Tensile Trading

GATIS N. ROZE is a veteran stock market investor who has traded his own account full-time since 1989, unburdened by the distraction of clients. He holds an MBA from the Stanford Graduate School of Business, is a Chartered Market Technician (CMT), and is a past president of the Technical Securities Analysts Association (TSAA). After a successful entrepreneurial career, he retired in his early 40s to focus on investing. With consistent success as a stock trader, he began teaching investments at the post-college level in 2000 and continues to do so today. A renowned communicator, he has taught thousands of investors in sold-out seminars for the AAII, the MTA, and more. His weekly investment blog, The Traders Journal, is read by a global audience.GRAYSON D. ROZE has worked in the financial services industry for StockCharts.com since 2012. He now serves as a Business Manager at the company. He holds a Bachelor’s degree from Swarthmore College, where he studied economics and psychology. At a young age, he began pursuing his interest in the financial markets by attending investment classes and starting to trade under the guidance of his father. At the age of 18, Grayson began investing his own account and has since become an accomplished trader in his own right. Tensile Trading was his vision as a vehicle to lay out his father’s investment wisdom and convey it to a wider audience.

No base is left uncovered by the 10-stage Tensile Trading approach. It effectively lays out a comprehensive, easy-to-follow methodology that promotes stable, balanced, high-probability investing. A refreshingly-honest and engaging book brimming with practical investing wisdom that will leave you inspired to take action and confident in your ability to succeed in the stock market. John Murphy, author of Technical Analysis of the Financial Markets and Trading with Intermarket Analysis; Chief Technical Analyst, StockCharts.com; former technical analyst, CNBC It is rare to find a book that presents such a thorough and authentic look into the strategies, routines and processes of a successful individual investor. It is clear that the Tensile Trading methodology has been shaped by many years of real-world investing experience, the lessons of which shine brightly through the pages of this powerful book. Dr. Henry Pruden, Professor of Business Administration and Executive Director, Institute of Technical Market Analysis, Golden Gate University; former editor, Market Technicians Association Journal Gatis and Grayson have penned a very thoughtful and personal approach to investing in the stock market. As you read this, you will hear a voice of experience. The book is broken into stages for you to go through to accelerate your own development of investing skills and to avoid learning things the hard way . A nice touch is a bullet point style summary of the important points of each chapter called Key Takeaways . This is the kind of book you will read more than once. Thom Hartle, Director of Product Trading, CQG, Inc.; former editor, Stocks & Commodities Magazine I have been investing for many years, but it was not until I studied under Gatis Roze and learned the Tensile Trading concepts that I became truly knowledgeable about how to succeed as an individual investor. Tensile Trading has helped me to gain clarity of thought, become well organized and better understand my Investor Self . This is an insightful book that investors should read closely and then review on a regular basis. It is an invaluable resource. Roger Shantz, individual investor; former mechanical engineer and naval aviator

• Preface xiAcknowledgments xviiAbout the Authors xxiStage 1 Money Management 1Crafting Your Money Management Plan 5Becoming a Successful Investor 9The Importance of Asset Allocation 11Constructing Your Personal Asset Allocation Profile 15X-Ray Magic 24Allocation Maintenance 24Stage 2 The Business of Investing 29Ten Invaluable Investing Lessons 29Staying Committed on the Road 36The Investor’s Quad 36Stage 3 The Investor Self 39The Five Levels of Investor Growth 40Investor Weaknesses 42Learn from the Professionals 46Your Daily Journal 47Stage 4 Market Analysis 53Permission to Buy 54Telescope-to-Microscope Approach 55Charting Indicators 56Organizing Your Analysis 60Common Misunderstandings 62The Market Stages and Technical Analysis 64Fundamentals Checklist for Stocks 67Fifty versus Fifty 68Stage 5 Routines 71Choosing Your Time Frame 72From Salesmen to Stock Traders 74Personal Peak Performance 75Daily, Weekly, Monthly, Annually 76A Day in the Life 79Stage 6 Stalking Your Trade 87Where to Look 88What to Look For 88How to Look 89When to Look 89Filters 91Human Nature and Overhead Supply 96Second-Opinion Resources 98The Sisters Strategy Revisited 98Mimic Wall Street’s Masters 99The Base-Hit Investor 101Stage 7 Buying 103BATTLE V Methodology 106Pyramid Trading 106The Language of the Market 108Buy Routines 109Considering Alternatives 111Perfection Paralysis 111Commission-Free Mind-Set 112Invest Like You Drive 113It’s All about Stress Control 114Stage 8 Monitoring 117You Bought It—Now What? 118Revisiting the Investor Self 119Market Monitoring 120Adjusting Stops 121Tools, Routines, and Charts 123Fundamentals 126Allocation Updates 127What is your Motivation? 129Stage 9 Selling 131Sell on Technicals, Not Fundamentals 133The Art of Selling 135Developing Your Selling System 138Mutual Fund Sell Signals 146Selling with the Sisters 148Sell-Side Pyramid Trading 149The Endowment Effect 149The Investor’s Trail 150Stage 10 Revisit, Retune, Refine 153Cleanse and Move Forward 154Personal Data Mining 164The Investor’s Big Three 165Thoughts on Transformation 167About the Website 171Index 173