Don’t conform to Wall Street’s rules. Be your own trader―Maverick style. PROVEN STRATEGIES FOR GENERATING GREATER PRO FITS FROM THE AWARD-WINNING TEAM AT MAVERICK TRADING Wall Street’s dirty secret is out―you don’t need a professional to manage your money, and you can beat the market on a consistent basis. All that’s required are three things: personal dedication, a sound risk management strategy, and the trading system outlined in this book. Yes, it’s that simple. As active traders at the private proprietary trading firm Maverick Trading, the authors have taught hundreds of budding traders how to end their relationship with the so-called professionals and trade on their own, using the same system the firm used to generate gains of more than 100% in 2008, 50% in 2009, and 50% in 2010. It’s not a get-rich-quick scheme. It’s a long-term methodology designed to create steady wealth you can live on, retire on, and pass down to the next generation. Maverick Trading teaches you how to: Design a portfolio using long and short options - Read OHLC and Candlestick charts - Hedge your investments with options - Create a risk-assessment tool kit - Mentally prepare yourself for the life of a trader It’s not complicated. In the authors’ own words, “The system in this book relies on pattern recognition, impeccable risk management, understanding yourself, and fifth-grade math.” The hard part is up to you. You have to make the decision to go all in. Full-time. No turning back. Once you do it, you’ll wonder what took you so long. Let Maverick Trading put you on the path to the life you were supposed to lead. Darren Fischer has evaluated and consulted more than 200 funds spanning asset classes such as hedge funds, private equity, venture capital, and real estate. He is a trader at Maverick Trading. Jon Frohlich joined Maverick Trading in 2002. He travels across North America introducing nascent traders to the powerful tools he has learned. Robb Reinhold has decades of experience as a trader. A passionate educator, he travels the world teaching and recruiting new traders for Maverick Trading when he’s not trading in the currencies market. Darren Fischer has evaluated and consulted more than 200 funds spanning asset classes such as hedge funds, private equity, venture capital, and real estate. He is a trader at Maverick Trading. Jon Frohlich joined Maverick Trading in 2002. He travels across North America introducing nascent traders to the powerful tools he has learned. Robb Reinhold has decades of experience as a trader. A passionate educator, he travels the world teaching and recruiting new traders for Maverick Trading when he’s not trading in the currencies market. MAVERICK TRADING PROFESSIONAL TECHNIQUES TO CREATE GENERATIONAL WEALTH By DARREN FISCHER, JON FROHLICH, ROBB REINHOLD The McGraw-Hill Companies, Inc. Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved. ISBN: 978-0-07-178431-3 Contents INTRODUCTIONCHAPTER 1 Don't Put It All on Black: Risk ManagementCHAPTER 2 Playground Economics: Determining Market DirectionCHAPTER 3 Reading the Tea Leaves: An Introduction to Chart ReadingCHAPTER 4 Options and Trading Techniques: The Secret SauceCHAPTER 5 What Are These Things in My Toolbox?CHAPTER 6 Getting into the Game: Technology and Broker SelectionCHAPTER 7 Batting Practice: Paper TradingCHAPTER 8 The Big Time: Live TradingCHAPTER 9 You Versus YouCHAPTER 10 You Versus the WorldCHAPTER 11 The End of the BeginningINDEX Excerpt CHAPTER 1 Don't Put It All on Black: Risk Management We don't care if you ignore every other chapter in this book and get yourtrading ideas by sacrificing a goat under the light of a full moon. If you don'tmake a commitment, right here and right now, to developing and following acomprehensive and methodical risk management strategy, please put this bookdown, walk over a few aisles, pick up Roulette for Idiots , and plan yournext trip to Las Vegas. There are a multitude of casinos that would like todevelop a lifelong relationship with you. Trading without a risk management system is gambling. Gambling relies on hope.When you gamble, in the long run, the house always wins. The balance of thisbook will lay out in minute detail a proven system for making money in themarkets, but if you don't master risk management from the beginning, weguarantee that you will lose money, regardless of the trading or investingsystem you decide on in the end. INEFFECTIVE RISK CONTROL Ineffective risk control is, if anything, more dangerous than a lack of riskcontrols. At least with a lack of risk controls, your emotions will let you knowwhen the pain becomes too great, and you will liquidate your position. Adherentsof ineffective risk controls spout watchwords like an oracle and will oftenfollow their creed straight to a 55-gallon drum of Kool-Aid and an implodedportfolio. This book is not a rehash of Warren Buffett's investment philosophy. Buffett'sstrate