Über die Autorin bzw. den Autor

BILL WILLIAMS, PhD, CTA, is the founder of Profitunity.com, a leader in the education of traders and investors. Besides coaching over 1,000 traders in private tutorials, his two bestselling books, Trading Chaos and New Trading Dimensions, have contributed to furthering his unique trading concepts. A trader with over forty years of experience, Mr. Williams publishes a newsletter that provides insightful market commentary for approximately 1,800 readers. He is also well known on the speaker circuit, with a loyal following of high-level traders.
JUSTINE GREGORY-WILLIAMS is a full-time trader in the stock and commodity markets and President of the Profitunity Trading Group. She has trained over 1,000 traders in the Profitunity Methodology and also does private consultations for clients. Ms. Gregory-Williams has lectured nationwide, speaking at conferences such as Futures Industry Association, TAG, Omega World, and the Traders’ Library Trading Forum.

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Praise for
TRADING CHAOS
SECOND EDITION

"As a trader and an author for over fourteen years in stocks, futures, and options, it still amazes me when I read a book that teaches me new approaches to the market. This book is one of these amazing books that can teach the novice or the professional something important to take them to the next level of their trading. It is a must read for everyone interested in looking at the markets in a new way."
George Fontanills, President Emeritus, Optionetics

"Bill and Justine Williams, two of the truly great teachers of market action, have written an outstanding book. It not only covers the psychology of personal trading but provides one with a well defined, coherent trading plan. This book is must reading for any serious trader, whether a beginner or experienced veteran."
John R. Hill, President, Futures Truth Company

"What Bill Williams does best is raise questions and doubts in the minds of his readers. But, even better, he then provides wonderful new choices for thinking and acting. He has a deft lightness in his writing and a seriousness of purpose that drew me in like a magnet."
Rodney Napier, PhD, head of The Napier Group
coauthor, The Courage to Act and Groups: Theory & Experience (now in its seventh edition)

Aus dem Klappentext

Published in 1995, the bestselling first edition of Trading Chaos provided readers with the most practical and comprehensive guide for applying chaos theory to the real world of trading and investing. But today, the markets are different than they were even a few years ago. So with fresh research in hand, coauthors Bill Williams and Justine Gregory-Williams have updated their profitable methods and provide new techniques to help you take profits from the markets.

Trading Chaos, Second Edition will not only show you how to anticipate, recognize, and react to impending bull and bear market conditions, it will also introduce you to the latest findings in physics and psychology as applied to various markets stock, bond, futures, indexes, and many others.

The first portion of this book is devoted to understanding how the rewards you ll acquire in trading and investing are determined by what is happening inside of you. By digging through some very interesting and deep psychological principles, you can become a profitable "trade/vestor" using technical techniques for good short-term entries and exits, but also holding on to long-term investments when the opportunity presents itself. Trading Chaos, Second Edition will help you build a solid psychological foundation before you enter the markets.

After you ve learned how to gain an inner analytic edge, the authors will show you how the application of self-knowledge will improve your bottom line. Through numerous charts, checklists, and examples, you ll be introduced to proven techniques that can make the unpredictable understandable and make your journey into the markets more profitable. You ll learn how to:

• Sharpen entries and exits, and reduce whiplashes with the powerful "Alligator" indicator
• Get into a new trend very early with proper use of the "First Wise Man"
• Add on aggressively after your first entry using the "Second Wise Man" with the help of the Awesome Oscillator (AO)
• Make fractal breakout trades with the "Third Wise Man" these almost guarantee profitable follow-through on a trade

In this early part of the twenty-first century, you have a choice to either be a part of the last generation of traders and investors using linear (ineffective) techniques or the first generation using effective nonlinear (chaotic) techniques. By reading the Second Edition of Trading Chaos, you ll learn how you can take your trading skills to the next level and make steady profits in any market.

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Trading Chaos

John Wiley & Sons

Chapter One

There Is No Reality, There Is Only Perception

Words are things, and a small drop of ink Falling like dew upon a thought, produces That which makes thousands, perhaps millions, think. -Lord Byron

GOAL

To understand how the markets really work and why the majority of market participants consistently lose money.

A number of years ago I attended a meeting in Boulder, Colorado, with a newly arrived swami from India. Muktananda proved to be a most interesting fellow. He gave no lectures; he only told stories and wove those stories into an instructional format. Accompanying him was an interpreter, complete with saffron-colored robes, from the University of Colorado. Muktananda maintained that not being fluent in English was a great advantage to becoming a guru in America. He started his lecture with the following story.

