Praise for Trading from Your Gut

CSCO (Cisco Systems, Inc.) Nasdaq GS
17-Aug-2009
Op 20.94 Hi 20.96 Lo 20.68 Cl 20.73 Vol 32.4M
Chg -0.58 (-2.72%) 
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CSCO (Daily) 20.73
FIGURE 6.4
The second rebound swing trade for CSCO
The old adage “Cut your losses short and let
your profits run” holds true even for
shorter-term swing trading.
Although this is very simple and easy to understand, notice how
the exit strategy of placing a stop just below the previous day’s low
after the price moved about halfway to the resistance would have
kept you in the entire move from about $18.50 to $21.75, for a profit
of about $3.25. Very simple swing-trading methods are similar to
this. They generally won’t turn out this well, but you will be able to
ride a few big swings when the market moves your way while you are
in the trade. The occasional large profit such as this one is not
From the Library of Daniel Johnson

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required for you to be successful in your trading, but it shows why
the old adage “Cut your losses short and let your profits run” holds
true even for shorter-term swing trading.
I have shown my personal rationale for one method and how
you can use right-brain intuition in trading a specific method. In
Chapter 7, “Simplicity and Speed: Training to Be a Master,” I show
how you can practice with intention to train your right brain to per-
form more effectively. In particular, I examine the “fuzzy” aspects of
the rules for the rebound swing method and show how you can use
your right brain to quickly analyze other “fuzzy” concepts. Your right
brain was built for it.
C
HAPTER
6 • T
RADING
S
MARTS
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From the Library of Daniel Johnson

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From the Library of Daniel Johnson

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119
CHAPTER 7
Simplicity and Speed: Training
to Be a Master
“Excellence is an art won by training and habituation.
We do not act rightly because we have virtue or
excellence, but we rather have those because we have
acted rightly. We are what we repeatedly do.
Excellence, then, is not an act, but a habit.”
—Aristotle
From the Library of Daniel Johnson

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Richard Dennis—at the very height of his fame for having
turned $10,000 into an estimated $200 million—gave 12 strangers
only two weeks of training in his methods in year one of the Turtle
experiment. Then after only 20 days of practice trading—for many
of us, it was the only trading we had ever done—he gave us millions
of dollars of his money to trade. The following year, he again trained
some new traders, but he reduced the training to a single week. The
amount of left-brain knowledge that one can impart in a single week
is fairly limited. Dennis obviously did not believe that trading was
complicated.
The lessons he taught us in the class can be boiled down to four
simple rules: