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Foreword

Foreword

This is a feast for a serious trader—for a professional looking to improve his or her performance or a beginner trying to avoid some of the more painful collisions with reality. I wish I had this book years ago, and I enjoy reading it today, finding pearls of wisdom to improve my trading.

Jerry is one of the world's top-performing money managers whose dazzling mind produces more fresh ideas in a month than most people have in a lifetime. He has, since 1973, been the editor of a technical newsletter, Systems and Forecasts, published by his firm, Signalert Corporation, is an important money manager, and the author of several books. He became famous in the era of computerized technical analysis as the inventor of MACD. Moving Average Convergence-Divergence is now included in most trading programs.

This book taps into the results of a lifetime of research and money management. Jerry gives you market mood indicators to identify high- and low-risk investment climates, backing them up with gain/pain ratios. He lays bare powerful signals from moving averages and rate of change indicators. He takes one of the most obscure areas of technical analysis—chart reading—and reduces it to a set of clear and lucid rules.

All traders and investors study price movements, but only the best pay attention to time. Jerry teaches you to ride market cycles, supplementing them with powerful T-formations. He explains why he believes the real market is reflected in market breadth, such as New High—New Low Index. His chapter on volume and volatility makes it clear why market tops are “calm before the storm” and market bottoms “storm before calm.” These and other simple but profound concepts will change the way you trade.

The chapters on MACD and moving average trading bands take you to the heart of the master's method. I first heard Jerry speak of them around 1990, and those ideas continue to influence my trading to this day. Jerry distills his vast market expertise into a set of what he calls Power Tools.

I recently visited Jerry and asked why he wrote this book. He laughed, “I enjoy seeing my picture on book jackets.... It feels good to get your ideas out into the world, leave a little of your imprint around. I have never lost anything by giving ideas away. If people find it useful, it makes me feel good.”

The only thing you have to bring to reading this book is a commitment to market work. What you need to succeed is right here, on the table in front of you. It will be curious to see how many people actually take this knowledge and work with it to become successful traders and investors.

Dr. Alexander Elder
Haciendas El Choco
Dominican Republic
January 2005

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