Spring waters surged up the riverbank last night, Like weightless feathers the heavy vessels float.

Rigorous labor pushed ships forward in the past, Down midstream on strong waves I ride effortlessly today.

FIGURE P.1 Trend Following—Effortlessly Riding the Strong Waves Down the Middle of the Stream. Pen sketch by Victor K. Wang (1958) with permission.

The poem by Zhu Xi and the boats illustrated in Figure P.1 describe the enjoyment of trend following in trading, as well as my feeling at the moment of finishing this book. Zhu was a Song Dynasty (960 to 1279) Confucian scholar who became the renowned leading figure of the School of Principle, and the most influential rationalist Neo-Confucian in China. His poem expresses the power of using natural law to fulfill one’s aims—a truth that has been the abiding principle underlying all my work.

I never dreamed that I would one day write a book about trading. Nor did I realize how important my discovery of AbleTrend would be for others. Rather, at first I succumbed to the secrecy of the trading business and only shared my findings with a limited group of my seminar attendees. Now, however, I recognize that it is time to introduce AbleTrend and its advantages to a wider audience.

Natural law is the guiding principle behind everything we see, even though we may not be aware of it. For example, gravity has always existed from the earliest creation of the world; but it seemed people were not aware of its existence until one day when Newton’s “Universal Law of Gravitation” was published. Similarly, the market trend has always existed; but I could not identify it—or take advantage of it—until one day in 1994 when I discovered a simple way—the “AbleTrend” way—to observe the trend.

Tens of thousands of AbleTrend users have helped us at AbleSys to grow over the last 15 years. We owe them a great deal because of their persistent support through all that time. I want to dedicate this book and issue a special “thank you” to every AbleSys client who has practiced our trend-following methods, and helped validate the trading system that can be applied to any market, any time chart, and anywhere in the world.

Most AbleTrend users are familiar with the way the software presents its trend findings on price charts in the form of blue bars, red bars, blue dots, red dots, and so forth. Here, in this book, I want to share with them more about the principles and philosophy underlying AbleTrend so that users may feel and get inside its soul and life.

But the purpose for this book goes beyond that. I believe that every trader—whether an AbleTrend user or not—can develop a deeper comprehension of how to trade the markets by understanding the universal principles that were used to develop the AbleTrend software. My intention in writing this book is to introduce these individuals to new concepts of trend following that they can use in their trading and benefit from for years to come.

In preparation for writing this book, we began to review hundreds of testimonials from AbleTrend users that we have received over the past 15 years. I would like to quote a few of these testimonials here to show what others think about the AbleTrend:

About 2 weeks ago, I got your brochure in the mail. I’ll admit, I threw it away! But after pulling it back out of my waste basket (3 times), I finally contacted your company for a trial. Am I ever glad I did! I have made 12 trades with AbleTrend and only lost on one trade so far (which was my fault). I feel great, because now I’m in control. Thank you for your excellent system, online training classes, and getting me started on the right foot.

—Tom Kewan, WI

Among all the trading software I bought, AbleTrend 7.0 is the most simple and easy to use, and it makes money. I’ve bought many trading software during the years. I’ve been using AbleSys software since June 2006, trading E-mini S&P500 between 2 to 4 Eastern Time and I am trading 9 contracts. One of the helpful services that AbleSys offers is its Tuesday and Thursday free Webinars. Just picked up one great idea last week, the Guidance Chart, which helps me to scalp the market while staying on top of the bigger picture of the market direction.

—Dr. Edward Christy, MI

Dear AbleSys, I have never had such a good system-strategy as the AbleTrend 7.0 and I have been in this business for more than 20 years.

—Martin Schakowski, Switzerland

I have spent over $30,000 on trading software over the years. eASCTrend is the first piece of trading software that I’ve come across, which is simple to use and has a built-in algorithm that actually works and can consistently make money. eASCTrend T2 stops provide the best support and resistance indicators; they are reliable and dynamic. The friendly and concerned support from AbleSys is second to none.

—Greg Clements, Australia

We could easily go on. It is so gratifying to us to read such feedback from our clients, and to learn that they are doing so well and continuing to progress in their trading success. These facts ignite my spirits and make me want to bring more inside knowledge to them concerning the universal trading principles that underlie the functioning of our software. And I believe that all traders, not just AbleTrend users, will benefit from learning these fundamental concepts.