There was a student in India who wanted to become enlightened. He left his family in search of an appropriate guru to guide him further on his journey. Stopping at one guru's place of business, he inquired as to this guru's method of becoming enlightened. The guru said, "Becoming enlightened is really quite simple. All you need to do is to go home each night and sit in front of a mirror for 30 minutes asking yourself the same question over and over. That question is: Who am I? Who am I? Who am I?"

The prospective student replied, "Hey, it can't be that simple."

"Oh yes, it is just that simple," replied the guru, "but there are several other gurus on this street."

"Thank you very much," said the student, "I think I will inquire down the way."

[Today we call this action seeking a second opinion.]

So the student approached the next guru with the same question. "How do I become enlightened?"

The second guru replied, "Oh, it is quite difficult and takes much time. Actually, one must join with like-minded others in an ashram and do Sava. Sava means 'selfless service,' so you work without pay."

The student was excited; this guru's philosophy was more consistent with his own preconceived view of enlightenment. He always had heard it was difficult. The guru told the student that the only job open at the ashram was cleaning out the cow stalls. If the student were really serious about becoming enlightened, the guru would allow him to shovel all the dung and be responsible for keeping the cow stalls clean. The student accepted the job, feeling confident that he must be on the right path.

After five long years of shoveling cow dung and keeping the stalls clean, the student was becoming discouraged and impatient about enlightenment. He approached the guru and said, "Honored teacher, I have faithfully served you for five years cleaning up the dirtiest part of your ashram. I have never missed a day and have never complained once. Do you think it might be time for me to become enlightened?"

The guru answered, "Why yes, I believe you are now ready. Here is what you do. You go home each night and look at yourself in the mirror for 30 minutes, asking yourself the same question over and over again. That question is: Who am I? Who am I? Who am I?"

The very surprised student said, "Pardon me, honored one, but that is what the other guru down the street told me five years ago."

"Well, he was right," responded the guru.

"Then why have I shoveled cow dung for five years?" asked the student.

"Because you are stupid, that's why," replied the guru.

I think of that story quite often while working with traders. One of the first problems I encounter is convincing traders that making profits in trading is really quite simple-notice, I did not say easy. There is a world of difference between a concept's being simple and being easy to carry out.

Looking at yourself in the mirror for 30 minutes each night is a simple concept, but asking yourself the same question over and over again and seeking an honest answer is not easy. As a psychologist I have found that we humans have two innate tendencies: (1) We tend to overcomplicate everything we touch and, because of that, (2) we cannot see the obvious.

To most traders and investors, the market is a dangerous and undependable animal. Their mottoes are: "Don't count on it" and "Get it before it gets you." They see the market as a dog-eat-dog world where other traders/investors are the dogs. This is not an accurate picture of the markets.

THE SIMPLICITY OF ALL MARKETS

The markets are not mysterious and unfathomable. The primary purpose of any market is to ration, at a reasonable price, existing and future supply to those who want it the most. You trade almost every minute of your life. Profiting in the markets is much easier when you really understand the underlying structure. To keep it as simple as possible, take the Flintstones as an example. You remember Fred Flintstone, a rather rough and outdoors kind of guy, and his more domestic next-door neighbor, Barney? Fred sees himself as a macho he-man who likes to hunt dinosaurs. One day he goes out and kills a big something-a-saurus even though his freezer is already full of dinosaur burgers. Barney does not enjoy hunting and killing but he likes eating dinosaur Whoppers(r). Barney prefers to sit around his backyard whittling wood and making clubs. Fred rarely takes time to make his own clubs.

Fred wanders over to Barney's backyard and gets an idea. Why not swap Barney a couple of platters of dinosaur burgers for that new club he is finishing. So he puts this proposition to Barney: "Barney, I'll give you two platters of dinosaur Whoppers for that new club. How 'bout it?" Barney says, "Okay, you got a deal."

Fred and Barney have just created a market. It is just that simple! Both Fred and Barney valued what they wanted more than what they had. To Barney the burgers were more important (valuable) than the club he was making, and to Fred the club was more valuable than the burgers.

All Markets are Created When Two or More People Have an Equal Disagreement on Value and an Agreement on Price

When you bought your last car, the car was worth more to you than the money used to pay for it. However, to the person who sold you the car, your money was more valuable than the car. You created a miniature market when you made your deal. We buy bonds when we would rather own the bonds than the money we are paying for the bonds. Our fantasy (trading is a fantasy game; more about this later in the introduction) is that the value of the bonds will go up relative to the dollar. We bought them from some unknown trader who was just as confident that their value was going to go down. We have a real disagreement on current and future value, but we agree on price.

Every market in the world is designed to ration or distribute a limited amount of something (whether it be stocks, agricultural products, currencies, dinosaur clubs, or whatever) to those who want it most. The market does this by finding and defining the exact price where, at that moment, there is an absolute balance...