4/01/2009

Trend Trading for a Living by Thomas Carr

 Trend Trading for a Living: Learn the Skills and Gain the Confidence to Trade for a Living by Thomas Carr

The title of this book is misleading, this book is not about trend trading. This book is about swing trading. This is a book about specific trading setups for swing trading using technical analysis. It gives you criteria for generating long and short trading ideas using any simple trading software. 
This is a very basic book and goes in to very basic information like how to set up broker account, which broker to look for, what computer you need, what kind of Internet connectivity and so on. The first few chapters take beginner readers through these basic things and basic introduction to chart reading and technical analysis..
The second part of the book deals with determining overall market direction. Thomas Carr describes trend trading as he practices as a way to capture bulk of major moves in a trending stocks. For this one must enter after a new trend has started and exit before the trend ends. The author recommends setting up a watchlist of possible trend trading candidates using three criteria:
  1. Price: between 10 and 100
  2. Average Daily Volume: 500000 plus
  3. Beta: greater than 2
Once you set up a list like that the author suggest using technical analysis to enter or exit. How to play these setups is determined by the trend of overall market. Thomas Carr describes five different kinds of market conditions:
  1. Bullish Strongly trending
  2. Bullish Weakly Trending
  3. Bearish Strongly Trending
  4. Bearish Weakly Trending
  5. Range Bound
He suggests focusing on long plays in first two types of market , short plays in the next two types of market, and a long and short approach in last type of market. He uses 20 and 50 day moving average to determine above 5 kinds of market conditions. 
Part three of the book talks about specific setups. Specific setups are set of conditions a stock must meet to qualify for a bullish or bearish entry. Thomas Carr describes five bullish and five bearish setups. He provides detailed guidelines for scanning for these set ups and narrowing stocks from these scans. He also provides alternative scans for same set ups. 
Five Bullish Setups
  1. The pullback
  2. The coiled spring
  3. The bullish divergence
  4. The blue sky breakout
  5. The bullish base breakout
Five Bearish Setups
  1. The relief rally
  2. The bearish divergence
  3. The gap down
  4. The blue sky breakdown
  5. The rising wedge breakdown
This section has many good ideas and while the specific setups mentioned in the book may  or may not be profitable, this book will give you lot of ideas to create your own setups.  All these setups can be easily scanned in Telechart. The author discusses various approach to entries and exits post trend identification. Last part of the book deals with options and how to trade the above setups using option. 
Overall this is a very simple book on swing trading with some good ideas for trading setups for beginners. One major negative in this book is blatant self promotion by the author of his own prowess and website. It is excessive and irritating. 





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2 comments:

Lasertrader said...

The interesting thing is the Author went on to start his own fund and in less than 12 months managed to lose 70% of the value. I posted some comments about this on my blog

http://lasertrader.wordpress.com/a-word-of-caution/

I think his ego got in the way of prudent methodology

Gerald Rickman said...

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Goodluck! =)