Archive for September, 2008

  • Top Ten Trading Books Ever Written
    , September 30th, 2008 at 5:44 pm

    Ed Dobson is a trader and owner of TRADER’S PRESS, a financial bookstore which operates online and at tradeshows through out the country. He just reviewed my book and I am honored to have my book included in his “top ten trading books ever written.” Below is his review.

    Purchase YOUR COPY TODAY

    Book Review of: Technical Analysis Using Multiple Time Frames
    Author(s): Shannon, Brian

    One of my favorite actors (Al Pacino) said in one of my favorite movies (The Scent of a Woman) “I’ve been around, y’know!” I might modestly say that I too have “been around” books and literature on trading for a long time, almost fifty years….and have literally read hundreds of books on the subject. The majority of them fall into the category of SSDD (same stuff, different day)….and I’ll confess that it takes something truly new and unusual to impress me. Brian Shannon’s new book, Technical Analysis Using Multiple Time Frames not only impresses me, it earns a place in my “top 10 trading books ever written” list.

    I’ve had the pleasure of meeting Brian at a number of trading seminars and discussing his approach to trading. Long before his book came out, he impressed me as a particularly savvy trader with a wealth of knowledge well worth listening to…again, a rare situation. His book corroborates this early opinion of him, and represents a valuable contribution to trading literature. It expands greatly on some of the ideas on another old favorite of mine (Stan Weinstein’s Secrets for Profiting in Bull and Bear Markets), adds valuable and detailed insights into the psychology of market participants, gives greatly detailed guidance on the specifics of how he trades, and emphasizes the most important elements necessary to achieve success in trading (discipline, detailed plan, removing emotion for decision making, and many others). A book from a “real trader” is worth far more, in my estimation, than one that is written from the “safety of the sidelines”. And this is one of the best that I have seen.

    Perhaps the reason I like this book so much is that it mirrors closely my own beliefs on trading, which were gleaned and formulated over many years. Dominant themes throughout the book include the fact that price is the most important factor to consider, nothing else (even volume, which often expands after price moves, not before); that one must trade only what one sees, not what one thinks; the supreme importance of avoiding large losses and protecting capital; how one should listen only to the market and to price action, never to opinions; and perhaps most importantly, that in order to have the odds in one’s favor, one must trade with the prevailing trend (and not just the major trend, but the intermediate and minor trend as well).

    Perhaps the most significant and important contribution of this book is the detailed manner in which the reader is shown how to enter and exit trades just at the moment when they should begin “working”, and not a moment sooner, thus permitting very close protective stops, which minimizes risk to trading capital. Shannon describes himself as a momentum trader, and takes positions only when all timeframes are in alignment with each other, from long term charts down to a 10 minute intraday chart. This is the first, and I believe the only book which offers concrete guidance in precisely how to correlate multiple time frames in order to fine tune trades with a high probability of success and a low risk.

    Many “good” books on trading are “dry”, boring, and difficult reading. This one is easy and entertaining to read, clearly written, and replete with sound trading advice and “nifty” sayings that are easy to remember (“from failed moves come big moves”; “Human nature is the only constant in an environment constantly in a state of flux”; “risk is your constant companion”; “discipline and patience are your friends, emotions are the enemy”). The detailed descriptions of “stage analysis” and the psychology of market participants as price patterns unfold are well done.

    If you are a long term, value oriented investor who reads 10-K’s and balance sheets, and selects stocks based on PE’s, book value, and other fundamentals, I doubt this book will hold much value for you. But if you are a focused, serious short term trader, it may just prove to be one of the most valuable books you ever read.

    Review by Edward Dobson
    President, Traders Press Inc.

    Purchase YOUR COPY TODAY

  • Stock Market Video Technical Analysis 9/30/08
    , September 30th, 2008 at 4:14 pm

    No high resolution, mybloop still not working.

  • Measured Move
    , September 30th, 2008 at 3:17 pm

    In yesterday’s video I mentioned the confluence of the 50% retracement of the 2002 low to the 2007 high and the measured move.

    The measured move target is calculated by taking the high of 55.07 and subtracting from it the low at 41.05 which is 14.02 points or 25.45%. From peak to trough, that is the range of the first drive lower on the weekly timeframe below.

    Using the 50.61 recovery high and subtracting 14.02 points would yield a downside target of 36.59. The actual low (so far) has been 37.18. If you look at it from a percentage view though, this drive lower has actually pulled the market down deeper than the first selloff. If we subtract 37.18 from 50.61 we can see that this leg has declined 13.43 points, but divide that into 37.18 and the market dropped 26.53% from peak to trough.

    When levels like this are reached it makes sense to look for reasons to buy, but right now the only trends which justify any purchases for most stocks is the one minute timeframe. This bounce should be viewed as just that, a bounce in a downtrend. Time will tell us what the actual lows will be but risks remain high and my opinion is that daytrading is the best way to compensate for those risks.

  • Interesting Divergence
    , September 30th, 2008 at 9:11 am

    Just because gold rallies, it does not mean the mining stocks will advance. The chart below shows the relationship between the Spyder Gold Trust (GLD) and S&P Metals & Mining ETF (XME). The darker shaded candles represent the XME which is close to unchanged since it first started trading in June of 2006, while Gold is up over 60% in the same time. Which one is wrong? Neither! Markets don’t always do what they are “supposed to do” and fighting a trend based on a relationship which is supposed to exist is a good way to lose a lot of money. Only price pays! If you trade GLD, trade it based on the chart of GLD. If you trade XME, trade it based on the chart of the XME. Let the media and academics debate why markets do what they do, our job is to manage risk.

    Here are the components of the XME.

  • Interesting Times
    , September 30th, 2008 at 5:48 am

    May you live in interesting times.
    ~Chinese proverb and curse

  • Financial Panic Techincal Analysis 9/29/08
    , September 29th, 2008 at 4:15 pm

    Mybloop is still having problems with their uploader so no high res video today.

    I hope you saw THIS POST earlier today

  • Daytrade in an IRA?
    , September 29th, 2008 at 1:16 pm

    To me, it seems like the lowest risk way to handle risk in a bear market. I just posted a live video trade to the bonus tab on the BOOK WEBSITE Remember, the username and password are on pg 184, use lower case to login.

  • Collapse?
    , September 29th, 2008 at 9:54 am

    Sure feels like it. Be very careful!

    The Nasdaq 100 looks like it is headed towards the 50% retracement (near 37) level from the 2002 lows.

  • Persistence
    , September 29th, 2008 at 6:28 am

    Success seems to be largely a matter of hanging on after others have let go.
    ~William Feather

    Except in the markets where you have to cut losses quickly!

  • Subprime Primer
    , September 28th, 2008 at 8:20 pm

    I am not sure who created this. I received it as a powerpoint and recorded it as a video. If you are easily offended by language do not watch it.

    I am back from vacation and will begin posting regularly on Monday.

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