Jea Yu - Simple Profits from Swing Trading: The UndergroundTrader Swing Trading System Explained

Contents

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Copyright 2014 by Jea Yu. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

The First edition of Simple Profits from Swing Trading: The Underground Trader Swing Trading System Explained, published by Marketplace Books 2011.

Published simultaneously in Canada.

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ISBN 9781118770917 (ePDF)

ISBN 9781118770849 (ePub)

To Katana, for always being my greatest inspiration ,

salvation, and foundation.

Preface

The Underground Trader embodies the simple theme of starting from the surface and drilling our way down , rather than the conventional working our way up from the proverbial ground floor. This is how we organically attain depth of knowledge that leads to enlightenment. In this minus sum game of trading, the only way to keep profits is by going against the majority. This takes unconventional methods that have been meticulously developed through thousands of hours of hands-on participation, not just back-testing.

While the title of this work emphasizes swing trading, we have included the core methods and tools that are used intraday for executions and trade management in the first section in the book, The Underground Trader Trading System Exclusive Quick Start Guide. These are the core charts, patterns, and methods that make up the execution and technical analysis portion of the system. Once you have built that foundation, then its time to engage in applying that to the swing trading in the second section, Swing Trading and The Underground Trading System , which extrapolate the basic system to wider time frames that are also tempered with key fundamental analysis methods.

Successful swing trading requires sharp fundamental analysis integrated with strong technical analysis, trade management, and execution skill sets. This book is designed to enhance those specific skill sets and nurture your development in the game of swing trading. Take it slowly and absorb the information at your own pace. Embrace the enlightenment.

The mechanics behind the Underground Trader trading system may seem overwhelming in the beginning. For this reason, we have put together a quick and dirty start-up guide.

Before we get started, take a look at these two series:

Which is an example of convergence also known as aligned, uniformed, and congruent?

Think fast. If you picked 1, then you are correct.

Now spot that same series in the following:

A little more difficult this time, eh? The correct answer is 1 as well. What makes this more difficult is the background noise.

The first has the same > > > > convergence, but its camouflaged within the context. The second and third have just as much noise and get close but not the series pattern we are looking for. If you can distinguish between the three series, then you are already off to a good start because this is what happens in the markets every single day. We are constantly trying to filter through the noise to spot the convergence pattern .

Most trading books and courses focus on particular patterns that historically have high probability results. Often, this is backtested to confirm the validity, effectiveness, and so forth. Yet, when the average trader or investor takes the signals, the results usually do not live up to the expectations. They look good on paper, but in reality, it feels like a coin toss. Does this mean the pattern is ineffective?

Let me pose this question in another light. Does a rifle have the potential to kill a deer? Yes. Can a rifle be used to kill a deer in the woods? Yes. Can that same rifle be used underwater to kill a shark? No. Why? Because you cant use a rifle underwater! Bingo.

Does that make the rifle insignificant as a weapon? No.

The key is the environment in which the rifle is being used, right? No one will dispute the deadly capabilities of a rifle in the right hands and the right environment. Common sense tells us this. If we extrapolate that thinking to trading, then you should see why methods and patterns are effective only when used like a weapon/rifle in the right environment.