P1: OTA/XYZ P2: ABC fm JWBT405-Brandt December 14, :1 Printer Name: To Come

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1 Acknowledgments PART I FOUNDATIONS OF SUCCESSFUL TRADING 1 Introduction 3 The Invention of a Commodity Trader 3 Why I Wrote This Book 7 This Book s Audience 9 The Book s Road Map 14 CHAPTER 1 PART II The History and Theory of Classical Charting Principles 19 My Perspective of the Principles 20 Three Limitations of the Principles 21 Summary 22 CHARACTERISTICS OF A SUCCESSFUL TRADING PLAN 23 CHAPTER 2 Building a Trading Plan 25 Trader Personality and Temperament 25 Adequate Capitalization 29 Overall Risk Management 30 Points to Remember 32 COPYRIGHTED MATERIAL xiii vii

2 viii CHAPTER 3 Identifying the Trades and the Trading Vocabulary 33 Trade Identification 35 Vocabulary of the Factor Trading Plan 35 Points to Remember 54 CHAPTER 4 Ideal Chart Patterns 55 Reversal H&S Pattern in Copper 56 Reversal Rising Wedge in AUD/USD 56 Continuation Wedge and Reversal Failure Top in Soybean Oil 57 Reversal Triangle Bottom in Sugar 58 Continuation and Pyramid Patterns in USD/CAD 58 Reversal Top in Silver 59 Continuation H&S Pattern in the Russell 1000 Index 60 Continuation Rectangle in Kansas City Wheat 61 Continuation Rectangle and Pyramid Triangle in Crude Oil 61 Continuation H&S Top in the Dow Utilities 63 Continuation Triangle, Reversal M Top, and Flag in the EUR/USD 63 H&S Reversal Top and Three Continuation Patterns in the GBP/JPY 65 A Reversal Symmetrical Triangle in the AUD/JPY 66 Two Continuation Patterns in GBP/CHF 67 A Triangle and Running Wedge in Sugar 67 An H&S Bottom in Apple Computer 68 A Major Continuation H&S and Symmetrical Triangle in Gold 68 A Series of Bullish Patterns in Copper 70 A Failed Ascending Triangle in the USD/CAD Crossrate 71 A 12-Week Rectangle in the Dow Jones Transport Index 72 A Rare Horn in Brent Sea Oil 72 An H&S Bottom Launches the 2009 Bull Market in the S&Ps 73 Summary 74 Points to Remember 74

3 ix CHAPTER 5 How the Factor Trading Plan Works 75 Trade Identification 75 Trade Entry 84 Trade Risk Management 85 Trade Order Management 86 Points to Remember 89 CHAPTER 6 Three Case Studies Using the Factor Trading Plan 91 A Remarkable Technical Event in the Dow Jones 92 A Year Trading Gold 94 A Year Trading Sugar 104 Points to Remember 113 CHAPTER 7 Characteristics of a Successful Trader 115 Intimate Knowledge of Trading Signals 116 Discipline and Patience 117 Analysis of Self and of the Trading Plan 117 It Takes a Leap of Faith 120 Points to Remember 121 PART III A FIVE-MONTH TRADING DIARY: LET THE JOURNEY BEGIN 123 CHAPTER 8 Month One: December Trading Record 129 Summary 143 CHAPTER 9 Month Two: January Identifying Trading Opportunities 146 Amending the Plan 151 Trading Record 152 Summary 170 CHAPTER 10 Month Three: February Sticking to the Plan in Choppy Markets 171

4 x Trading Record 173 Summary 187 CHAPTER 11 Month Four: March Trading Record 190 Summary 201 CHAPTER 12 Month Five: April Relying on Classical Charting Principles 204 Trading Record 205 Outlook for the Future 210 Summary 214 PART IV THE WRAP-UP 215 CHAPTER 13 Analysis of Trading Performance 217 How the Trading Plan Performed 221 How the Plan (and the Trader) Evolved 227 Summary: Best Practices Going Forward 228 CHAPTER 14 The Best Dressed List 231 A Seven-Month Double Bottom in AUD/USD 231 A 14-Month Coil and Nine-Month Descending Triangle in EUR/CHF 233 A Six-Month Wedge in EUR/USD 234 A 16-Week Horn in GBP/USD 235 A Four-Month H&S in Bottom NZD/USD 236 A Six-Month Ascending Triangle Failure in USD/CAD 237 An Eight-Month H&S Bottom in the S&Ps 238 A 14-Month Symmetrical Triangle in Sugar 239 A Seven-Month Triangle in Gold 240 A Series of Continuation Patterns in Copper 242 An H&S Bottom in Crude Oil 243 Summary 243

5 xi Postscript 245 APPENDIX A Factor Trading Plan Signals 249 APPENDIX B Quick Reference to Charts 257 APPENDIX C Recommended Resources 269 Author s Note 271 Index 275

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