JWBK244-Miner August 18, 2008 15:7 Printer: Yet to comeHigh ProbabilityTradingStrategiesEntry to Exit Tactics for the Forex, Futures,and Stock MarketsROBERT C. MINERJohn Wiley & Sons, Inc. 7700++ DDVVDD ss FFOORR SSAALLEE && EEXXCCHHAANNGGEE CCoonnttaaccttss aannddrreeyybbbbrrvv@ aannddrreeyybbbbrrvv@ SSkkyyppee:: aannddrreeyybbbbrrvv P1:a/b P2:c/d QC:e/f T1:gfm JWBK244-Miner August 18, 2008 15:7 Printer: Yet to comeP1:a/b P2:c/d QC:e/f T1:gfm JWBK244-Miner August 18, 2008 15:7 Printer: Yet to comeHigh ProbabilityTradingStrategiesP1:a/b P2:c/d QC:e/f T1:gfm JWBK244-Miner August 18, 2008 15:7 Printer: Yet to comeFounded in 1807, John Wiley & Sons is the oldest independent publishing company in theUnited States. With offices in North America, Europe, Australia and Asia, Wiley is globallycommitted to developing and marketing print and electronic products and services forour customers professional and personal knowledge and Wiley Trading series features books by traders who have survived the mar-ket s ever changing temperament and have prospered some by reinventing systems,others by getting back to basics .

2 Whether a novice trader, professional or somewherein-between, these books will provide the advice and Strategies needed to prosper todayand well into the a list of available titles, please visit our Web site at :a/b P2:c/d QC:e/f T1:gfm JWBK244-Miner August 18, 2008 15:7 Printer: Yet to comeHigh ProbabilityTradingStrategiesEntry to Exit Tactics for the Forex, Futures,and Stock MarketsROBERT C. MINERJohn Wiley & Sons, :a/b P2:c/d QC:e/f T1:gfm JWBK244-Miner August 18, 2008 15:7 Printer: Yet to comeCopyrightC 2009 by Robert Miner. All rights by John Wiley & Sons, Inc., Hoboken, New simultaneously in part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or byany means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted un-der Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission ofthe Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright ClearanceCenter, Inc.

3 , 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 750-4470, or on the web Requests to the Publisher for permission should be addressed to the Permissions Depart-ment, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or onlineat of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparingthis book, they make no representations or warranties with respect to the accuracy or completeness of the con-tents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particularpurpose. No warranty may be created or extended by sales representatives or written sales materials. The adviceand Strategies contained herein may not be suitable for your situation. You should consult with a professionalwhere appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercialdamages, including but not limited to special, incidental, consequential, or other used by companies to distinguish their products are often claimed as trademarks.

4 In all instanceswhere John Wiley & Sons, Inc. is aware of a claim, the product names appear in initial capital or all capitalletters. Readers, however, should contact the appropriate companies for more complete information regardingtrademarks and general information on our other products and services or for technical support, please contact our Cus-tomer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993or fax (317) also publishes its books in a variety of electronic formats. Some content that appears in print may not beavailable in electronic books. For more information about Wiley products, visit our web site at of Congress Cataloging-in-Publication Data:Miner, Robert Probability Trading Strategies : entry to exit tactics for the Forex, futures,and stock markets / Robert cm. (Wiley Trading series)Includes bibliographical references and 978-0-470-18166-9 (cloth/cd-rom)1.

5 Speculation. 2. Futures. 3. Stocks. 4. Foreign exchange Investment analysis. I. dc222008017697 Printed in the United States of America10987654321P1:a/b P2:c/d QC:e/f T1:gfm JWBK244-Miner August 18, 2008 15:7 Printer: Yet to comeContentsForewordixPrefacexiPART ONE High Probability Trading Strategies for Any Marketand Any Time Frame1 CHAPTER 1 High Probability Trade Strategies for Any Marketand Any Time Frame3 Any Market, Any Time Frame4 Conditions with a High Probability Outcome4 Leading and Lagging Indicators5 What You Will Learn in This Book and CD6 Let s Get Started8 CHAPTER 2 Multiple Time Frame Momentum Strategy9 What Is Momentum?11 Multiple Time Frame Momentum Strategies12 The Basic Dual Time Frame Momentum Strategy12 Momentum Reversals14 Most Price Indicators Represent Rate-of-Change15 Momentum and Price Trends Often Diverge16 How Dual Time Frame Momentum Strategies Work19 Which Indicators to Use for Multiple Time FrameMomentum Strategies31 What Are the Best indicator Settings to Use?

