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STUDY GUIDE FOR Come Into My Trading Room
A Complete Guide to Trading
You can read Come Into My Trading Room: A Complete Guide to Trading in a few days, but you cannot expect to master every aspect of that invaluable book until you work through it. Study Guide for Come Into My Trading Room: A Complete Guide to Trading will help you learn the profitable methods and techniques of Come Into My Trading Room before...
STUDY GUIDE FOR Come Into My Trading Room
A Complete Guide to Trading
You can read Come Into My Trading Room: A Complete Guide to Trading in a few days, but you cannot expect to master every aspect of that invaluable book until you work through it. Study Guide for Come Into My Trading Room: A Complete Guide to Trading will help you learn the profitable methods and techniques of Come Into My Trading Room before risking a dollar in the markets.
Study Guide for Come Into My Trading Room: A Complete Guide to Trading parallels the actual book, challenging you at every step with questions that make you focus on all the important areas of trading. Some tests are pencil-and-paper, others have you work with charts, but all prepare you to make crucial decisions.
This Study Guide will:
The best trading strategies, techniques, and tools are only as good as your understanding of them. Pick up this Study Guide for Come Into My Trading Room: A Complete Guide to Trading and convert Dr. Elder's methods into your own powerful and profitable tools.
Study Guide for Come Into My Trading Room.
How This Book is Organized.
Part One: Questions.
1. Financial Trading for Babes in the Woods: Questions 1 8.
2. Mind The Disciplined Trader: Questions 9 18.
3. Basic Charting: Questions 19 23.
4. Indicators Five Bullets to a Clip: Questions 24 39.
5. Trading: Questions 40 47.
6. Day-Trading: Questions 48 53.
7. Advanced Concepts: Questions 54 67.
8. Money Management: Questions 68 82.
9. The Organized Trader: Questions 83 100.
Part Two: Answers and Rating Scales.
1. Financial Trading for Babes in the Woods: Answers 1 8.
2. Mind The Disciplined Trader: Answers 9 18.
3. Basic Charting: Answers 19 23.
4. Indicators Five Bullets to a Clip: Answers 24 39.
5. Trading: Answers 40 47.
6. Day-Trading: Answers 48 53.
7. Advanced Concepts: Answers 54 67.
8. Money Management: Answers 68 82.
9. The Organized Trader: Answers 83 100.
Part Three: Let s Trade: Case Studies and Questions.
Part Four: Let s Trade: Answers and Ratings.
The Road Ahead.
About the Author.
Trading is serious business, no less so than building a house or teaching calculus. Being smart and having good ideas is not enough for winning. You must understand the mechanics of the markets and the essential principles of analysis and risk control.
You need to learn the key facts and rules before entering your first trade. The first chapter of the Study Guide tests your knowledge of some of those concepts. Answer these eight questions and write down your answers. Go to the Answers section, check your responses, and then enter your grade for each answer in the first column of the spreadsheet. There are five columns to enable you to return at a later date, retake the test, compare your results, and measure your progress.
Question 1-Decision Making
Match the statements on the decision-making process with the type of trader.
1. A person hears a tip at a party and buys that stock in the morning.
2. A person hears a tip at a party and spends the next morning researching that stock and the industry group.
3. A person hears several people gossiping about a stock at a party and pulls it up on his computer with a view to selling it short.
4. A person sees a TV show about a famous investor and buys the stocks that he mentions.
5. Aperson reads a news release regarding disappointing earnings from a high-tech company and pulls up its chart the next day to see how it reacts to the report.
6. A person buys a stock after receiving a call from a relative working for a penny stock company who tells him of that firm's technological breakthrough that has not yet been disclosed to the public.
Question 2-Efficient Market Theory
Which of the following statements regarding the efficient market theory are true and which are false?
1. All traders focus on maximizing profits and minimizing losses.
2. The outcome of any single trade is largely a matter of luck.
3. A trader whose account has increased after a year of active trading is very lucky.
4. Trading in a room with a group of people leads to more objective decisions.
5. Markets become more efficient when they become less volatile.
Question 3-Trading Choices
Match the following statements with the trading terms:
1. Finding these points is the hardest aspect of trading.
2. Buy when a rally accelerates, and sell when it starts losing speed.
3. These must be planned in advance; do not chase the markets.
4. This is the most often ignored aspect of trading.
5. Buy when a downside breakout starts pulling back up into the range, and liquidate within the range.
A. Countertrend trading
C. Money management
D. Momentum trading
Question 4-Stocks, Options, and Futures
Match the following statements with one or more of the trading vehicles.
1. The buyer must be right on the vehicle, price, and time.
2. This is a certificate of business ownership.
3. Money management skills are essential for success.
4. This is a contract for future delivery.
5. It's OK to buy cheap, but not OK to buy down.
Question 5-Barriers to Winning
Match each statement with one or more of the external barriers to winning.
1. They impact your account more than market trends.
2. They must be monitored so as not to exceed a small percentage of your account.
3. This is the distance between the price at which you place a market order and at which it is executed.
4. This is a meaningless percentage of your account.
5. This is an inevitable cost of entering markets.
Question 6-Account Size
Five traders with similar levels of skill and all using stops enter the stock market. Which is likely to generate the highest percentage return?
1. $50,000 account; $5,000 maximum stop on any trade
2. $15,000 account; $1,500 maximum stop on any trade
3. $250,000 account; $50,000 maximum stop on any trade
4. $50,000 account; $1,000 maximum stop on any trade
5. $250,000 account; $5,000 maximum stop on any trade
Question 7-Market Data
Which of the following statements are true?
1. Real-time data is essential for timing entries and exits.
2. The more markets you follow, the more money you will make trading.
3. You must keep abreast of earnings reports for the stocks you follow.
4. Futures can sell for less than the cost of production.
5. Having 12 months' worth of daily charts makes weekly charts unnecessary.
6. Good software makes up for traders' inexperience.
A. 1 and 2
B. 2 and 3
C. 3 and 4
D. 4 and 5
E. 5 and 6
Question 8-Types of Analysis
Match each phrase with the types of analysis.
1. Studies economic supply and demand
2. Forecasts future prices
3. Studies crowd behavior
4. Can be fully automated
5. Serves as a basis of trading decisions
A. Fundamental analysis
B. Technical analysis
Excerpted from Come Into My Trading Room by Alexander Elder Excerpted by permission.
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