This is a book about a comprehensive and modular trading approach that I have found to be prudent and highly effective. It is about the PRACTICAL application of Fibonacci ratios to investment markets. In order to implement these Fibonacci based strategies successfully, a considerablefoundation and structured context must be put in place. The text contains 15 information-packed Chapters, a comprehensive set of Appendixes, and Reference material, as well as an orientation in the form of a Preface. Fibonacci techniques are not taught until Chapter 8, so that the ground work can be properly laid. If you choose to gallop ahead, it is my hope that you have already formulated a comprehensive context in which to use the powerful leading indicator techniques, referred to herein as DiNapoli Levels.

GENERAL DISCUSSION:

Judgmental approaches call upon the trader to make decisions within a given criteria or context, while non-judgmental systems are strictly mechanical.

The trading methodology I use involves judgment. It's the way I like to trade. I believe judgmental techniques have inherent advantages over non-judgmental techniques. Flexibility as inspired by the human mind, and the speed with which necessary adjustments can be made to respond to changing market conditions are two of the strongest reasons to trade using judgment. I know from teaching however, that many of you have preconceived notions about different approaches to trading that are inconsistent with reality. Since achievement in any field first involves some fundamental understanding, Tthought it might be in your best interest to spend a little time looking at certain realities of basic trading approaches. First we'll go through a reality check, then some history, so you can see why and how I have reached certain conclusions. We'll consider judgmental vs. non-judgmental trading methods then position vs. intraday trading approaches.

REALITY CHECK:

The Beach Boys had a song many of you should remember that began, " Wouldn't it be nice ...." It extolled the virtues and fun of constant companionship, where lovers could skip through the daisies to the never-never land of untold bliss. After not so many years, some of the Beach Boys themselves had to face the realities of married life, legal hassles in divorce court being one. Some who have avoided such a fate would privately admit that their former soul mates have become little more than dents in the bed next to them.

Are things always that bad between expectation and reality? Of course not. With enough effort, we can hopefully end up somewhere in between. Likewise, such is the promise of both judgmental methods and non-judgmental trading systems. Let's look at non- judgmental trading systems first.

NON-JUDGMENTAL APPROACHES:

WOULDN'T IT BE NICE...

1. Once you have the development in place, your research and your work is over. Your trading system is fixed, stationary, and immutable. Stress is non-existent since the decision-making process is out of your hands and in the purview of a machine. Thorough and precise (hypothetical) testing techniques have left little to chance. Everything has been taken into consideration so your confidence is strong.

2. You can arrange for signals to be implemented by a hired trader or broker and thereby avoid the tedium of monitoring the markets yourself.

3. "It" - i.e. the "system," the "program," the "solution" - can generate an ' adequate income flow which will enable you to go to Fiji and stick your toes in the sand. Perhaps "it" can even pay the alimony and child support while you find a new soul mate to take the place ofthe dent in the bed.

THE REALITY...

1. The work never ends. When system historical extremes are exceeded, you're back to tweaking, testing, and massaging the parameters.

1 A. In fact, you better have two independent systems, or maybe three, or four, to even out the equity swings. Oh yes, there will not only be some tweaking and massaging, it's more likely that outright replacement of a system or two will occur, as one or the other goes sour altogether.

1B. What about stress? You don't know stress until you experience pervasive impotence. You feel utterly helpless to effect results as you watch your system(s) dictate one absurd order after another. You just know that profit is going to evaporate and go to a loss. When that happens, you can't do anything but watch and obey the signals it generates. Hey Mack, pass the Maalox®, NOW!

1C. You learn that the $100 for slippage and commission you thought was extravagant, was in fact sorely inadequate. You forgot about limit moves, 40 tick runs without looking back, worst possible fill situations and.... The data you did the testing with was thought to be okay, but really wasn't all that good. Your confidence in your testing techniques is hitting new lows along with your account size.

•  The broker you have executing the trades seems to be missing entries on
some of the biggest moves and ... why couldn 't he get that stop right! Or,
the trader you hired can't help but put his vast experience (one year) to
work "improving" what you have struggled so long to perfect.

•  The only way to get enough capital to properly fund four systems over
the 15 futures contracts you have found necessary to trade for adequate
system diversification, is to take in, and manage money. Now you have
disclosure statements, CFTC (Commodities Futures Trading Commission)
oversight, a staff, and more NFA (National Futures Association)
compliance issues than you ever dreamed existed. You thought a
corporate tax return was hard to comply with? Now the manure is so
thick, you wonder if the daisies you planted will ever have an opportunity
to germinate, much less see the light of day.