THE SMARTEST TRADES. THE HOTTEST MARKETS. THE ONLY BOOK YOU NEED. You don’t have to be a professional trader to win big in the stock market. That’s what Anne-Marie Baiynd learned when she changed her career from neuroscience researcher to full-time momentum trader. Now, with her popular website and this brilliant new book, she teaches other traders how to master the market using her proven combination of analytics and psychology. The Trading Book shows you how to: Master the power of technical trading - Increase profits using probabilities and pattern recognition - Focus on precision trading for consistent results - Discover the benefits of waves and fibs - Embrace the habits of highly effective traders This one-of-a-kind guide goes beyond the numbers and statistics to show you the complex psychology behind the trades―from the greatest gains to the hardest losses. You’ll discover how other traders deal with making counterintuitive decisions; how to use technical indicators to identify the momentum and direction of the markets; and how to achieve your long-term financial goals through discipline, dedication, and endurance. Filled with insightful case studies, interviews, exercises, and guidelines for keeping a personal trading journal, this is more than a crash course for beginners or an industry guide for experts. This is the book on trading. Praise for The Trading Book : “Anne-Marie is an amazing trader who loves to share ideas. She knows it makes her smarter and so sharing is not really giving away anything. Anne Marie can explain complex trading ideas in a digestible manner, and any level of trader or investor will benefit from this book.” ―Howard Lindzon, cofounder and CEO of StockTwits and author of The StockTwits Edge “ The Trading Book does an outstanding job of offering step-by step explanations of trading strategies and methods. Anyone looking for a clear path to profits in the markets will find the pre-trade checklist especially helpful for staying disciplined during the trading day. The lessons on reading stock charts are some of the best I’ve seen and worth reading multiple times.” ―Tim Bourquin, Traderinterviews.com “This excellent book balances trading wisdom, psychology, common sense, and valuable strategies that you can put to work immediately. I think that the ‘woman’s perspective’ really adds something that most trading books are missing. Read this book; trust me!” ―Brian Shannon, author of Technical Analysis Using Multiple Timeframes and President of Alphatrends.net Anne-Marie Baiynd is president and CEO of TheTradingBook.com. A former neuroscience researcher and corporate recruiting executive, she currently runs a mentorship program, speaks to trading firms, trains proprietary traders, and manages client trading accounts. Anne-Marie Baiynd is president and CEO of TheTradingBook.com. A former neuroscience researcher and corporate recruiting executive, she currently runs a mentorship program, speaks to trading firms, trains proprietary traders, and manages client trading accounts. THE TRADING BOOK A COMPLETE SOLUTION TO MASTERING TECHNICAL SYSTEMS AND TRADING PSYCHOLOGY By ANNE-MARIE BAIYND McGraw-Hill Copyright © 2011 Anne-Marie Baiynd All right reserved. ISBN: 978-0-07-176649-4 Contents Chapter One An Introduction to the Markets "You cannot step twice into the same rivers; for other waters are ever flowing onto you." — HERACLITUS As long as we keep conscious of the fact that the markets are a living enterprise, run by fickle, changeable beings, we'll grip the notion that they are never the same place twice. As Mark Twain once said, "History does not repeat itself, it merely rhymes." The same is true of markets. The general "introduction to the markets" chapter normally describes the basic structure of the markets with equities, futures, forex, or some other trading instrument. Although that is important, and the structures are a good thing to understand, I will leave that to other authors. The nature of this work suggests we take an alternate view of the market at the outset in the not-so-typical way—not the overview of the forest, but a look through the trees while keeping very aware of the fact that we are in a forest. This view is even more unusual when we consider that our approach to trading will be largely technical in nature. Our ability to grasp this view, however, will assist us in observing the market as an entity, not just an amalgam of technical pieces, and that, in turn, will transform you into a trader who thinks on a grand and, at the same time, granular scale. By accepting that the market is an entity in constant flux, we cannot approach trading in a cookie-cutter manner, no matter how much we would like to. Instead, to trade at maximum efficiency, we must set that cookie cutter aside to make real tracks toward our end goal of superior, consistent returns. The same actions will not always be required in response to occur