Welcome to Day Trading With Lines In The Sky

Richard L. Muehlberg

I do not offer software or mentoring or, strictly speaking, courses. Specifically I offer my trading diary entries, guides and articles covering the lines approach. The approach is interpretive, it is a strategy, suited to market-neutral trading in a complex multiple-market context. All of my work on this site is Adobe PDF downloads. Click my Service page, click FAQ and read "What is it like to buy a download?" You need Reader 8.0 or later to view my work. Get 9.3 free from the Adobe home page. Problems? E-mail richardmue@yahoo.com.
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Steve A. from Florida: "I have found Richard's analysis of market conditions to be thorough and inspired. His analysis of how the markets interact has improved my market IQ and my trading results. His daily diary entries are required reading for me. Keep up the good work!"

Jim B. from Chicago: "From one who has followed Richard's daily trading diary entries for more than six months, I have found them to be exceptionally valuable both as a trading tool and a learning resource. The entries provide clear comprehensive insights into the truly complex nature of the markets enabling one to day trade profitably regardless of market conditions."

Tim M. from Ohio: "The lines approach is like a GPS guiding my entry, exit and swing trade management in ETF, Futures and Forex resulting so far in two months of highly profitable trading. I believe it dynamically evaluates Gann price and time principles so you always know where you are in a trade. I have mentored with Jack Bernstein and others, own 150 books and trading courses, and haven't achieved as much success before the 10 lessons and lines approach. It is an intuitive approach which gives me confidence to enter trades I wouldn't have previously."

See my lines-approach day trading diary archive in the upper left corner of this page
2009 End of month reviews
2008 End of month reviews
2007 End of month reviews

See my lines-approach day trading guides in the upper left corner of this page
Volume 2 Master Your Skill
Volume 1 Acquire Your Skill
Quick Introduction

See my articles in the upper left corner of this page
1)   Slow day trader die
2)   Do real traders paper trade?
3)   5% of day traders succeed. If you want to be one of the 5%, act like one.
4)   Day trade in cold (not hot) blood. Wait for an optimum moment to trade.
5)   Getting blindsided? Blame it on tunnel vision.
6)   Is fear preventing you from trading to your potential?
7)   Ready to quit?

See my articles in Futures magazine. Search under: Muehlberg (www.futuresmag.com)
Feb 2010: Failed setups: Inverse predictive power
Nov 2009:  For safe profits, trade a delayed reaction
Sep 2009:  Trade an intraday hook to safe profits
Aug 2009:  For safe profits, trade narrow intraday channels
Jun 2009:  Safe profits: Trade an intraday stair
Apr 2009:  Profiting from temporary market anomalies
Feb 2009:  Long the strongest, short the weakest
Jan 2009:  Start late, work hard, quit early
Oct 2008:  Using net flow value for algo profits
Sep 2008:  How algo trading is changing the landscape
Jul 2008:  Trading ETFs with round numbers
Jun 2008:  Reaping profits with regression analysis
Apr 2008:  Safe profits with bull and bear stairs
Feb 2008:  It's the close, stupid
Jan 2008:  Avoiding common trading pitfalls
Dec 2007:  Market relationships key to price moves
Oct 2007:  Using trend dynamics for day-trading profits

