Trade Your Way to Financial Freedom

The bestselling holy grail of trading information-now brought completely up to date to give traders an edge in the marketplace "Sound trading advice and lots of ideas you can use to develop your own trading methodology."-Jack Schwager, author ofMarket Wizards and The New Market Wizards This trading masterpiece has been fully updated to address all the concerns of today's market environment. With substantial new material, this second edition features Tharp's new 17-step trading model. Trade Your Way to Financial Freedom also addresses reward to risk multiples, as well as insightful new interviews with top traders, and features updated examples and charts.

Van K. Tharp is an internationally known consultant and coach to traders and investors and the author of multiple bestselling books on trading and investing.

Foreword by Chuck Whitman

xiii

Preface to the Second Edition

xix

Preface to the First Edition

xxiii

Acknowledgments

xxvii

PART ONE THE MOST IMPORTANT FACTOR IN YOUR SUCCESS: YOU!

Chapter 1 The Legend of the Holy Grail

3

(16)

The Holy Grail Metaphor

6

(3)

What's Really Important to Trading

9

(2)

Modeling Market Geniuses

11

(8)

Chapter 2 Judgmental Biases: Why Mastering the Markets Is So Difficult for Most People

19

(28)

Biases That Affect Trading System Development

22

(15)

Biases That Affect How You Test Trading Systems

37

(3)

Biases That Affect How You Trade Your System

40

(4)

Summary

44

(3)

Chapter 3 Setting Your Objectives

47

(22)

Designing Objectives: A Major Part of Your System Work

49

(1)

Tom Basso on Objectives

50

(9)

Setting Your Own Objectives

59

(10)

PART TWO CONCEPTUALIZING YOUR SYSTEM

Chapter 4 Steps to Developing a System

69

(28)

1. Take an Inventory

70

(2)

2. Develop an Open Mind and Gather Market Information

72

(3)

3. Determine Your Mission and Your Objectives

75

(1)

4. Determine the Concept That You Want to Trade

76

(5)

5. Determine the Big Picture

81

(1)

6. Determine Your Time Frame for Trading

82

(3)

7. Determine the Essence of Your Trading and How You Can Objectively Measure It

85

(2)

8. Determine What Your Initial 1R Risk Will Be

87

(1)

9. Add Your Profit-Taking Exits and Determine the R-Multiple Distribution of Your System and Its Expectancy

88

(1)

10. Determine the Accuracy of Your R-Multiple Distribution

89

(1)

11. Evaluate Your Overall System

90

(1)

12. Use Position Sizing to Meet Your Objectives

91

(1)

13. Determine How You Can Improve Your System

92

(1)

14. Mentally Plan for Your Worst-Case Scenario

93

(4)

Chapter 5 Selecting a Concept That Works

97

(56)

Trend Following

98

(4)

Fundamental Analysis

102

(5)

Value Trading

107

(3)

Band Trading

110

(6)

Seasonal Tendencies

116

(8)

Spreading

124

(5)

Arbitrage

129

(7)

Intermarket Analysis

136

(6)

There's an Order to the Universe

142

(6)

Summary

148

(5)

Chapter 6 Trading Strategies That Fit the Big Picture

153

(36)

The Big Picture as I See It

156

(1)

Factor 1. The U.S. Debt Situation

157

(6)

Factor 2. The Secular Bear Market

163

(5)

Factor 3. The Globalization of Economic Factors

168

(4)

Factor 4. The Impact of Mutual Funds

172

(4)

Factor 5. Changes in Rules, Regulations, and Taxes

176

(4)

Factor 6. Human Beings' Tendency to Play a Losing Economic Game

180

(2)

Other Areas You Might Consider

182

(1)

Flow Will You Monitor the Big Picture?

183

(2)

Summary

185

(4)

Chapter 7 Six Keys to a Great Trading System

189

(28)

The Snow Fight Metaphor

191

(5)

Looking at Expectancy under a Magnifying Glass

196

(4)

Opportunity and Expectancy

200

(1)

Prediction: A Deadly Trap

201

(1)

Real Trading Applications

202

(7)

Determining How Your System Will Perform

209

(3)

Summary

212

(5)

PART THREE UNDERSTANDING THE KEY PARTS OF YOUR SYSTEM

Chapter 8 Using Setups to Jumpstart Your System

217

(34)

The Five Phases of Entry

219

(7)

Setups for Stalking the Market

226

(6)

Filters versus Setups

232

(6)

Setups Used by Well-Known Systems

238

(10)

Summary

248

(3)

Chapter 9 Entry or Market Timing

251

(36)

Trying to Beat Random Entry

253

(2)

Common Entry Techniques

255

(20)

Designing Your Own Entry Signal

275

(4)

An Evaluation of Entry Used in Some Common Systems

279

(5)

Summary

284

(3)

Chapter 10 Knowing When to Fold 'Em: How to Protect Your Capital

287

(22)

What Your Stop Does

289

(10)

Using a Stop That Makes Sense

299

(4)

Stops Used by Common Systems

303

(3)

Summary

306

(3)

Chapter 11 How to Take Profits

309

(20)

Purpose behind Profit-Taking Exits

310

(8)

Just Using Your Stop and a Profit Objective

318

(1)

Simplicity and Multiple Exits

319

(1)

What to Avoid

320

(1)

Exits Used by Common Systems

321

(3)

Summary

324

(5)

PART FOUR PUTTING IT ALL TOGETHER

Chapter 12 There's Money for Everyone

329

(56)

How Seven Traders Approach Their Craft

331

(7)

How Our Traders Would Look at Five Key Market Situations

338

(32)

Results Six Weeks Later

370

(10)

Results as R Multiples

380

(2)

Summary

382

(3)

Chapter 13 Evaluating Your System

385

(20)

Several Approaches to Take

386

(2)

Expectunity: Factoring in Opportunity

388

(2)

The Cost-of-Trading Opportunity

390

(4)

Peek Drawdowns

394

(3)

Using Newsletter Recommendations as Sample Systems

397

(6)

Summary

403

(2)

Chapter 14 Position Sizing—the Key to Meeting Your Objectives

405

(32)

Basic Position-Sizing Strategies

411

(4)

Model 1: One Unit per Fixed Amount of Money

415

(4)

Model 2: Equal Value Units for Stock Traders

419

(2)

Model 3: The Percent Risk Model

421

(5)

Model 4: The Percent Volatility Model

426

(2)

The Models Summarized

428

(2)

Position Sizing Used by Other Systems

430

(4)

Summary

434

(3)

Chapter 15 Conclusion

437

(18)

Avoiding Mistakes

439

(2)

What's Left Now: An Interview with Dr. Tharp

441

(14)

Glossary

455

(12)

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Trade Your Way to Financial Freedom

Summary

Author Biography

Table of Contents

Supplemental Materials

FREE SHIPPING

Rent More, Save More! Use code: BBRENTAL

5% off 1 book, 7% off 2 books, 10% off 3+ books

Trade Your Way to Financial Freedom

Summary

Author Biography

Table of Contents

Supplemental Materials

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