Chapter 6

Breaking Down a Stock or Commodity

Know your enemy and know yourself and you can fight a hundred battles without disaster.

—Sun Tzu

In attempting to construct a trading system appropriate for the existing trading environment, you are likely to encounter many false starts. Nevertheless, these exploratory undertakings are a valuable learning process. After researching an assortment of possibilities, you will eventually uncover some attractive candidates. As you narrow the field, you can perform a more extensive examination of those systems offering the most promising opportunities.

This chapter offers a more probing examination into the most tradable equities index commodity, the E-mini S&P 500 (ES) futures contract (multiplier × $50 ...

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