Introduction

Trend Trading for a Living presents a nuts and bolts approach to technical based trading over any time period. Dr. Carr does a fantastic job of highlighting the issues with more traditional investing methodologies, and points out how Trend Trading addresses these flaws. The book opens with a poignant story detailing his experience with fundamental analysis / buy and hold investing methods. After spending several days researching he made a value investment play on a small technical company. He had studies the management team, the product pipeline, and all of the other important fundamental aspects of the company, and determined it was a strong value play.

Sadly for Dr. Carr, the investment was in the wrong sector, and 5 months after making this investment, the stock went from $5 to less than a buck, and was delisted from the Nasdaq, before finally going bankrupt. After several other stories, he mentions a trade in which he decided to stick to the buy and hold mantra with Qualcomm. 3 weeks after betting what little was left of the farm on Qualcomm, it dropped 40%. He stuck to his guns and held the stock for 6 more months, selling his entire holdings for just under break even… Less than 12 months later, Qualcomm shot up 2500%!

Trend Trading Guiding Principles
From his buy and hold experience, Dr. Carr came up with 3 core principles that guide the rest of his trading plan:

• Don’t trade on chat room tips
• Don’t trade on news reports
• Don’t trade on economic or business forecasts

I’d also like to add another rule along those same lines: Don’t trade on analyst forecasts or up / downgrades!

The book discusses that fundamental analysis depends on an almost infinite number of macro and micro economic inputs, which in total, are impossible for anybody to track. Of course the epiphany occurs when the trader comes to the single realization that everything a trader needs to know about a company’s future prospects are already reflected in the price of it’s shares!

Accepting this simple premise upon which technical analysis foundation has been built led to the creation of the Trend Following, or “Befriend the Trend” system. The system attempts to maximize profits by only trading very specific chart patterns and setups.

Highlights

The two chapters in the book that I liked most describe how to determine the overall market trend, and then shows you how to find great trades in bullish, bearish, and sideways markets. Each chapter gives 5 trading plans that include detailed stock screens, and technical indicator setups to follow. I have actually implemented my own technical stock screens based on these trading plans and have found them to be quite profitable.

Recommendation
The book covers many of the core concepts necessary to actually implement a technical analysis based trading plan. The book doesn’t delve deeply into the actual indicators themselves, which I found refreshing as reading the same old information gets quite boring.

All in all I would highly recommend this book to traders who have at least a core understanding of technical analysis principles. The methods and tactics are certain to teach you something new which you can incorporate into your trading methods.

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