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Trading the Measured Move


Trading the Measured Move

A Path to Trading Success in a World of Algos and High Frequency Trading
by David M. Halsey 

Wiley, 2013

"The biggest dangers in our markets are in many ways self-inflicted. The danger exists when trades are chased instead of planned. There is a trader's saying that says, 'You never get smarter once you are in the trade.' Traders are at their best when they are planning the next opportunity."
Trading the Measured Move

Written for retail traders trying to find profits in an environment filled with institutional logorithms and high-frequency trading, this book offers a methodology based on Fibonnaci-based measured moves and market internals specific to each trading instrument. These are tools commonly used in program trading by traders using quantitative analysis of technical data, or "quants." And by learning to use the same tools as the quants, retail traders stand a better chance of being successful participants.

Technical traders, securities analysts who seek to identify price patterns and market trends in financial markets and attempt to exploit those patterns, believe Fibonacci indicators give them an edge in their investments.





Fibonacci

"Leonardo Pisano Bigollo was a brilliant mathematician who lived in thirteenth-century Italy. Like many of his time, he was known by several different names, the most famous of which is Fibonacci (fib-buh-NAH-chee)."

During his lifetime, Fibonacci was widely known for his Book of Calculation, in which he discussed a series of numbers we now call the Fibonacci series where each number in a set is the sum of the two preceding numbers, such as 3, 5, 8, 13, 21, 34, 55, 89... 

Dividing a number in  the series by its preceding neighbor results in a number close to 1.618, which is widely known as the Golden Ratio, a mathematical anomaly that carries considerable significance when applied to price movements in the world of stock trading.

A "Fibonacci retracement," for instance, measures the distance between two extremes of a stock price and divides that range by key ratios like .618 to predict its future in a series of "measured moves." Fully Automatic Visual Fibonacci Indicator for Forex and Commodity Trading in Metatrader Mt4

As Halsey explains, "Markets set up in a series of measured moves and continue in a trend of either rising or falling prices until the series of MMs fails... All series of MMs fail eventually, at which point a change in trend occurs, also known as a price reversal."

Never mind monetary policy or product innovations or the effectiveness of corporate management, this level of stock trading is strictly technical and numbers-based, and it dominates world trading in the 21st century. This book provides a methodology for the individual investor to use in picking entry and profit targets, managing stops, and pursuing profits in currency and day trades especially.



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Book of Calculation
Fibonacci, his numbers and his rabbits

Book of Calculation
Fibonacci's Liber Abaci

 Translation into Modern English of Leonardo Pisano's Book of Calculation






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