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Trade Like a Casino: Find Your Edge, Manage Risk, and Win Like the House

Book Description

A detailed look at the common characteristics found in most successful traders

While there are a variety of approaches to trading in the financial markets, profitable traders tend to share similar underlying characteristics. Most have a methodology that they believe will prove profitable over the long run and are willing to endure short-term setbacks. If you're looking to make the most of your time in today's markets, you need to understand what separates the best from the rest. And with Trade Like a Casino, you'll gain the knowledge needed to excel at this challenging endeavor.

Engaging and informative, this reliable guide identifies and explains the key techniques and mental processes characteristic of successful traders. It reveals that successful traders operate very much like a casino in that they develop a method that gives them "positive expectancy" and they unflappably implement the method in the face of changing, and oftentimes volatile, market conditions. Page by page, the book explores the intricacies of methodology, mental control, and flexibility that allow traders to develop and maintain the casino-like edge.

  • Reveals how many successful traders tend to follow the same general principles, even if their approach to trading may differ

  • Explores how to account for the risk of being wrong and the market moving against you

  • Discusses how to develop an approach that combines trade selection with sound risk management, avoids emotional attachment to positions, exploits volatility cycles, and focuses on market action

Regardless of how you approach markets, the insights found here will help improve the way you trade by putting you in a better position to distinguish the differences between successful and unsuccessful traders.

Table of Contents

  1. Cover
  2. Series
  3. Title Page
  4. Copyright
  5. Dedication
  6. Preface
  7. Acknowledgments
  8. Part I: The Casino Paradigm
    1. Chapter 1: Developing Positive Expectancy Models
      1. WHY TECHNICAL ANALYSIS HELPS
      2. THE INEFFICIENT MARKET
      3. IF IT FEELS GOOD, DON'T DO IT
      4. “JUST MAKE THE MONEY”
      5. FINAL THOUGHTS
    2. Chapter 2: Price Risk Management Methodologies
      1. ONE SURE THING
      2. BASE OF PYRAMID
      3. MIDDLE OF PYRAMID
      4. APEX OF PYRAMID
      5. PROS AND CONS OF THE RISK MANAGEMENT PYRAMID
      6. PUTTING IT ALL TOGETHER: A CASE STUDY
      7. FINAL THOUGHTS
    3. Chapter 3: Maintaining Unwavering Discipline
      1. DEFINING DISCIPLINE
      2. DISCIPLINE AND THE POSITIVE EXPECTANCY MODEL
      3. TYPES OF TRADERS
      4. DISCIPLINE AND PRICE RISK MANAGEMENT
      5. PATIENCE AND DISCIPLINE
      6. FINAL THOUGHTS
  9. Part II: Trading Tools and Techniques
    1. Chapter 4: Capitalizing on the Cyclical Nature of Volatility
      1. THE ONLY CONSTANT
      2. DEFINING VOLATILITY WITH TECHNICAL INDICATORS
      3. BUILDING POSITIVE EXPECTANCY MODELS WITH VOLATILITY INDICATORS
      4. FINAL THOUGHTS
    2. Chapter 5: Trading the Markets and Not the Money
      1. TEN THOUSAND DOLLARS IS A LOT OF MONEY!
      2. BABY NEEDS A NEW PAIR OF SHOES
      3. TRADING WITH SCARED MONEY
      4. TIME IS MONEY
      5. FINAL THOUGHTS
    3. Chapter 6: Minimizing Trader Regret
      1. THE SOFTER SIDE OF DISCIPLINE
      2. ISSUES FOR TREND FOLLOWERS
      3. ISSUES FOR MEAN REVERSION TRADERS
      4. FINAL THOUGHTS
    4. Chapter 7: Timeframe Analysis
      1. TRADITIONAL TIMEFRAME ANALYSIS
      2. TIMEFRAME CONFIRMATION TRADING
      3. TIMEFRAME DIVERGENCE TRADING
      4. FINAL THOUGHTS
    5. Chapter 8: How to Use Trading Models
      1. MECHANICAL TRADING SYSTEMS
      2. NONMECHANICAL MODELS
      3. EQUITY TRADING MODELS
      4. FINAL THOUGHTS
    6. Chapter 9: Anticipating the Signal
      1. ALWAYS TRADE VALUE, NEVER TRADE PRICE
      2. SUPPORT (AND RESISTANCE) WERE MADE TO BE BROKEN
      3. DON'T ANTICIPATE, JUST PARTICIPATE
      4. FINAL THOUGHTS
  10. Part III: Trader Psychology
    1. Chapter 10: Transcending Common Trading Pitfalls
      1. CHARACTERISTICS OF MARKET BEHAVIOR
      2. OBSTACLE MAKERS TO GROWTH AS A TRADER
      3. FINAL THOUGHTS
    2. Chapter 11: Analyzing Performance
      1. A DUE DILIGENCE QUESTIONNAIRE
      2. TRADING JOURNAL
      3. FINAL THOUGHTS
    3. Chapter 12: Becoming an Even-Tempered Trader
      1. THE “I DON'T CARE” GUY
      2. THE MASTER TRADER
      3. REPROGRAMMING THE TRADER
      4. FLEXIBILITY AND CREATIVITY
      5. MEDITATION
      6. VISUALIZATION
      7. SOMATIC EXERCISES
      8. FINAL THOUGHTS
  11. Notes
    1. PREFACE
    2. CHAPTER 1 DEVELOPING POSITIVE EXPECTANCY MODELS
    3. CHAPTER 2 PRICE RISK MANAGEMENT METHODOLOGIES
    4. CHAPTER 3 MAINTAINING UNWAVERING DISCIPLINE
    5. CHAPTER 4 CAPITALIZING ON THE CYCLICAL NATURE OF VOLATILITY
    6. CHAPTER 6 MINIMIZING TRADER REGRET
    7. CHAPTER 7 TIMEFRAME ANALYSIS
    8. CHAPTER 8 HOW TO USE TRADING MODELS
    9. CHAPTER 10 TRANSCENDING COMMON TRADING PITFALLS
    10. CHAPTER 11 ANALYZING PERFORMANCE
    11. CHAPTER 12 BECOMING AN EVEN-TEMPERED TRADER
  12. Bibliography
  13. About the Author
  14. Index