These principles are basic to all aspects of life, and not just trading. Understanding them will perhaps bring readers more in harmony with their body and mind, with their family and acquaintances, and eventually with the markets.

It is my hope that you will truly learn something valuable from this book. The concepts are laid out in straightforward language, in textbook style, with several examples to explain each concept. Educators say that people cannot learn a concept until it is repeated seven times with different applications. That is the way this book has been structured. When you complete this book, I suggest you come back to Chapter 2 to review the topic “What Is a Trend?” By that time, you will truly understand the contents of this book.

WHAT YOU WILL FIND IN THE BOOK

AbleTrend users in more than 60 countries and regions, trading different financial markets—some of which I am not even familiar with!—have put the concepts of this book to a practical test. This book was written in response to their wish that the concepts and philosophy behind our software be placed within the reach of all who are interested.

This book includes seven chapters and two appendixes:

• Chapter 1 is about the birth of AbleTrend. Is the market completely chaotic or is there a hidden order? How did I discover AbleTrend with scientific methods?

• Chapter 2 is the most important chapter, where the foundation of this book is laid out. There we introduce new concepts about the trend: What is the scientific definition of a trend? How do we pinpoint the very beginning and ending point of a trend? How do we define a market’s own protective stops? With an immense number of charts, we explain step by step our points of view of support and resistance. And we provide a few real examples (or homework) to explain trends, stops, entry points, and so forth.

• Chapter 3 discusses the four elements on which you build success in trading. Chapter 4 presents essential trading philosophy in terms of trend-following methods, especially drawing on the wisdom of the Tao.

• Chapter 5 covers issues of applying AbleTrend to trading, based on our concepts of trends. This chapter lays out from theory to application specifically how to trade the markets.

• Chapter 6 presents 13 examples of trend analysis, with charts, to show how the trend-following method works in some common markets.

• Chapter 7 introduces the design concepts behind some special trading tools provided by the trading software, along with their applications.

• Appendix A presents 10 interviews with AbleTrend users who share their points of

• view, experiences, and trading methods.

• Appendix B provides a quick reference guide for Simplified Trading Method (STM).

WHAT YOU WILL FIND ON THE WEB SITE

AbleTrend is an award-winning trading system software by AbleSys Corporation. From 1997 to 2009, it was honored with the Readers’ Choice Awards of Stocks & Commodities magazine in Stock Trading Systems, Futures Trading Systems, and Options Trading Systems. The AbleTrend trading system has recently made the Stocks & Commodities magazine “Top 10” list from 2001 to 2009.

AbleSys Corporation (ASC) is a worldwide leader in universal financial trading software and Web application. As the creator of the benchmark ASCTrend indicator, AbleSys has long been synonymous with cutting-edge financial trading technology. AbleSys strives to develop innovative products and services that meet users’ evolving needs in the Internet age. Founded in 1994, AbleSys is a Commodity Trading Advisor (CTA) registered with the Commodity Futures Trading Commission (CFTC), specializing in trading software and Internet applications. Products include AbleTrend, ASCTrend, and WinTick.

As this book purchaser, you may go to a special web site, www.wiley.com/go/abletrend (password: wang), for a FREE 80-minute video course about Simplified Trading Method (STM). The value of the training course is $99. For more information about AbleTrend trading software, please visit www.ablesys.com or send an e-mail to wileybooks@ablesys.com.

DISCLAIMER

As CTAs, by request of the CFTC, we must give the following important disclaimer to our readers:

Futures, forex, options, and securities trading has risk of loss and may not be suitable for all persons. No system can guarantee profits or freedom from loss. Past results are not necessarily indicative of future results. Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under- or overcompensated for the impact, if any, of certain market factors such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. This disclaimer should be applied to the whole book.

AS YOU BEGIN

You don’t become great at trading in a day. You become great at trading day by day. This book opens a gate to the inside of the markets, providing readers with a better understanding of the market’s behaviors, actions, and trends. I hope that some day you may come into harmony with the markets, because it is only then that consistent profits can be achieved.