Study Guide for Come Into My Trading Room - Forex Factory

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ADVANCED CONCEPTS 125 Give yourself a point for each correct answer. Options offer an enormous range of choices, from buying calls outright—the beginners’ favorite tactic—all the way up to diagonal butterfly spreads and beyond. Sophisticated traders tend to write rather than buy options. Answer 66 C. 1, 2, and 3. Give yourself four points for choosing the right answer. Writing covered options is an expensive proposition because of commissions on both stocks and options; naked writing exposes traders to unlimited risk. For those reasons, money management is the cornerstone of any intelligent option-writing campaign. Option writers profit from selling hope—it is better to sell hope that is unlikely to be fulfilled, writing calls in downtrends and puts in uptrends. Time works for the writer because the options he sells lose value with each passing day. There is no reason to wait for the expiration if the option you sold has lost almost all its value—buy it back, kill the risk, and move on to the next trade. Answer 67 1. D 2. E 3. A 4. B 5. C Give yourself a point for each correct answer. If you grow wheat and hedge by selling a corresponding quantity of futures contracts, you eliminate price risk between that time and the harvest, when wheat is sold to consumers and futures bought back. Razorthin margins in futures lure beginners into overtrading, and they take on
126 ANSWERS AND RATING SCALES more risk than they can handle. Faraway months normally sell for more than nearby ones because of storage and insurance costs; an inverted market, with more expensive nearby contracts, reflects very high demand, which is bullish. Industrial producers and consumers can legally trade futures using inside information. Supply-driven markets tend to be fast and furious; bad weather can stress the balance between supply and demand much faster that changing consumer tastes. Rating Yourself Below 56 Poor. If you have already learned conventional methods, you should be able to do better with these advanced techniques. Please return to the recommended materials, study them, and retake this test a few days later. 56–66 Fairly good. You are starting to get a handle on new, unconventional methods. It would be a good idea to return to the recommended literature, review answers to the questions you missed, then return to the Study Guide a few days later. 67–77 Excellent. You are way ahead of the game. Now tighten your seat belt because you will be moving forward to the topic that separates the winners from the losers—money management. Recommended Reading Elder, Alexander. Come into My Trading Room (New York: John Wiley & Sons, 2002). See Chapter 5 “Trading.” Additional Reading McMillan, Lawrence G. Options as a Strategic Investment, 3rd ed. (New York: New York Institute of Finance, 1999). Teweles, Richard J., and Frank J. Jones. The Futures Game, 3rd ed. (New York: McGraw-Hill, 1998).
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STUDY GUIDE FOR COME INTO MY TRADIN
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BOOKS BY DR. ALEXANDER ELDER Tradin
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Copyright © 2002 by Dr. Alexander
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vi CONTENTS Part Two Answers and Ra
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HOW THIS BOOK IS ORGANIZED The firs
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QUESTIONS P A R T O N E
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8 QUESTIONS Questions Trial 1 Trial
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10 QUESTIONS Question 4—Stocks, O
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12 QUESTIONS Question 8—Types of
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14 QUESTIONS Questions 9 10 11 12 1
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16 QUESTIONS Question 12—Alcoholi
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18 QUESTIONS Question 16—Discipli
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BASIC CHARTING T H R E E Trading wi
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BASIC CHARTING 23 Question 20—A B
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BASIC CHARTING 25 Question 22—Bas
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F O U R INDICATORS— FIVE BULLETS
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INDICATORS—FIVE BULLETS TO A CLIP
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TRADING F I V E Beginning traders t
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TRADING 41 Question 41—System Tes
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TRADING 43 A. Trend-following B. Os
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TRADING 45 Question 47—Taking Pro
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48 QUESTIONS Questions 48 49 50 51
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50 QUESTIONS Question 51—Opening
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52 QUESTIONS Question 53—The Dail
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56 QUESTIONS Question 56—The Impu
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58 QUESTIONS Question 59—Exits Fi
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60 QUESTIONS Question 62—Trading
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62 QUESTIONS Question 66—Options
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66 QUESTIONS Question 71—The 2% R
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68 QUESTIONS Question 77—The 6% R
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N I N E THE ORGANIZED TRADER If you
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THE ORGANIZED TRADER 73 Question 83
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Page 90: THE ORGANIZED TRADER 81 Question 99
Page 94 and 95: O N E FINANCIAL TRADING FOR BABES I
Page 96 and 97: FINANCIAL TRADING FOR BABES IN THE
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Page 101 and 102: 92 ANSWERS AND RATING SCALES ings w
Page 103 and 104: 94 ANSWERS AND RATING SCALES ten re
Page 106 and 107: BASIC CHARTING Answer 19 T H R E E
Page 108 and 109: BASIC CHARTING 99 Give yourself a p
Page 110 and 111: F O U R INDICATORS— FIVE BULLETS
Page 112 and 113: INDICATORS—FIVE BULLETS TO A CLIP
Page 120 and 121: TRADING Answer 40 F I V E D. 1, 2,
Page 122 and 123: TRADING 113 Answer 44 D. 1, 2, 3, a
Page 124 and 125: DAY-TRADING Answer 48 S I X D. 1, 2
Page 126 and 127: DAY-TRADING 117 Give yourself a poi
Page 128 and 129: ADVANCED CONCEPTS Answer 54 1. E 2.
Page 130 and 131: ADVANCED CONCEPTS 121 At the right
Page 132 and 133: ADVANCED CONCEPTS 123 Answer 61 1.
Page 136 and 137: MONEY MANAGEMENT Answer 68 E I G H
Page 138 and 139: MONEY MANAGEMENT 129 staring at a l
Page 140 and 141: MONEY MANAGEMENT 131 Six precent of
Page 142 and 143: N I N E THE ORGANIZED TRADER Answer
Page 144 and 145: THE ORGANIZED TRADER 135 daily, and
Page 146 and 147: THE ORGANIZED TRADER 137 Answer 93
Page 148 and 149: THE ORGANIZED TRADER 139 Answer 98
Page 150: LET’S TRADE: S E C T I O N CASE S
Page 153 and 154: 144 CASE STUDIES disciplined and ga
Page 155 and 156: 146 CASE STUDIES Technical analysis
Page 157 and 158: 148 CASE STUDIES Trade 1: Oracle Co
Page 159 and 160: 150 CASE STUDIES Trade 2: Sun Micro
Page 161 and 162: 152 CASE STUDIES Trade 3: Kroll Inc
Page 163 and 164: 154 CASE STUDIES Trade 4: Imclone S
Page 165 and 166: 156 CASE STUDIES Trade 5: Wheat—E
Page 167 and 168: 158 CASE STUDIES Trade 6: Vimpel Co
Page 169 and 170: 160 CASE STUDIES Trade 7: Internati
Page 171 and 172: 162 CASE STUDIES Trade 8: Biovail C
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176 CASE STUDIES Trade 4: Imclone S
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178 CASE STUDIES Trade 4: Imclone S
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180 CASE STUDIES Trade 5: Wheat—E
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182 CASE STUDIES Trade 5: Wheat—E
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184 CASE STUDIES Trade 6: Vimpel Co
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186 CASE STUDIES Trade 6: Vimpel Co
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188 CASE STUDIES Trade 7: Internati
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190 CASE STUDIES Trade 7: Internati
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192 CASE STUDIES Trade 8: Biovail C
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194 CASE STUDIES Trade 8: Biovail C
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THE ROAD AHEAD You can learn to tra
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SOURCES Appel, Gerald. Day-Trading
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