Long Term Secrets To Short-Term Trading

"knowledge" with correct data ... the truth. So here are two doses of market truths. 
Truth 1 
Buy when a market closes on or near its high; sell when a market closes on or near its low (limit up/down 
moves see a continuation of surge). 
Yes, I know, it is really tough-intellectually and emotionally-to buy or sell up or down limit moves. But 
the truth is lots of money can be made in so doing. Here, let me show you: I went into System Writer and 
asked a simple question, "If price today closed in the upper 65% of the day's range, what would happen if I 
bought on that close and exited 5, 10, 15, and 20 days later?" The results are shown in Figure 15.3. With a 
stop for protection, this information is powerful. In all markets, this basic strategy made money as the 
following table depicts. 
Even more staggering is that, as explained in an article I wrote for Futures magazine a year ago on 
candlestick charts, I took the "most bullish" candlestick formations and exited in the fashion described here. 
In the test, 
Figure 15.3 Buy S&P 500 market on close if close is above 65% of range for the day. 

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239 
none of the patterns worked across all markets. Yet, here, one simple pattern, produces profits on all 
fronts? Egad.... buying incredibly strong markets is a good habit. 
This is strange stuff. In our guts, we want to sell these strong days and buy the weak ones. You got it, we 
all like a discount. But, in this business of trading, discount leads to bankruptcy. 
If any one good habit separates the pros I know from the public, it is their willingness to buy strength. 
Bill Meehan first tried to break me of my bad habit of buying pullbacks many years ago, and I can vouch it 
does not take a person that long to unlearn. Fix into your mind that strength is power and a market needs 
power to continue its trend. 
To further get this point through our thick skulls, I will add that the best "chartist" buy signal I know of 
is when the price literally goes off the top of your chart, so you have to add chart paper. That is the ultimate 
buy. 
Truth 2 
Buy new higbs/sell new lows. 
If I had to guess, my guess would be that more money has been made by buying new highs and selling 
new lows than with any other techniques known to traders. The converse is equally true; more has been lost 
(forever and ever) selling new highs, buying new lows. 
Usually we see a new high and-if not long-decide to bypass the trade or await a pullback. That is wrong, 
real wrong as the following study reveals. This study only bought breakouts to new X day highs! It, the 
computer, did what the public and poorly "trained" trader can never do. 
This truth is confirmed by the computer. The next set of data in Figure 15.4 shows what happens if 
today's high is less than the highest high of the last X days and price makes a new high tomorrow, which puts 
us long buying a new X day high.