| In the broad category of “trading the markets,” there are basically three types of |
| trading: discretionary, technical, and strategy-based. When I sat down to write this |
| book, my intent was to write only about strategy trading. But then I realized that |
| to fully describe strategy trading, it was also necessary to discuss discretionary and |
| technical trading. It’s important that you understand the difference between them, |
| which is not always clear. I’ve met many people who believe they are strategy |
| traders when they’re actually technical traders, and vice versa. |
| I have known and taught many traders, and have observed that there are four |
| distinct stages of trader education: discretionary trader, technical trader, strategy |
| trader, and complete strategy trader. All successful traders have gone through |
| them. It is almost impossible to be a successful strategy trader without going |
| through all of these stages. My goal with this book is to help you understand and |
| move through the stages at much less cost in both time and money. |
| Every trader usually starts out as a discretionary trader. The amount of money lost |
| generally determines how long it takes the individual to start using technical |
| indicators to make trading decisions. Eventually, as even employing technical |
| indicators fails to move the trader into profitability, the trader moves into the |
| third stage and starts to write strategies based on quantifiable data. It is at this |
| stage that the trader ordinarily starts to make money. Finally, the strategies and |
| money management approaches are refined and the individual becomes successful |
| as a strategy trader. |