What else am I doing? The latest trading book for me is Trading for a Living by Alex Elder, an oldie but goodie. It’s basically a practical overview of technical indicators, along with notes on money management and psychology. His ‘Triple Screen’ system is quite popular, and easy to understand: it implements several notions that successful traders use (I’m guessing?):
- Examine multiple time frames. Dr Elder uses weekly/daily/hourly as the example for his Triple Screen, but mentions this can be scaled down proportionally for intraday trading (e.g. hourly/10min/2min).
- Use multiple indicators. In particular, use trend-following indicators to give the allowed direction of trades (e.g. if the long-term trend is up, only buy to enter), then use oscillators to give the entry criterion (e.g. stochastics/MACD hist). He’s trying to maximise the value of both types of indicators, while admitting that each has drawbacks.
- Use tight stops. Money management is pretty conservative. Someone using the system will likely need to be OK with being stopped out a lot.
Anyway, seems like a logical, mechanical system. I’ll try a bit this week to see how it gets on.