Van Tharp - Trade Your Way to Financial Freedom.pdf

TRADE YOUR WAY
TO FINANCIAL FREEDOM
Foreword by David Mob& Sr. xiii
Acknowledgements xvii
VAN K. THARP
Preface xxi
PART ONE
THE MOST IMPORTANT FACTOR
IN YOUR ESS: YOU!
The Legend of the Holy Grail 3
The Holy Grail Metaphor 6
What’s Really Important to Trading 9
Modeling Market Geniuses 11
Summary 14
chapter 2
Judgmental Biases: Why Mastering the Markets Is So Difficult
for Most People 17
Biases That Affect Trading System Development 20
Biases That Affect How You Test Trading Systems 35
Biases That Affect How You Trade Your System 38
Summary 41
Chapter 3
__-
Setting Your Objectives 45
Designing Objectives Is a Major Part of Your System Work 47
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Tom Basso on Objectives 48 Chapter 6
Setting Your Own Objectives 57 Understanding Expectancy and Other Keys
to Trading ess 130
PART TWO: The Six Keys to Investment ess 130
The Snow Fight Metaphor 133
CONCEPTUALIZATION OF YOUR SYSTEM Looking at Expectancy under a Magnifying Glass 137
Expectancy and R Multiples 143
Chapter 4
Expectancy Applied to the Market 148
Steps to Developing a System 61 Using Expectancy to Evaluate Different Systems 152
1. Take an Inventory 61 A Review of How to Use Expectancy 158
2. Develop an Open Mind and Gather Market Information 63
3. Determine Your Objectives 66
4. Determine Your Time Frame for Trading 66
5. Determine the Best Historical Moves in That Time Frame and PART THREE:
Notice What Those Moves Have mon 69 UNDERSTANDING THE KEY PARTS
6. What’s the Concept behind Those Moves and How Can You OF YOUR SYSTEM
Objectively Measure Your Concept? 70
7. Add Your Stops and Transaction Costs 72
Chapter 7
8. Add Your Profit-Exits and Determine Your Expectancy 73 __-
9. Look for Huge Reward Trades 74 Using Setups 165
10. Optimize with Position S