The Market Maker's Edge: Day Trading Tactics from a Wall Street Insider
"How do market makers do it? "
Even seasoned day traders occasionally find themselves marveling at the strategic skills and trading successes of today's top market makers. As they set the tone of markets worldwide, these market makers must also remain aware of key economic announcements, developing trends, and breaking news events-all while staying one step ahead of traders who are, quite frankly, out to beat them at every turn. In The Market Maker's Edge, market maker Joshua Lukeman reveals exactly how market makers maintain their edge. Drawing on the technical knowledge and experience he's developed through years of battling individual traders, Lukeman explains how market makers work, what they think, and where they consistently find the profit and risk protection opportunities overlooked by other traders. Combining market-proven technical analyses and knowledge with insights on maintaining psychological and emotional control in the breakneck world of day trading, Lukeman covers important aspects of success for a market maker, including:
- Spotting low-risk entry points
- Strategies for effectively using stop loss orders
- 5 crucial steps for determining optimal position size
- Fundamental red flags that spur institutions into action
- Scaled exit techniques to lock in maximum profit
- Essential leading indicators and how to use them
- Techniques to accurately pinpoint support and resistance
- Basic chart patterns, oscillators, and reversal indicators
- Intraday applications of technical analysis and candlestick charting techniques
- Methods to exploit profitable trading gaps
- Specific fundamental events, and how they can provide unique trading opportunities
- Advanced trading tactics including "going long the up hook", "shorting the reverse hook", and "trading the dead cat bounce"
Regardless of whether you are a scalper, swing trader, or even a buy-and-hold investor, The Market Maker's Edge is your key to foreseeing, understanding, and profiting from the little-known but effective trading tactics and methods of the competitiontoday's top market makers. It will help you dramatically increase your risk/reward ratio, time your trades with the skill and experience of battle-hardened market makers, and gain a one-of-a-kind, valuable perspective for making money in today's fast-moving, unforgiving markets.
ABOUT THE AUTHOR Josh Lukeman is an institutional Nasdaq market maker at A Morgan Stanley Dean Witter, concentrating on technology stocks. He produces a daily technical analysis bulletin, incorporating candlestick charting methods, which analyzes and interprets the movement of sectors for Morgan Stanley's OTC group. Josh was previously employed at Bear-Hunter LLC, where he traded listed stocks and futures.
Table of Contents
Preface v
PART I RISK CONTROL
1 Managing Money to Succeed As a Day Trader 3
2 Five Steps to Determine the Proper Position Size 12
3 Profit by Managing Loss 17
4 Mind Games That Propagate Financial Havoc 26
PART II UNDERLYING CONDITIONS
5 Trend Spotting Is the Key to Profits 39
6 Four Trading Signals for Spotting a Trend 49
PART III FUNDAMENTALS
7 Fundamental Catalysts 67
8 Ratio Power 74
9 Economic Indicators and Their Impact on Day Trading 82
10 Organize Your Information Flow 92
PART IV THE TRADE
11 Entry 103
12 Exit 114
13 Execution and Control 119
PART V TECHNICAL ANALYSIS
14 Candlestick Charting Techniques 137
15 Support and Resistance 161
16 Basic Chart Patterns 171
17 Oscillators and Reversal Indicators 190
PART VI THE PULSE OF THE MARKET
18 Volume 209
19 The Leading Indicators 220
Part VII ADVANCED TRADING TACTICS
20 Advanced Chart Patterns 231
21 Trading the Gap 248
22 Event-Driven Trades 260
Part VIII PSYCHOLOGY
23 The Trading Mind
271 Conclusion 285
Index 287
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