6 36 Dual Time Frame Momentum Strategy Rules43 Dual Time Frame Momentum Strategy Trade Filter46vP1:a/b P2:c/d QC:e/f T1:gfm JWBK244-Miner August 18, 2008 15:7 Printer: Yet to comeviCONTENTSCHAPTER 3 Practical Pattern Recognition for Trendsand Corrections49 Why Is It Important to Identify a Trend or Correction?50 Simple Pattern Recognition Based On Elliott Wave52 Trend or Correction: The Overlap Guideline52 ABC and Away We Go58 Complex Corrections64 Overlap Is the Key to Identify a Correction66 Trends and Five-Wave Patterns67 Greater in Time and Price75 Fifth Waves Are the Key77 Momentum and Pattern Position79 Momentum and Pattern Not Enough82 CHAPTER 4 Beyond Fib Retracements83 Internal Retracements and Corrections84 Alternate Price Projections Qualify InternalRetracements89 More Alternate Price Projections92 External Retracements Help Identify the Final Section ofa Trend or Correction96 Pattern Price Targets99 Price, Pattern, and Momentum106No Excuse108 CHAPTER 5 Beyond Traditional Cycles111 Time Retracements and Corrections112 Alternate Time Projections Narrow the TimeRetracement Range114 More Time Factors117 The Time Target Zone118 Time Bands128 More Time Factors135 Conclusion137 CHAPTER 6 Entry Strategies and Position Size139 Entry Strategy 1.

7 Trailing One-Bar Entry and Stop140 Entry Strategy 2: Swing Entry and Stop150P1:a/b P2:c/d QC:e/f T1:gfm JWBK244-Miner August 18, 2008 15:7 Printer: Yet to comeContentsviiPosition Size158 Conclusion162 CHAPTER 7 Exit Strategies and Trade Management163 Multiple-Unit Trading164 Risk/Reward Ratios165 Exit Strategies166 Trade Management168 Trade Only the High Probability , Optimum Setups197 PART TWO Trading the Plan199 CHAPTER 8 Real Traders, Real Time201 Adam Sowinski (Slorzewo, Poland)202 Jagir Singh (London, United Kingdom)206 Cees Van Hasselt (Breda, The Netherlands)214 Kerry Szymanski (Tucson, Arizona)218 Derrik Hobbs (Warsaw, Indiana)222 Carolyn Boroden (Scottsdale, Arizona)227 Jaime Johnson (Encinitas, California, andBogata, Columbia)231 Chapter Summary234 CHAPTER 9 The Business of Trading and Other Matters237 Routines and Trading Records237 Why Traders Win or Lose239 Technology, Trading Time Frames, Markets to Trade,and Leverage242 Trade for Points, Not for Ticks244 You Can t Buy Success244 YouCANBe a Successful Trader245 More Bar-by-Bar Entry to Exit Trade Examples247 Glossary249 Bibliography261 About the Author263P1:a/b P2:c/d QC:e/f T1:gfm JWBK244-Miner August 18, 2008 23:51 Printer: Yet to comeviiiCONTENTSI ndex265 About the CD-ROM271P1:a/b P2:c/d QC:e/f T1:gfm JWBK244-Miner August 18, 2008 15:7 Printer: Yet to comeForewordImet Robert Miner not long after the market crash of October 1987.

8 I reluctantly wentto a Trading conference in downtown Chicago where he was one of many was reluctant to attend the conference because I had recently lost my cushy job atthe Chicago Mercantile Exchange where I had been managing a floor Trading operation,working with institutional clients in the financial futures markets. Fortunately, I decidedto attend the conference, which ended up opening the door to whole new career in thetrading had heard about Fibonacci retracements before, but only as they were applied tothe price axis of the market. I remember the exact area of the room where I sat whenBob gave his presentation and illustrated, among other things, a very simple example ofFibonacci applied to thetimeaxis of the market. I swear it was just like the proverbiallight bulb went on above my head, and part of me knew that this was the key to myfuture. It was an aha was so fascinated by Bob s presentation, I made my way over to his booth in theexpo hall and told him how much I enjoyed his presentation.

9 This led to shooting a coupleof games of pool over cocktails, and that was the beginning of our friendship that haslasted over the I started studying Bob s work, I was so fascinated that I would work on mypaper charts with a pencil, calculator, and proportional divider every chance I got. I didnot own a computer at the time. Through this almost daily ritual with my hand updatedpaper charts, I would prove to myself how powerful were the Strategies he taught. Istarted sharing some of my results with some friends and clients. It worked so well, someof them started offering to pay me for my analysis. I studied everything Bob had to teachover the years and perfected my trade Strategies . All this eventually led to opening myown market analysis and trade recommendation business, Synchronicity Market Bob Miner, I would not be enjoying the very successful career I have of what I ve learned about technical analysis and trade Strategies , I learned fromBob.

10 I am forever grateful for what he has taught me over the years as I can truly say Ilovemy work, and they even pay me for doing it!Thanks Bob!!Carolyn Borodenaka FibonacciQueen, :a/b P2:c/d QC:e/f T1:gfm JWBK244-Miner August 18, 2008 15:7 Printer: Yet to comeP1:a/b P2:c/d QC:e/f T1:gfm JWBK244-Miner August 18, 2008 15:7 Printer: Yet to comePrefaceHigh Probability Trading Strategiesis one of the few Trading books from whichyou can learn a complete trade management plan from entry to you are a new trader or one who has not yet found consistent success in thebusiness of Trading futures, stocks, or forex, you will learn specific trade Strategies , fromhow to identify high Probability trade conditions, to the specific entry and stop price,through exit Strategies that are designed to maximize the gain from any trend. If youare an experienced and successful trader, I know that you will recognize several keystrategies to incorporate into your existing trade plan that should immediately increaseyour ve been teaching these Strategies for over 20 years to traders around the world.