Chapter V Summary and Analysis

Livingston discusses the patterns various stocks show and how charts can be kept of these patterns and compared to market trends. By applying certain rules to the patterns, traders can decide if it is a good time to buy or sell a particular stock. Only the best traders make money with this approach. One problem is that it ignores the underlying conditions that make a market move, irrespective of individual stocks and past precedents. These technical trading tools work best paired with knowledge of market conditions and normalcy.

Livingston is still learning these lessons for himself, trading in Fullerton's office. He enjoys trading enough that it takes him a while to realize it is more important to anticipate larger movements of the market and trade on those. He begins to study longer-term movements of the markets and stocks he...