The stock market is no longer a members only field game of stockbrokers
playing the market. Like so many other industries, the Internet has changed the
market and the way we do business. With the click of a button, the average
individual now has access to the same information and facts that only stockbrokers were privy to a few years ago. Gone are the days when market
traders and specialists had the advantage of profiting from the ignorant public.
With today’s technology, you have the same opportunities as the professionals at your fingertips. The difference, of course, is knowledge and experience, both of which are within your grasp. High-speed access to information, providing real-time quotes and instant online trading has sprung day trading into a new profession of its own. People are realizing that they too can master the concept of day trading and compete professionally in a level-playing field.

When I began this project, the name I originally selected the "The Dow & The
Future." The more I explored the past, the more it became clear that is was impossible to discuss purely the stock market without involving not merely economics, but also foreign exchange and commodity price movement as well as the events within the eternal sea of politics itself. No matter who takes up the crusade to write of events long since past, they often begin with some preconceived notion of what may have taken place. Others often select facts which only support their own distorted or personal views. I should state for the record that when I began this project, I was under several false assumptions.

Frank J. Fabozzi is editor of the Journal of Portfolio Management and an adjunct professor of finance at Yale University’s School of Management. He is a Chartered Financial Analyst and Certified Public Accountant. Dr. Fabozzi is on the board of directors of the Guardian Life family of funds and the BlackRock complex of funds. He earned a doctorate in economics from the City University of New York in 1972 and in 1994 received an honorary doctorate of Humane Letters from Nova Southeastern University. Dr. Fabozzi is a Fellow of the International Center for Finance at Yale University. He is an Advisory Analyst for Global Asset Management (GAM) with responsibilities as Consulting Director for portfolio construction, risk
control, and evaluation.

The Foreign Exchange, also referred to as the "Forex" or "Spot FX" market, is
the largest financial market in the world, with over $1.2 trillion changing hands
every single day. If you compare that to the $25 billion a day volume that the
New York Stock Exchange trades, you see how giant the Foreign Exchange
really is. In fact it is three times larger than all of the US Equity and Treasury
markets combined! What is traded on the Foreign Exchange? The answer is money. Forex trading is where the currency of one nation is traded for that of another. Therefore, Forex trading is always traded in pairs. The most commonly traded currency pairs are traded against the US Dollar (USD). They are called ‘the Majors'. The major currency pairs are the Euro Dollar (EUR/USD); the British Pound (GBP/USD); the Japanese Yen (USD/JPY); and the Swiss Franc (USD/CHF).

Over the last decade I have met many of the top technical analysis "gurus" as well as shared experiences with thousands of newcomers. The common element I've discovered among investors who use technical analysis, regardless of their expertise, is the desire to learn more. No single book, nor any collection of books, can provide a complete explanation of technical analysis. Not only is the field too massive, covering every thing from Federal Reserve reports to Fibonacci Arcs, but it is also evolving so quickly that anything written today becomes incomplete (but not obsolete) tomorrow. Armed with the above knowledge and well aware of the myriad of technical analysis books that are already available, I feel there is a genuine need for a concise book on technical analysis that serves the needs of both the novice and veteran investor. That is what I have strived to create.

Stock prices go up and down. It would seem that it is simple to make a fast profit from day trading. You need to buy stocks after a price drop and sell them after some time with a profit. Unfortunately, this is a minus sum game. Bad stock selection can easily kill you. The faster you trade, the faster your losses become large. Every transaction has a cost: bid-ask spread and brokerage commissions. Very tiny profits will disappear in a long run when you take into account these transaction costs. Nevertheless, day traders still exist and many of them are very rich people. How did they do that? If you are a professional and trading on the floor of the exchange you can look for micro trends and catch the leaving train right on time. Big capital and zero commissions allow you to make micro profits constantly.

Managing a portfolio is not easy. If someone tells you there is an easy formula to
successful investing it is not true. Especially if you want to manage all your money, not just play money. A portfolio requires time, study, and analysis. If you want to manage play money, find someone who gives you tips, and go gamble. In order to manage all your assets, you need an investment process. This book starts from where “Profiting in Bull or Bear Markets” concluded. Profiting in Bull or Bear Markets presented a detailed analysis of the relationships existing between financial markets and business cycles. In any economic system, business cycles impact financial markets and financial markets impact business cycles. That book provided a framework to understand these relationships and showed that history does indeed repeat itself.

This book is the result of more than 20 years of studying the behavior of business and financial cycles and their impact on investment management. My viewpoint has been influenced by my graduate work at Case-Western Reserve in Cleveland, Ohio, where I received a Ph.D. Case was well known for its advanced studies and research in the field of management science, information systems, and artificial intelligence. For several years after graduation I reflected on the meaning and implications of what I learned. Finally I realized that the entire program was about “the engineering of thinking.” It was about the logical, structured thought process that is typical in the field of artificial intelligence. The main assumption of this branch of computer sciences is that
human thinking can be duplicated. Anything produced by the mind is the outcome of a sequence of logical steps that, when taken all together, can be recognized as thought.

I went to work when I was just out of grammar school. I got a job as quotation-board boy in a stock-brokerage office. I was quick at figures. At school I did three years of arithmetic in one. I was particularly good at mental arithmetic. As quotation-board boy I posted the numbers on the big board in the customers' room. One of the customers usually sat by the ticker and called out the prices. They couldn't come too fast for me. I have always remembered figures. No trouble at all. There were plenty of other employees in that office. Of course I made friends with the other fellows, but the work I did, if the market was active, kept me too busy from ten A.M. to three P.M. to let me do much talking. I don't care for it, anyhow, during business hours.

This book was made possible through the influences and inspiration of many people. It is hard to decide who to mention first due to the integral input of all during the process of writing this book. My first and foremost thanks goes to my mother June Bigalow who has always been there to support my endeavors. I am also blessed with a great and supportive brother and sister, along with their families. Their support through this effort has been greatly appreciated. I am forever grateful for the encouragement from friends and business acquaintances, who have since become good friends, for their parts in advancing the progress of this book. Drew and Dee Dee Vickers, Dan Dubose, Daryl and Barbara Thompson have been great inspirers. Wally and Rose Ann
Peckham provided great coaching as well as a refuge to clear the mind for the next go-round of typing.