Average Reviews:
(More customer reviews)I was able to triple my trading account in the past 18 months with this book. Although, I did own the first and second editions, it is the third edition that gave me these remarkable results. How did I do this? I followed the stepwise procedure below:
(1) I programmed the scan suggested by the author on pages 357-383 into my stock scanning software to find long trades reversing from a bottom. I also adapted the scan to search for short trades reversing from a top. This is quite easy to do by reversing the stated conditions.
(2) I used the market timing indicator discussed on pages 179-185 to decide whether the general market is turning up or down. The indicators in the book are best used to detect an inflection point in the market which is critical to catch moves early in the trend.
A down signal was given by this indicator in Nov 2007.
(3) When the general market is turning up I run the scan that searches for long trades. I focused only on two high profit setups discussed in the book: VPV reversal and the highly profitable falling rectangle. My reason for focusing on these setups is that not only they have high profit potential, they get you in early in the trend thus reducing the possibility of being stopped out of the trade and keeping drawdown at a minimum.
While VPV reversals are not hard to find, the highly explosive falling rectangles do not come by more than few times a year , but once you find them you can get profits upwards of 50% in a short time.
(4) If the general market is turning down I ran the scan that searched for stocks to short. In this case, however I looked for a rising rectangle pattern which is essentially the opposite of afalling rectangle. I also required that the break below the rectangle be accompanied by a volume spike. Knowing that markets and stocks fall much faster than they rise I would buy puts on the stock at the next strike below the current price. Once that strike price is reached and if the downtrend is still intact I will sell the puts I hold and buy puts at a lower strike and so on.
To show the explosive profits you can get using this technique, I will give a specific example: On 8/21/08 my short search program identified JDSU as a stock falling with a heavy volume spike. On examining the chart a break below a rising rectangle was evident. By buying $7.5 puts when the stock was at $10+ and then selling them when the stock hit $7.5 and buying $5 strike puts and so on until the stock hit $2.5 , my small investment grew by 20 times.
I have taken the advice of the author in my trading "to specialize in specific setups and get good at them to the point where they can be recognized by a glance at the chart".
I waited this long before writing the review since I had read many reviews and even written reviews myself on books without addressing the critical question: did the reviewer make money with ideas in the book. In most cases it is difficult to answer that question, however is this case it was possible since I followed a specific approach suggested in the book and it worked.
My actual rating for the book though is slightly shy of 5 (around 4.75) stars mainly because the author does not discuss record keeping in detail. He touches on psychology and does discuss money management and risk control by setting stops out of congestion areas, so you do not get run over by market makers and using specific option strategies to control risk.
I do not believe this is a major drawback since there are many books that discuss trading psychology and record keeping.
A personal note regarding trading psychology: When I was not doing so well trading I started reading books that focus mainly on trading psychology , record keeping , followed their advice and got little improvements.
However , a successful trading system changed my psychology by making me more confident, and thus willing to pull the trigger when I see a setup that falls within my specialty. Since most trades were profitable it was easy to cut losses on the ones that were not, thus following the saying cut your losses and let profits run was much easier to do.
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After a sell out first and second edition, Dr. Samir Elias added significant new material to the third edition - the main focus of which is making money in multiple ways. You can make money by purely trading stocks using numerous combinations of technical indicators described in several chapters and supported by practical market examples. You can also make money by raising cash on your long term holdings using effective and simple option strategies. In addition, you can make money by increasing your return on profitable trades while significantly reducing losses on unprofitable ones by using risk control strategies described in a special chapter. Learn also how to find stocks that have the potential to deliver explosive profits by incorporating ideas from the author's own stock scanning system that is presented in the book. Make the most of your trades by using specific techniques to determine the approximate best exit time and price using methods in the book applied in detail to the author's own trades. Whatever kind of trader you may be, this book will show you practical ways to increase your profits. If you are a swing trader, you can use candlestick charts combined with two specific technical signals to enter profitable trades. If you are an intermediate term trader, you can use profitable chart patterns described in one of the chapters in combination with technical signals to increase your return. Long term investors can use CD charts described in an especially dedicated chapter to determine the long term direction of a stock as well as entry and exit points.
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