Trend Trading Set-Ups Entering and Exiting Trends for Maximum Profit

L. A. LITTLE is what Jim Cramer called a "technician extraordinaire" on his Mad Money television show. Little is a professional trader, money manager, and writes frequently for online publications including Minyanville.com and MarketWatch.com while continuing to contribute articles to well-known print publications like Stocks & Commodities, Active Trader, and Traders World. Little has presented in numerous conferences both domestically and internationally, appeared on syndicated radio shows, and provides daily market analysis and the tools to implement the trading strategies covered in this book on his website TAToday.com. With a trading philosophy centered on capital protection first and the accumulation of consistent gains over time, Little espouses a simplistic technical approach to trading the markets that refocuses technical analysis away from patterns to supply and demand levels. He is the author of Trend Qualification and Trading, also from Wiley.

Foreword ix

Acknowledgments xi

Introduction 1

PART I 7

CHAPTER 1 Identifying and Qualifying Trend Probabilities 9

Trend Determination 10

Qualified Trend Failure Probabilities 13

Qualified Trade Failure Probabilities 31

Summary 37

CHAPTER 2 Anchor Zones: The Key to Timing Trades 41

Anchor Bars and Zones 42

Reconsidering Trade Failures 46

Summary 54

CHAPTER 3 Broader Influences Affecting Stocks 55

Sector Congruence 59

Virtual Industry Groups—Future Direction 72

General Market Congruence 74

Summary 81

PART II 85

CHAPTER 4 Formulating a Workable Trading Plan 89

Trend Direction and Strength 90

Time Frames 94

Entry and Exit Timing 95

Trading Size, Scale Trading, Trade Success Probabilities, and Reward-to-Risk Ratio 100

Evaluating and Acting Upon the Plan 104

Summary 105

CHAPTER 5 The Data behind Trend Trade Set-Ups 107

The Only Two Types of Trade Set-Ups 108

Trading Breakouts and Retraces 111

Breakouts versus Retrace Trade Probabilities 113

Probabilities for Trade Set-Up Scenarios 122

Summary 133

CHAPTER 6 Sideways Range Trades 135

Trade Set-Up Conditions and Categorizations 136

Trading Sideways Trends 137

Summary 155

CHAPTER 7 Breakout and Retrace Trade Set-Ups 157

Retrace Trade Set-Ups 158

Breakout Trade Set-Ups 186

Considering Other Trade Set-Ups 199

Trade Set-Up Rationale and Thoughts 201

Summary 205

Conclusion: Unleashing Trade Potential 207

Appendix: Data Tables 209

About the Author 241

Index 243

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