Long Term Secrets To Short-Term Trading

Figure 7.5 Trade on any day but Thursday. 

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Figure 7.6 A close that is above the day's high. 
For example, checking this pattern from 1986 to 1998 in the S&P 500, there were 25 occurrences of 
this pattern on Tuesday setting up sells for Wednesday. Of these, 19 were winners, netting $21,487. In the 
Bond market, the same pattern set up 28 trades on Thursday, to sell on Friday, making $13,303 which 
challenges the random walk professors with a thoughtprovoking 89 percent accuracy. The Bond test was on 
data from 1989 to August 1998! A $1,500 stop was used in Bonds, $2,000 in the S&P 500. 
For both markets, we used the simple bailout exit I will teach later. There are several major short-term 
patterns like this that I take advantage of in my trading. The search is on each day to see what the current 
pattern foretells. I have some stock patterns that I have used for years, but am always on the lookout for new 
ones. 
The Questions to Ask 
Patterns work. I know. I have cataloged hundreds of them over the years and suggest you do the 
same starting with the ones I am providing here. It is best to think about why these patterns work. What do 
they represent? Can I find the pattern at work in all markets? Does the trading day of the week matter? 

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Those are my stock questions, but the underlying germ of truth I am looking for is some visual 
pattern that emotionally sucks the public into buying or selling at just the wrong time ... for them ... and right 
time for me. Understanding emotions as reflected on charts is the key to "chart reading." "Trader Rick," a 
recent seminar attendee, E-mailed me this note as I was writing this section. Read it to understand what to 
look for and reflect on yourself at the same time: 
Would you like yet another story that proves you should not be an emotional trader? Well here goes, 
you'll find it interesting. 
Last weekend I decided to place a buy stop in May Copper at 77.80, first thing Monday morning. 
Shortly after Copper opened I called my broker (unfortunately my regular broker does not come in until 
around 8 A.M.) and asked, "What's Copper called this morning?" He replied, "I don't follow Copper, I really 
don't know, I'd have to look it up. . ." (Oh brother, never mind).