The Art of Trend Trading. Parness Michael

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      Michael Parness

      The Art of Trend Trading

The Art of Trend TradingANIMAL SPIRITS AND YOURPATH TO PROFITSMichael Parness

      Copyright © 2016 by Michael Parness. All rights reserved.

      Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

      Published simultaneously in Canada.

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       Library of Congress Cataloging-in-Publication Data:

      Names: Parness, Michael, author.

      Title: The art of trend trading: animal spirits and your path to profits /

      Michael Parness.

      Description: Hoboken, New Jersey: John Wiley & Sons, Inc., [2016] | Includes

      index.

      Identifiers: LCCN 2015032740 (print) | LCCN 2015038538 (ebook) | ISBN 9781119028017 (cloth) | ISBN 9781119185215 (ePDF) | ISBN 9781119185321 (epub)

      Subjects: LCSH: Investments. | Speculation. | Investment analysis.

      Classification: LCC HG4521 .P353 2016 (print) | LCC HG4521 (ebook) | DDC

      332.64 – dc23

      LC record available at http://lccn.loc.gov/2015032740

      Cover Design: Wiley

      Cover Image: Dollar Bird © iStock.com / hdoggrafix

      Foreword

      Michael Di Gioia

      CEO Affinity Trading Partner – World Series of Trading, (www.worldseriesoftrading.com)

      Michael Parness and I come from very different parts of the financial world, and though very different, we are complementary in many ways. I got started in trading in the late 1990s. I had just come back from a summer in Spain and a few different study-abroad programs. While studying (partying; – )) in Europe, I had started to trade and monitor my accounts online. When I got back to New York and started graduate school, I also started a job as a head hunter in New York City. In 1998, it did not take me long to figure out where the best-paying jobs were in NYC – Wall Street. As a head hunter, I knew that there was one company that was hiring more people than any other firm. It was an Internet online trading company. So I sent myself out for an interview there, and sure enough, I got a job offer.

      So my trading experience started more from the direction of being a person on a professional trading desk. Mind you, when I got started at Precision Edge Securities (later, edgetrade.com) in 1999, I was not a licensed broker. I had to cram to pass my series 7 in January 2000. Professional trading at that time was mainly a scalping style, widely known as SOES trading, because we used systems like SOES, Select Net, and Instinet to route our orders. I traded and helped run a trading desk where there was a mix of retail brokers trading for their clients (we at the trading desk executed their orders), retail trader SOES scalping, and momentum trading. For the retail brokers, I was more like a foot soldier. I worked and executed orders, and that was my focus. It was very short term, and I had no idea why the clients or the brokers were buying or selling. My performance was measured entirely by my execution price versus VWAP (volume-weighted average price). As for the day traders, well, I was one of them when not trading a client order.

      As a licensed professional trader, I had no idea what guys like Michael Parness were looking at or basing their trade ideas off of. I was more a cog in the proverbial wheel who knew a lot about execution and short-term trading technicals. Trends to me simply meant higher highs and higher lows.

      When I went to my next firm, Terra Nova Trading, Michael Parness was one of their biggest and most active trader clients. His students were also many of our clients; it was there that I started to learn about his trend trading tactics. They were very different from the very short-term execution-based concepts that I was used to on a professional trading desk.

      Needless to say watching him and his trader/students pull multidollar moves from stocks and options when I would high-five the guy next to me on the trade desk if I took a trade for a point ($1), I really wanted to learn how he made such amazing picks. Fast forward a few years and Michael and I were having lunch at Broadway Joe's on 46^th Street in New York City and he was telling me about his trading and a new idea, the World Series of Trading (Michael and I are now partners on the www.worldseriesoftrading.com).

      Michael and I still did not get together officially for a few more years when we collaborated on “Ka-chingos in Paradise,” a live trading mentorship in the Bahamas. Sadly, I have a short attention span and require visuals to learn. When Michael and I did the seminar together in the Bahamas, I finally started to get what he was talking about. His trends were statistical and event driven. In all my years of technical trading, I always knew that news trumped technicals – the problem was that I just did not know how to interpret the news catalyst events. What Michael has done is package and simplify the tradable news catalyst events into his Trend Trading System. After that seminar in the Bahamas, we both knew we wanted to merge Michael and his Trend Trading System and Affinity Trading Institute's well-established multifaceted D+TPTSP (Discipline + Trend, Pattern, Trigger, Stop and Target). Our disciplines, while different, fit perfectly together. I would always say a good swing trade would turn into two to five days of great day trading for me. Now I had a great source of additional swing trades.

      Once Michael and I got together, we came up with more awesome concepts like “Day Trading Stocks for Cents and Swing Trading Options for Dollars.” In case you have not figured it out yet, I teach “Day Trading Stocks for Cents” and Michael teaches the “Swing Trading Options for