Trading Terms (source: various)
ALGO TRADING
Algo (algorithmic) trading: (Definition) Using computer automation to create and execute orders.
ALPHA (PERFORMANCE)
Alpha: (Definition) Performance measurement relative to an index (e.g. S&P 500 = 1.0).
Alpha: (Usage) "This stock has an alpha of 1.3 (it is projected to rise 0.3 times more than the S&P 500)."
Alpha: (Usage) "I'm an aggressive trader. I like stocks with a high alpha."
Alpha: (Potential fallacy) Performance measurements are dependent on prediction.
Relative (indexed) performance: (Definition) Subject's performance relative to an index (e.g. S&P 500).
Relative (indexed) performance: (Usage) "This fund beat the S&P three years in a row."
Efficient market theory: (Definition) Hypothesis that consistent relative out-performance is impossible.
Absolute performance: (Definition) Subject's performance relative to a prior performance.
Assets-under-management fee model: (Definition) Fee(s) based on administrative overhead.
Incentive-based fee model: (Definition) Fee(s) based on absolute performance.
2-and-20: (Definition) Fees based on 2% of assets-under-management plus 20% of absolute performance.
Highwater mark: (Definition) Last fiscal period marked-to-market value of an incentive-based fund.
Highwater mark: (Usage) "The fund is above/below its highwater mark."
Highwater penalty: (Definition) Elimination of an incentive-based fee until a highwater mark is regained.
Reincarnation: (Definition) Zero the mark; using a new fund to replace a fund facing a highwater penalty.
BETA (VOLATILITY)
Beta (stocks): (Definition) Volatility measurement relative to the S&P 500. The S&P 500 is always 1.0.
Beta: (Usage) "This stock has a beta of 1.3 (it is projected to be 0.3 times more volatile than the S&P 500)."
Beta: (Usage) "I'm an aggressive trader. I like stocks with a high beta."
Beta: (Usage) "I'm a conservative trader. I like stocks with a low beta."
Beta: (Potential fallacy) Volatility measurements are dependent on prediction.
BID/ASK (PRICE)
Bid: (Definition) Highest price a buyer is willing to pay.
Ask (offer): (Definition) Lowest price a seller is willing to accept.
Spread: (Definition) Difference between the highest bid and lowest ask (offer).
Quote (quotation): (Definition) Current highest bid and lowest ask (offer), in that order.
Sale price: (Definition) Last price at which a buyer and seller agreed to trade.
Closing price: (Definition) Last recorded sale price at the close of a recognized trading session.
Basis point: (Definition) Smallest unit (.01 percent) a bill/note/bond yield moves.
Basis point: (Usage) "The yield gained 50 basis points (gained .50 percent or 1/2 percent)."
Pip (PIP, price increment point, point): (Definition) Smallest unit (.01/.0001) a currency price moves.
Pip: (Usage) "The U.S. dollar yen pair gained 7 pips (gained 0.07)."
Pip: (Usage) "The euro U.S. dollar pair gained 7 pips (gained 0.0007)."
Tick (futures contract): (Definition) Smallest unit a futures contract moves.
Tick (stock/ETF): Smallest unit (.1 cent) a stock/ETF moves.
DAY TRADING
Day trading: (Definition) Risk management discipline hallmarked by ending each trading day in cash.
Swing trading: (Definition) Holding a position overnight or up to (arbitrary) two weeks.
Trend/Position trading: (Definition) Holding a position for more than (arbitrary) two weeks.
GAME (GAMING)
Game (gaming): (Definition) Trader-induced volatility; "sell/buy the rumor, buy/sell the fact".
Game the news: (Definition) Gaming a series of trades ahead of/on a key scheduled news release.
Game the Fed: (Definition) Gaming a series of trades ahead of/on a scheduled Federal Reserve release.
(Intraday) exaggeration: (Definition) Bidding (or offering) aggressively to force a high (or low) close.
Poop and scoop: (Definition) Generating heavy downside volume to attract a crowd then exiting early.
Pump and dump: (Definition) Generating heavy upside volume to attract a crowd then exiting early.
INTRADAY EXHAUSTION (SUPPORT-DEMAND, RESISTANCE-SUPPLY)
Intraday exhaustion: (Definition)
Bear poison: (Definition) Support that triggers a sharp, sustained reversal rally.
Bull poison: (Definition) Resistance that triggers a sharp, sustained reversal break.
LOSER'S (WINNER'S) DENIAL
Loser's denial: (Definition) Tendency of a losing trader to begin ignoring escalating losses.
Winner's denial: (Definition) Tendency of a winning trader to begin ignoring his/her trading discipline.
RELATIVE VALUE (RELATED, RELATIONSHIP, CORRELATED)
