The Universal Tactics of Successful Trend Trading

Finding Opportunity in Uncertainty

Brent Penfold

• Publisher: Wiley
• Year: 2020
• Print ISBN: 9781119734512
• eBook ISBN: 9781119734499
• Edition: 1
• Topic: Business
• Subtopic: Trading
• Index: Business

Get a flying headstarton trend trading with this comprehensive how-to guide

The Universal Tactics of Successful Trend Trading: Finding Opportunity in Uncertainty delivers powerful and practical advice for the serious trend trader. Using the principles identified in The Universal Principles of Successful Trading, author Brent Penfold shows curious investors how to become a long-term winner with tried-and-true trend trading methodologies.

The book includes in-depth and comprehensive treatments of topics like:

· Why trend trading is so appealing

· Popular and effective trend trading strategies

· How to measure risk

· Common trend trading mistakes and how to avoid them

Investors and readers will also discover the importance of risk, and how to judge outcomes and strategies on a risk-adjusted basis.

Perfect for anyone interested in trading successfully, The Universal Tactics of Successful Trend Trading is a key strategy guide that belongs on the shelf of anyone involved in the buying and selling of financial securities.

CHAPTER 1
The Paradox

NIRVANA AND DESPAIR

Today we live within a trading paradox where it's both the best and the worst of times to be a trader.

Today we've never had it so good. With the advent of the internet, development of high‐speed wireless networks and proliferation of smart phones with even smarter online trading applications, traders can buy and sell just about any instrument, in any market, across any exchange, at any time.

When I compare it back to the early 1980s, when I thought wearing a data pager was an unfair advantage, today feels totally futuristic with all the technological wizardry available at our finger tips.

Today we have multiple online discount brokers with both web‐based and smart phone applications. We have inexpensive historical and real time data with automated trading programs. There are multiple charting programs with hundreds of indicators. We have multiple markets to trade ranging from forex to financials to commodities. We even have cryptocurrencies to trade. There are multiple instruments we can trade from options to warrants to futures to shares and CFDs.

But it does not stop at the electronic wizardry available.

Traders have never had it so good with the enormous vault of available trading knowledge. Today there are multiple trading theories to consider, multiple trading newsletters to subscribe to, multiple trading authors to read, multiple financial shows to tune into, multiple trading educators to listen to and multiple trading workshops to attend.

Really, there is no reason or excuse for a modern trader to fail. It's the best of times.

But unfortunately, it's also the worst of times.

Just ask the majority of traders. Why? Because despite the advancements made in technology and trading knowledge, the majority of traders today still lose. It's an unfortunate situation where over 90% of active traders fail. Just like they did back in the 1980s when I thought wearing a data pager was both hip and advantageous. So, for the majority it's the worst of times.

It's the paradox us traders live in.

IT'S ALSO A CONFUSING TIME

Not only is it the worst of times but it's also a confusing time. It seems the world excels in confusion and uncertainty. It throws up so many questions with few good answers.

Whenever I try to puzzle out the world's riddles I usually end up with a sore head. Who knows the answer to the big macro issues? I don't think anyone really does. I mean who knows for sure whether the European Union will hold together? Who knows whether the United States will get hold of its debt and deficit? Who knows whether China will return to trend growth? Who knows whether Japan will find a resolution to its demographic struggles? Who knows whether the world will return to normalcy following the Coronavirus pandemic? And who knows if central banks will normalize monetary policies or keep supplying their opioid cocktail of cheap and abundant money? Will they continue to enable the market's liquidity‐drug‐addicted dependency or will they restore risk to its previously respected and proper pedestal? I certainly don't know.

But the questions don't stop at the macro level. They also mount up at the micro level, where trading throws up its own avalanche of questions.

Out of the hundreds of markets available which ones should we trade? Should we trade local or international markets? Should we trade consumer discretionary, consumer staple, energy, financial, health care, industrial, information technology, materials, metals, mining, telecommunication, utility or commodity markets? Within each market segment which individual businesses or markets should we select?

