CONTENTS
Acknowledgments
Foreword
Chapter 1: Opening Thoughts
Section One: Momentum Continuation Patterns
Chapter 2: Hot IPO Pullbacks™
Conclusion
Chapter 3: Flat-Top Expansion Breakouts™
Conclusion
Chapter 4: Reversal New Highs Method™
For Buys (Sells are Reversed)
Conclusion
Chapter 5: Intraday Relative Strength Trading Strategy™
Conclusion
Chapter 6: Extended Level Boomers™
Conclusion
Chapter 7: Non-Adx 1-2-3-Pullbacks™
Conclusion
Chapter 8: Jack-in-the-Box Strategy™
Rules For Buys (Short Sales are Reversed)
Conclusion
Chapter 9: V-Thrusts™
Conclusion
Section Two: Advanced Stepping in Front of Size™
Chapter 10: Stepping in Front of Size on New Highs and New Lows™
Conclusion
Chapter 11: Stepping in Front of “Substantial” Size™
Conclusion
Chapter 12: Offering Knockouts—An Advanced Stepping in Front of Size™ Strategy
Conclusion
Section Three: More Reversal Strategies
Chapter 13: Expansion Range Double Sticks™
Conclusion
Chapter 14: Boomerangs™
Conclusion
Chapter 15: Iguanas™
Conclusion
Section Four: Techniques of a Professional Trader
Chapter 16: Maximizing Profits With Trailing Stops
Conclusion
Chapter 17: When to Hold ’Em and When to Fold ’Em
Conclusion
Chapter 18: Preparing for Daily Battle
Conclusion
Chapter 19: The Education of a Stock Trader
Chapter 20: The Best of My Learning Sheets
Chapter 21: Concluding Remarks
Appendix
About The Author
Copyright © 2004 by Jeff Cooper
Published by John Wiley & Sons, Inc., Hoboken, New Jersey
Published simultaneously in Canada
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For Bridget
“Jeff’s methods have proven to be very successful. Anyone interested in the workings of the market would be well served to read this book. As one develops more skill they will find themselves going back over the patterns, to reread and relearn the material to better hone their trading. Jeff has truly taken pattern recognition to a higher level.”
— Bill Abrams, former specialist, New York Stock Exchange
ACKNOWLEDGMENTS
I would like to thank David Reif, my partner at Mutual MoneyFlow Management (www.mutualmoneyflow.com); TheStreet.com for their support and for offering a continuing venue to express my ideas; to Jaye Abbate, Kate Clark, and Chris Myers for all of their efforts in guiding this book back to the marketplace; and to Ruth Roosevelt for her insight.
FOREWORD
It has now been 18 years since Jeff and I met. The main thing we have in common was that we both have a voracious appetite for knowledge about the markets. I was a broker at Prudential Bache Securities in 1986 when we first met. I could tell you some hilarious stories, but this is not the time for that. I have forgotten the circumstances of our meeting, but we soon became fast friends due to the passion we shared in searching for the “magic bullet” that would make us king of the stock market mountain. I laugh when I think about the hundreds of hours I spent running an Apple II Computer searching for the “ANSWER”. We both read every book that came out about the market and spent hours discussing the contents of them. In the end, we both learned there was and is no magic bullet and that we had to learn to read what the price action was saying all by itself.
In late 1986, after a brief illness I decided to learn how W.D. Gann plotted the swing charts he showed in his books. I read everything he wrote and studied all of his courses, but could not find any “directions” for plotting the chart. Since my doctor ordered me to stay at home, I had the quiet time necessary to figure it out. I was so taken by what I discovered that it changed both my trading and personal life. I began plotting the NYSE Index and the NASDAQ Composite soon thereafter, and watched the behavior of the price chart as I plotted each time frame (Daily, Weekly, Monthly, and Yearly.) I soon learned how one time frame could hand off its message to the other and how price could setup “cascade” moves both up and down. It was my way of discovering Multiple Time Frame Analysis. I soon taught Jeff these new ideas, and he has since taken them to a whole new level. We have since discovered that the principles we learned about the standard time frames work on ANY time frame, including 10 minute bar charts. Jeff has focused on the daily and intraday picture for years now and as a result is now teaching the teacher new tricks. You know how they say; a ten-year-old dog is really 70-years old? Well, Jeff has at least two hundred years experience reading and interpreting 10 minute and daily swing charts. I can’t keep up with him!
Jeff is one of the only people I know who has made his living trading the markets. Over the years, he has taken the Gann concepts of the Square of Nine, my Swing Chart Method, and Multiple Time Frame Analysis to improve his own trading. Through hard work and dedication to his trade, he has developed numerous patterns, which he has described in detail in his Hit and Run Trading books. He has been writing daily comments about the market since 1999 and has been able to catch the majority of the major swings the market has made since that date. Jeff’s approach is unique in that, he does not use the plethora of oscillator type indicators used by most technical analysts. He, like me, believes that the study of price and time is all you need in order to be successful in the markets.
In February of 2004, Jeff became a partner in our money management firm, Mutual MoneyFlow Management (www.mutualmoneyflow.com). We are now putting to work all of those “dog years” of experience in order to improve the returns of the firm’s clients.
—David C. Reif, CMT
August, 2004
When I sat down to write Hit and Run Trading a few years ago, I had no idea it would have such an impact. I knew there was a lack of information available for short-term equity traders. I did not know that so many thousands of traders were craving this information.
I have heard the good and bad about my first book. The bad stemmed predominately from the few people who hoped to turn $5,000 into millions. That is never going to happen with my strategies. The good came from the many traders who have taken the strategies and grown their accounts. An extreme example was told to me recently by a senior executive at a major discount brokerage firm. He stated one of their customers, using only one strategy from the book, has grown his account from $30,000 to over $300,000 in 24 months. This performance is astounding and I could only hope for it to happen to me someday!
Hit and Run Trading is about momentum trading. It is about climbing aboard strongly trending stocks in order to make fast profits. It is also about taking very small risks. This is done with tight protective stops. Recently, Gary Smith from TheStreet.com traded my method and stated in his review:
Jeff’s come up with a winning methodology. He only takes a position if momentum reasserts itself and while the maximum loss he incurs is 1 point, the maximum profit is unlimited. Stack those odds in your favor and you should get exactly what I found: more wins than losses, and the average win being greater than the average loss.
Gary is exactly right in his analysis. By risking small amounts in order to hopefully make larger amounts, the odds do get stacked in your favor.
Hit and Run Trading II