Relative value: (Definition) Hypothesis that the price of one thing is a function of the price of another thing.
Correlated: (Definition) Things that move in price in a direct relationship.
Inversely correlated: (Definition) Things that move in price in an inverse relationship.
Delayed reaction: (Definition) Hypothesis that relative prices can move asynchronously.
Relative-value volatility pressures: (Definition) Result of relative prices moving asynchronously.
Relative-value arbitrage: (Definition) Trading on the asynchronous movement of relative prices.
Net-flow value (NFV, money flow): (Definition) Expression of the flow of money encompassing two things.
Net-flow value: (Usage) "Money is flowing into (+1) the S&P 500 and out of (-1) bonds."
Net-flow value: (Usage) "The S&P and bonds are a closed loop. The NFV is 0."
RUN...REST...RUN (DELAYED REACTION)
Delayed reaction: (Definition) Hypothesis that different traders react at different speeds.
(Intraday) hook: (Definition) Conspicuous reversal in price direction.
(Intraday) run...rest...run pattern: (Definition) Tendency of an intraday price run to occur in two waves.
(Two-day) run...rest...run pattern: (Definition) Tendency of a price reversal to occur over at least two days.
Long the strongest: (Definition) Hypothesis that an upside leader is durable and the safest thing to long.
Short the weakest: (Definition) Hypothesis that a downside leader is durable and the safest thing to short.
STAIR
Stair: (Definition) Bar chart pattern showing consecutively higher stair-step lows (lower stair-step highs).
Bull stair: (Definition) Bar chart pattern showing consecutively higher stair-step lows.
Bear stair: (Definition) Bar chart pattern showing consecutively lower stair-step highs.
Stair trading: (Definition) Holding a position only while price runs along a stair.
STANDARD INCREMENT
Standard bull increment: (Definition) Price distance between a current high and a preceding high.
Measured rally: (Definition) Each new high is a standard increment above a preceding high.
Parabolic rally: (Definition) Each new high is increasingly more than a standard increment.
Bull compression: (Definition) Each new high is increasingly less than a standard increment.
Moving average rally: (Definition) Rally that tracks along a moving average.
Panic buying (fast market): (Definition) Buying that feeds on itself in a hyper cycle.
Standard bear increment: (Definition) Price distance between a current low and a preceding low.
Measured break: (Definition) Each new low is a standard increment below a preceding low.
Parabolic break: (Definition) Each new low is increasingly more than a standard increment.
Bear compression: (Definition) Each new low is increasingly less than a standard increment.
Moving average break: (Definition) Break that tracks along a moving average.
Panic selling (fast market): (Definition) Selling that feeds on itself in a hyper cycle.
TRADING INTELLIGENCE TEMPLATING
Trading intelligence templating: (Definition) Using pattern overlays to interpret/predict price movement.
TREND
Trend: (Definition) Dominant price direction (up, sideways or down) for a set period.
Trend trading: (Definition) Holding a position only while price follows a trending parameter(s).
TRENDING PARAMETERS
Stair trading: (Definition) See STAIR.
Moving average: (Definition) Irregular line showing the average lows, highs or closes for a set period.
Moving average trading: (Definition) Holding a position only while price runs above (below) an average.
Trendline: (Definition) Straight line containing the price lows in an uptrend or highs in a downtrend.
Trendline trading: (Definition) Holding a position only while price runs above (below) a trendline.
Price channel: (Definition) Irregular or straight lines drawn to contain the lows and highs of a trend.
Curvilinear (price) channel: (Definition) Irregular-line based channel.
Linear regression (price) channel (LRC): (Definition) Straight-line standard-deviation based channel.
Lines approach: (Definition) Day trading combining intermarket, time-of-day and linear regression analysis.
Intermarket analysis: (Definition) Using relative value to execute trading decisions.
Time-of-day analysis: (Definition) Using key time periods to execute trading decisions.
Linear regression (price channel) analysis: (Definition) Using LRC dynamics to execute trading decisions.
WALL
Wall: (Definition) Account value (highwater mark) specific to each trader that he/she is unable to best.

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