Praise for Trading from Your Gut

105
From the Library of Daniel Johnson

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ptg
• Setup—Conditions that indicate a trade is ready to be taken.
These are often combinations of several short- and medium-
term factors.
• Triggering event—Specific event that indicates a trade
should be taken.
• Exit event—Specific event that indicates a trade should be
exited.
Now let’s look at the specific criteria for the rebound swing
method.
The Rebound Swing Method
If you want your intellect to buy into a trading method, you
need to build that method on a sound premise. Your intellect wants
you to build your trading strategies on intellectually sound princi-
ples. If you can’t articulate these principles consciously and apart
from your intuition, you will be leaving your intellect behind when
you make decisions. Without the buy-in of your left brain, you won’t
be as confident in your decisions. You want to use both intuition and
smarts in your trading.
The premise of the rebound swing method is that the market
generally moves several days in one direction after a rebound off
of clear support and resistance. Therefore, this particular swing-
trading method is particularly well suited to range-bound markets.
It is also suited for trading in the direction of the major trend during
major bull- or bear-market moves.
106
T
RADING FROM
Y
OUR
G
UT
From the Library of Daniel Johnson

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ptg
Whole-mind trading should begin with a clear vision of the
model of the ideal version of a trade. The left brain’s job is to
develop the idealized models—the idealized vision of what a “per-
fect” trade looks like. Then the right brain’s job is to find examples
that most closely fit the ideal vision. To give you some idea of how
this works, I begin with a model for the rebound swing method, and
then I show one specific example that comes close to that ideal. I
then discuss the reasons that the specific model doesn’t fit that ideal,
as well as the reasons those differences don’t matter.
Figure 6.1 shows a model for the ideal rebound swing trade.
C
HAPTER
6 • T
RADING
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MARTS