CONTENTS

Preface to the Third Edition

List of Abbreviations

1. Introduction
   - Indian Stock Markets -- A Quick Overview
   - Working of the Indian Stock Markets
   - Why People Invest
   - Know Your Profile
   - Derivatives
   - Futures Contracts
   - Technical Analysis
   - Charting
   - Types of Charts
   - Broad Classification of Chart Patterns
   - Use of Multiple Time Frame
   - Summary

2. The Average Directional Index (ADX): Finding Out if the Market is Trading or Trending
   - What Average Directional Index (ADX) Is
   - Directional Movement (DM)
   - Positive and Negative Directional Indicator (DI)
   - Weaknesses of ADX
   - Summary

3. Trend Lines
   - What Are Trend Lines?
   - How Trend Lines Are Drawn
   - Up Trend Line
   - Down Trend Line
   - Validation of a Trend Line
   - Internal Trend Lines
   - Trend Lines as Support and Resistance Levels
   - Trend Channels
   - Using Trend Lines in Conjunction with Other Indicators
   - Combining Trend Lines with Candlesticks
   - Candlestick Patterns
   - Using Candlesticks in Conjunction with Trend Lines
   - Summary

4. Reversal Patterns - 1: Head and Shoulders, Basing
   Formation, Broadening Formations
   - Types of Chart Patterns
   - Reversal Patterns: What They Are
   - Head and Shoulders Pattern
   - Inverted Head and Shoulders Pattern
   - Failed Head and Shoulders Pattern
   - Double Top Pattern
   - Double Bottom Pattern
   - Basing Formation
   - Broadening Formations
   - Summary

5. Reversal Patterns - 2: Ascending Triangles, Descending
   Triangles, Symmetrical Triangless
   - Triangles
   - Symmetrical Triangles
   - Summary

6. Continuation Patterns - 1: Flags, Pennants and Wedges
   - What Are Continuation Patterns?
   - How Continuation Patterns are Different from Reversal Patterns
   - Flag Patterns
   - Pennant Patterns
   - Requisites of Valid Continuation Patterns
   - Continuation Patterns on Weekly and Monthly Charts
   - Wedge Pattern
   - Rectangle
   - Summary

7. Continuation Patterns - 2: Ascending and Descending Triangles
   and Head and Shoulders as Consolidation Patterns
   - Ascending Triangles
   - Descending Triangles
   - Continuation Triangle Pattern Formations on Longer Time Frames
   - Head and Shoulders as a Continuation Pattern
   - Summary

8. How to Use Volume and Open Interest
   - Volume
   - The Importance of Volume
   - Volume Interpretation
   - On Balance Volume (OBV)
   - Accumulation / Distribution
   - Open Interest (OI)
   - Put Call Ratio (PCR)
   - Price Volume Data
   - Summary

9. Important Momentum Indicators: Moving Averages, RSI and Stochastic
   - Momentum
   - Different Markets, Different Indicators
   - Moving Averages (MA)
   - Strategies for Using Moving Averages
   - Moving Average Convergence Divergence (MACD)
   - MACD Histogram
   - Leading Indicators
   - Relative Strength Index (RSI)
   - Stochastic Oscillator
   - The Theory of Confluence of Indicators
   - Summary

10. Using Momentum for Entries and Exits -- and How to Use the ABC Wave
    - Using Moving Averages for Making Entries
    - Use of MACD for Trade Entries
    - Use of MACD Histogram for Making Entries
    - Use of RSI and Stochastic for Making Entries
    - ABC Wave and Momentum Setup
    - Example of a Real Trade Using Momentum Indicators
    - Summary

11. Money Management: How Much Capital to Risk on Each Trade
    - Money Management
    - Position Sizing and Risk Control
    - Risk Reward Ratio and Your Success Rate
    - Pyramiding and Martingale
    - Margin and Leverage
    - Money Management Rules for Trading Nifty Futures
    - Money Management Rules for Trading Individual Stock Futures
    - Using Stops
    - Exit Strategies
    - Summary

12. Putting It All Together: Sector and Stock Selection
    - Building Your Road Map
    - Importance of Sector Selection in Selecting Individual Stocks Trade
    - Importance of Sector Rotation
    - Example of a Real Trade
    - Summary

13. Trading the Railway-Line Theory
    - The Four Phases of a Trend
    - The Process of Stock Selection
    - The Railway-Line Theory
    - Trade Set-Up in the Railway-Line Theory
    - Stocks to Avoid
    - Trade Confirmation in Railway-Line Theory
    - Trade Management in Railway-Line Theory
    - Conclusion

14. Mind of the Successful Trader
    - Emotions You Need to Overcome to Trade Well
    - Common Mistakes Many Traders Make
    - How to Think When Trading
    - Laws of Human Nature
    - Qualities of a Good Trader
    - Visualization to Improve Trading Performance