Good trades begin and end with money management. The 6% Rule tells you whether you may put on a trade in the first place. Then, before you place an order, the 2% Rule tells you the maximum size allowed for that trade, based on the distance from your entry to the stop. Sandwiched between those rules is td sequential market analysis. Here, in this chapter, I want to illustrate the analytic process for you.

Shocking but true, most people who write books on trading do not trade. In putting together their books, they rely on the power of well chosen hypothetical examples. The only people obligated to disclose their track records are money managers. I'm trading my own money and feel no need to lay my full accounting open to curiosity seekers. Still, you trusted me enough to buy this book. Since all trust is mutual, I want to reciprocate by showing you some of my trades.

Here are a few trades I executed in recent months. It is important that all of them have already been closed out. One of the worst things a trader can do is reveal his open trades, putting his ego on the line and gumming up the decision-making process. Completed trades are history, from which we may learn.

These charts show how one forex trader makes his buy and sell decisions. Mine are based primarily on Triple Screen trading system-making strategic decisions in the longer timeframe and tactical decisions td sequential in the shorter timeframe.

Whenever I put on a trade, I print out its charts and mark key signals that prompted me to act. Whenever I close a trade, I print out its charts again and mark up those signals that prompted me to exit. I may write a few lines on how I first became aware of a potential trade, how I felt entering and exiting, and so on. I try not to write a dissertation on every trade, and record only the key factors, aiming for speed and brevity.

My journal, a hard-cover spiral-bound album, sits on a bookshelf in my trading room. I sometimes come into that room in the evening, sprawl in an armchair, and review my trades, one after another. Some pages are pleasant, others painful, but all are educational.

As you go looking for trades, please do not feel as if you have to find the same patterns as shown here. This is just a brief excerpt from one man's diary-a few of the trades made in recent months. Also, trading is intensely personal, with different people reacting to different aspects of the game. There are many ways to make money trading stock in the markets and even more ways to lose it. My main purpose in showing you a few pages from my diary is to prompt you to begin documenting your trades in order to learn from your own experience.

EXCERPTS FROM THE DIARY

Charts in my trading diary are printed in color and marked up by hand. Comments, written on margins, are telegraphic and abbreviated. In preparing this manuscript for publication, I had to print those charts in black and white rather than color, while slightly expanding my comments of td sequential to make them easier to understand.

Showing strangers your trading diary feels almost like inviting them into the bedroom during an intimate moment. As we grow older, we care less and less about what others think of us; I do not believe I could have shown you my diary just a few years ago.

The key question is, What are you going to do with it? Will you casually flip through the pages? Will you go through them slowly, evaluating each trading signal? Will you feel overwhelmed? Will you feel critical, especially of trades with less than perfect scores? Before I turn my records of six recent trades over to you, I have just one question. Will you be keeping your own diary? If my example has inspired you, I will have achieved my goal.

YOUR NEXT TRADE

It took me twenty years of trading and three years of writing to complete this book. The work was hard, but I enjoyed the journey. Reading must have been hard work for you, especially if you studied this book and did not just skim. I wrote on several levels, and it will probably take you more than one reading to grasp all its ideas and concepts. Expect to return and review sections of this book in the months and years ahead, as your expertise grows and new questions emerge.

We spent a lot of time together, but now our paths diverge.

I've accomplished what I wanted, summarized my ideas on trading. Liberated from the word processor, I am off to pursue my passions, espe cially trading and travel. I will spend more time in front of the screen, travel to faraway places, and if they have good Internet connections, I'll trade from there, combining my interests.

What will you do?

You had your lessons in psychology, technical analysis, money management, Demark td sequential, and record keeping. If you are serious about success, start applying what you've learned. You have your work cut out for you.

Your first task is to set up a record-keeping system. Keeping records is like looking in a mirror while shaving with a very sharp blade. You're safer if you look. Hammering on this topic reminds me how I once sent a patient to AA who told me that those meetings ruined him as an alcoholic. Getting drunk could never be fun again. Keeping records will do the same for you-it will immunize you against impulsive gambling.

Your next step is to set up a money management plan. Follow that by writing down your trading plan, a decision-making tree, td sequential. Once you do that, you'll be moving in the direction opposite to the majority of the trading public. Test everything you read in this or any other book. Only testing can make any method your own.

Those who concentrate on the rewards, which are considerable, often push themselves too hard. It is better to trade small in order to be more relaxed and enjoy the learning process of td sequential. Then you will emerge not only richer, but also more alert, aware, free, and at peace with yourself.

I have traveled this road, made my choices, and battled my demons, growing from a wide-eyed beginner into someone who knows what he is doing. The journey had many rough stretches, but both the trip and the rewards are worth it.

Closing this book does not mean having to say good-bye. If I continue to run my Traders' Camps, you may come to spend a week during which we'll work on trading together. All new ideas in this book have first been presented to my campers, to whom my work is dedicated.

In writing this book I gave you my best and did not hold anything back. I hope you will give all of yourself to becoming a good trader. I now return to my trading room and wish you success in yours.