But the questions don't stop there.

Which instruments should we trade? Shares, options, warrants, contracts for difference or futures?

Should we use fundamental or technical analysis or a combination of both? If it's technical analysis, should we use cycles, patterns, indicators, astrology, geometry, Dow Theory, seasonals, Market Profile, Elliott Wave or WD Gann? Just to mention a few.

As I said, so many questions, and they don't stop.

Are the markets bullish or bearish? Should we trade with or against the trend? Should we be a short‐term, medium‐term or longer‐term trader? How much should we risk? Where should we enter, place our stops and exit?

As I said, there are so many questions to answer. Is it any wonder that so many traders today are so confused?

HOW I CAN HELP YOU

Well I'm here to help you.

But an important qualifier before I do. I need to let you know that I don't know everything there is to know about the markets. I wish I did, but I don't. When I was younger, I thought I knew everything there was to know. As I've got older, I've got wiser! So, to be up front I have to tell you that it's an unfortunate truth that after 35+ years in the markets, and ten years since I wrote The Universal Principles of Successful Trading (hereafter, UPST), I still don't know everything there is to know about trading and the markets.

However, I know you're looking for answers.

What I can do is share part of what I do. And I do make money trading. So, what I can tell you is this. If I can make money trading, so can you. If I can make 20–30% annual returns with manageable risk, so can you. And that is the important word, manageable. I'm not some amazing trader with unique and exclusive knowledge. No. I'm just like you. I may have more experience and more market scars then you, but I'm still normal. I'm no special trader with Marvel super hero powers or insights. I'm just an ordinary person who has gained some knowledge with a lot of experience along the way.

So please believe, despite what your experience has been so far, that it is possible to trade successfully.

HOW TO TRADE SUCCESSFULLY

I'm writing this book for one reason and one reason only. To show you how to make money trading with the trend. Put simply, profitable trend trading is dependent upon the understanding and acceptance of the universal truth and universal principles of successful trading. You will need to read, comprehend, embrace and execute the universal truth and principles of successful trading. If you get the universal truth and principles right the profits will follow. They have to. Ignore them and you'll continue to struggle. Period. No discussion. No ifs. No buts. No excuses. This applies to all traders in all markets, across all timeframes and all instruments.

For the universal principles of successful trading you will need to read my previous book, UPST.

For the universal truth you will need to read Chapter 2.

SUMMARY

Despite it being both the best and worst of times to be a trader, I believe there is a safe pathway forward to help you navigate your way towards a sensible destination. A pathway that will go a long way to answering many of the confusing questions we traders have to answer each day. A pathway that will allow you to find opportunity in uncertainty. A pathway that I hope, even with my limited knowledge, will lead you to a rewarding position of sensible sustainable trading. That pathway will commence in Chapter 2, where I want to share with you a number of key messages.

CHAPTER 2
Key Messages

Those that fail to learn from history, are doomed to repeat it.

Winston Churchill (1874–1965)

I want you to learn from my experiences. If I can help you avoid the mistakes others (and I) have made in the past then I will certainly have helped you along your pathway towards sustainable trading. I just need to get my thoughts down in a coherent order. Wish me luck.

It's well accepted knowledge that over 90% of active traders lose. To avoid the same fate, it's important for you to know and to remember...

Table of contents

• Cover
• Table of Contents
• ACKNOWLEDGEMENTS
• PREFACE
• INTRODUCTION
• CHAPTER 1: The Paradox
• CHAPTER 2: Key Messages
• CHAPTER 3: The Appeal of Trend Trading
• CHAPTER 4: Why Do Trends Exist?
• CHAPTER 5: Why Do So Many Fail?
• CHAPTER 6: Strategies
• CHAPTER 7: Measuring Risk
• CHAPTER 8: Moving Forward
• CHAPTER 9: Back to the Future
• APPENDIX A: Literature on Trend TradingLiterature on Trend Trading
• Index
• End User License Agreement