Candlestick and Pivot Point Trading Triggers, + Website: Setups for Stock, Forex, and Futures Markets by John L. Person

Candlestick and Pivot Point Trading Triggers, + Website: Setups for Stock, Forex, and Futures Markets by John L. Person

CHAPTER 1
Trading Vehicles, Stock, ETFs, Futures, and Forex

Welcome to Trading Triggers. If you are an active trader or a first-time
investor looking for a trading method that suits your personality, then you
have the right book. Trading for a living is an amazing and yet risky
business. There is more to trading than buying and selling. There are often-

missed but important issues that many books do not mention, such as not
only how to make money in the market but also how to keep it and create a
positive cash flow. The purpose of this book is to take you to a new level of
trading knowledge by giving detailed explanations of technical tools that
will help you develop your own trading system so you can cultivate and
extract money from the market, especially those traders who want high
alpha (big returns) with reasonable standard deviation (volatility). I will
explain some of the most obvious yet simple concepts of how to interpret
technical analysis and improve your chart-reading skills so you can make
money in the markets.
There are two theories on how markets perform: efficient market theory
and random walk theory.
1. Efficient market theory lends to the belief that markets are always
priced correctly because the current price reflects all factual
information. If the markets are efficient, then no fundamental
information will give an investor an edge in the market.
2. Random walk theory lends to the belief that price movements do not
follow any pattern or trend and that past price behavior cannot be
used to predict future price movements. In other words, the markets
are completely unpredictable.
I fall in the category of believing that history can and does repeat itself.
People can and do make money based on technical analysis, and I am here
to help prove it.

IMPORTANCE OF A RULE-BASED APPROACH
You may have heard of Jesse Livermore, who was immortalized by Edwin
Lefèvre’s book Reminiscences of a Stock Operator (G. H. Doran, 1923;
Wiley, 2006). Jesse was considered one of the greatest speculators of his
day. Many of his principles and ideas are still used. His three key concepts
of trading are (1) timing, (2) risk management, and (3) emotional control.
This quote from Richard Smitten’s Trade Like Jesse Livermore (Wiley,
2005, p. 70) sticks with me because it is as true now as it ever was (keep in
mind that Jesse committed suicide in 1940, so this was stated nearly 70
years ago): “All through time, people have basically acted the same way in
the stock and commodity markets as a result of greed, fear, ignorance, and
hope: that is why the formations and patterns recur on a constant basis. The
patterns the traders and technicians observe are simply the reflections of
human emotional behavior.”
Most traders who are consistently profitable have learned to develop a
rule-based approach that doesn’t change. They have within their arsenal of
trading tools, definitive, recognizable, and frequently reoccurring patterns
that can be used to trade by a set of established trading rules. They can
clearly define, without guessing or using a vague approach, support and
resistance levels and what to do once prices reach those levels. Moreover,
they have the ability to clearly define their entry, stop-loss, or risk
parameters and their profit objectives in a consistent, repetitious fashion
each time they place a trade. This is what I do when trading my own
account and what I have taught my son and even my own father. My dad
used to think trading commodities was like gambling until I showed him a
method. This is the same method that will be disclosed in these pages.
It is important for you to realize that it is the emotional balance that helps
keep you on the profitable side of the ledger. You must never anticipate
what the market might do, but rather wait for confirmation on your triggers.
Most traders who are profitable are flexible as to the anticipated outcome
that may occur on each trade. Successful traders have the mindset to
develop the perspective that their trading business is to manage their money

Candlestick and Pivot Point Trading Triggers, + Website: Setups for Stock, Forex, and Futures Markets by John L. Person