The Complete Trading Course

A practical guide covering everything the serious trader needs to know

While a variety of approaches can be used to analyze financial market behavior and identify potential trading/investing opportunities, no approach is completely accurate. The challenge for traders is to find a method that they feel comfortable with and are able to implement consistently, through the normal ups and downs of trading.

The Trading Course provides you with a detailed description of the methods used to analyze markets, spot profitable trading opportunities, and properly execute trades. Page by page, this book references different trading methodologies, but focuses specifically on applying them when attempting to identify good trades.

• Discusses the principles of price behavior, trends, trade set ups, trade execution, and intermarket relationships
• Details different trading tools and techniques, including Japanese Candlesticks, Elliott Wave, Dow Theory, momentum indicators, and much more

If you want to become a successful trader, you have to be prepared. This book will show you what it takes to make it in this field and how you can excel without getting overwhelmed.

Preface xi

Acknowledgments xvii

Part I Foundational Principles 1

Chapter 1 Supremacy of the Trend 3

What is a Trend? 3

Methods for Defining Trends 7

Pinpointing the Trend Reversal in 2009 19

Chapter 2 Momentum’s Leading Edge 21

The Science of Momentum 21

Momentum in the Stock Market 23

Gaps Reveal Momentum 24

The Momentum Indicator 26

The Rate of Change Indicator 34

The 3/10 MACD Oscillator 37

Where Momentum Is Strongest 43

Chapter 3 Price Alternation Principle 45

Defining the Principle 45

Price Contraction Phase 47

Price Expansion Phase 49

Viewing the Market as Buyers and Sellers 53

Feedback Loops 55

Choosing the Right Indicators 64

Part II Strategies and Tools 79

Chapter 4 Candlestick Charting 81

Benefits of Using Candlestick Charts 81

Construction of Candlestick Charts 82

Basic Terms Used to Describe Candlesticks 85

Common Signals 87

Three Trading Scenarios 107

A Little Knowledge Goes a Long Way 109

Chapter 5 Examining Price Patterns 111

What Are Price Patterns? 111

Introduction to the Most Popular Patterns 115

Head and Shoulders 116

Inverse Head and Shoulders 121

Bull Flag 125

Triangles 134

Using Price Patterns in the Real World 143

Chapter 6 Fibonacci Tools 145

What Is Fibonacci in Trading? 145

Fibonacci Retracements 147

How to Identify Fibonacci Retracement Confluence Zones 153

The Multiple Uses of Fibonacci Tools 161

Chapter 7 Following the Life Cycle of a Price Move 163

Three Phases of a Large-Scale Price Move 164

Visualizing the Stages through Charts 169

Ralph Elliott’s Wave Theory 176

The Three Rules of Elliott Wave 182

Elliott Waves Example: Research in Motion 183

Final Tips for Applying the Life Cycle in Real Time 185

Part III Execution and Trade Setups 187

Chapter 8 Edge, Expectancy, and Execution 189

All about Edge 190

Edging Out Your Expectancy 197

Trade Execution Tactics 208

Chapter 9 Four Basic Trade Setups 219

Common Components of Every Trade 219

How to Classify Trade Setups 228

Mean Reversion Strategies 229

Mean Departure Strategies 240

Where Trades Fit in the Life Cycle 248

Trading Confidently 253

Chapter 10 Specific Trade Setups for Today’s Markets 255

The Cradle Trade 255

The Impulse Buy and Impulse Sell Trade 260

Using Multiple Timeframes to Enter an Impulse Buy Trade 265

Concluding Thoughts 270

About the Author 273

Bibliography 275

Index 281

COREY ROSENBLOOM, CMT, founded the trading education site www.afraidtotrade.com, where he offers a variety of services and market analysis. A Chartered Market Technician, he speaks regularly at industry trading conferences. Rosenbloom's work appears on a number of trading Web sites, such as greenfaucet.com, traderkingdom.com, moneyshow.com, dailymarkets.com, wallstreetcheatsheet.com, bestwaytoinvest.com, and others. His strategies have also appeared in Dr. Brett Steenbarger's book The Daily Trading Coach. Rosenbloom earned a master's degree in political science and bachelor's degree in psychology from the University of Alabama in Huntsville. Where do you start when you first look at a stock chart? How do you classify all the conflicting signals, cut through the noise, and get straight to the point of what matters most? With so much information for the technical analyst to discover, new traders often do not know where to start or what should guide them. And if you should decide it might be a profitable trade, how do you enter, manage, and exit the trade most efficiently?

The Complete Trading Course answers the questions of traders from all experience levels and provides you with a specific pathway for analyzing your chart to find specific trading opportunities.

Built on time-tested price principles that winning traders have used for many years but have been buried under the information overload of today's high-speed, indicator-driven markets, The Complete Trading Course cuts through the theoretical aspects and esoteric information and highlights only the most important insights from a variety of disciplines. Unlike other books, it focuses on the logic behind the pattern, how it fits into the broader context on a price chart, and how to assess the integrated whole of the chart within the context of guiding price principles that underscore all trading decisions.

Perhaps most importantly, the book reveals specifics of trade execution tactics geared to the unique experiences and personality of the trader putting on the position—the "edge" that enables you to combine objective chart information with your own understanding and experience so that you can recognize a proper opportunity, manage it in real time, and exit the position properly without emotion negatively affecting your decision.

With a firm knowledge of foundational price principles, specific trade strategies for today's markets, information on edge and execution, and a clear understanding of trade set-ups, you will be fully equipped to take your trading to the next level and formulate your own personal strategies in a trading plan that will help you continue on your lifelong journey to trading success.

THE COMPLETE TRADING COURSE
A step-by-step approach to analyzing markets and making informed trading decisions

The Complete Trading Course provides aspiring traders with a detailed description of methods to analyze markets, spot profitable trading opportunities, and execute trades properly. Using a variety of approaches—such as Candlesticks, Elliott Wave, Dow Theory, and others—this book shows you how these methods overlap to identify tradable moments in the markets. Author Corey Rosenbloom skillfully explains how to identify trades based on price trend, momentum, and volatility—and how to make decisions confidently and maintain that confidence throughout the trade.

The Complete Trading Course goes beyond basic strategies to reveal how to assess your edge—the specifics of trade execution tactics geared to your unique personality—and then incorporate your experiences, stage in life, risk-tolerance, and individual psychological make-up into a lifetime of learning. By creating this unique approach, you'll learn to progress month to month and then year to year as a developing trader.

No one book, indicator, or seminar can teach you all you need to know to be a successful trader, but this timely guide lays the foundation upon which to build a lifelong trading career.