Short Term Trading Strategies That Work by Larry Connors

Short Term Trading Strategies That Work by Larry Connors

Conventional wisdom for many traders is to buy new highs and sell new lows. For those frustrated with buying false breakouts and buying the highs, Short Term Trading Strategies That Work by Larry Connors may provide some help. Connors conducted extensive studies on the probabilities of buying weakness rather than buying strength. The evidence points overwhelmingly to buying weakness (pullbacks) and he presents many trading strategies centered around this philosophy.

There are numerous trading strategies and tactics outlined in this book, but there are two features that caught my attention - the usage of a 2 period RSI and the fact that Connors recommends not using stops.

The 2-period RSI can be used be used as a way to enter trades as well as exit trades. Both uses of the RSI can give you an edge in trading and they can also be used to develop a simple, but effective trading system. I am in favor of anything that gives me an edge and I will certainly do more testing on what appears to be some excellent uses of an indicator I often neglected.

Surprisingly, Connors has run numerous tests that indicate performance actually increases when stops are not used. I have to say I was a little skeptical on this one. The studies were based on trading stocks and since I predominately trade futures, my nature was resistant to this philosophy. Nonetheless, it is difficult to ignore the data.

The problem with traders not using stops is that they often refuse to take a loss. Then, they hold on far too long and have no exit plan. Fortunately, the trading strategies outlined in Short Term Trading Strategies That Work have defined exit plans. A trade may ultimately show a loss, but it will probably be exited in a relatively short period of time.

It is obvious that Connors believes in using statistics to gain an edge in trading and he takes some approaches that most traders don’t consider. At the very least, traders should be able to pull some techniques out of this book to improve their trading. Others, however, may change their whole trading philosophy and solely use these trading strategies.

Short Term Trading Strategies That Work is an eye-opening book that questions much of the conventional wisdom that traders have considered fact. Better yet, Connors backs his strategies with extensive testing evidence, where the results just can’t be ignored. Sometimes, doing the exact opposite of what you perceive to be correct may be just the remedy you need to improve your trading.

Scheduled release date: November 14, 2008