Micro-Trend Trading for Daily Income: Using Intra-Day Trading Tactics to Harness the Power of Today's Volatile Markets [Hardcover]

Most stock trading books make elaborate claims about offering new trading systems without showing their back-test performance results. This book shows such results for the eight featured systems. Normally such "proof" of performance would make this book stand above its competitors.

Unfortunately, when I modeled two of the eight systems using TradeStation's Easy Language programming system (I have about 5-years Easy Language programming experience), I found that they didn't reproduce the author's stated back-test results! For these two, I couldn't get a decent (consistent looking) equity curves even after setting all commissions and slippage to zero and optimizing the input moving average periods and stop-loss and stop-profit percentages.

In my opinion, a good systems stock trading book should show both back-tested systems performance results and an equity curve over the period it was tested. A system with a chaotic equity curve is one that most of us don't want to trade. Without this data the reader knows nothing about the "advertised" system other than the author saying "trust me".

I'm embarrassed/disappointed that he frequently mentions the Lord's name and his Christian beliefs in the text of such a sub-par product.

I never got around to modeling the other six "systems" since I felt that the book was wasting my time. You may come to the same conclusion.

I would encourage other reviewers who also have programming experience (via programmable trading platforms such as TradeStation, Ninja Trader, MultiCharts, OmniTrader, etc.) to back-test these systems and report back here with your results. After all, we may help prevent some newbie from losing his/her hard-earned trading account money. Remember; 95% of all traders lose. Why? Because 95% of the available trading books/seminars feature and teach trading systems/techniques that simply don't work.

Someone once said that: "Any trading system can be quite profitable... provided that you sell enough copies of it!" :-)

***I've added some updated results from my use of the trading systems described in this book***

I have both trading books by Dr. Carr and in my opinion, Micro-Trend Trading is just as good as Trend Trading for a LIving if not better. There are 8 systems fully explained here (I don't know of any other trading book that FULLY explains any trading system, let alone 8 of them!). There is only one system that requires you to sit in front of the computer all day. The rest only require a few minutes each day to run a screen, enter your orders, then log back in at the close to close out positions. There are also 3 systems that hold positions overnight as well, in case you do not have a $25k account to daytrade with.

I really don't get the previous reviewer's problem with backtesting. Dr. Carr spells out several reasons why he does not use mechanical backtesting (see pages 93 - 99, also the Introduction). His method is to run his screens over a look-back period and then "eyeball" each chart for passing candidates. It is more work but, it seems to me, a lot more accurate. He also tests his systems using real money and real trades. I don't see how you can get a more accurate report than that.

To give an example: this morning I ran his "snap-back" screen (ch. 11) for long candidates. There were 6 hits on the screen but only 1 of them was a viable candidate according to his rules. A mechanical backtest would have used returns for all six, not just the one passing stock.

I've been trading 3 of his systems since I bought the book: Turn of the Month, Snap-Back and the ONT's. I'm using a $20k account at IB.com with a fourth of it in the TOTM system (since it is less volatile), and the rest spread evenly over up to seven open positions. Here are my results so far:

15 weeks of trading up to: 04/11/11

Total Net Profit (after commissions): $3,347
Total ROI: +16.7%
Total Trades: 89
Total Winners: 51

Here are some recent closed "Snap Back" trades (my favorits system so far). The RNOW trade was an ONT trade. There were two shorts, noted below, with the cover price listed as entry price:

Date (in) Stock In Out Shares Profit Tl Profit %age

7-Jan-11 KV/A 2.17 2.27 500 $44 $1,405 4.6%
10-Jan-11 APOL 34.96 40.78 100 $580 $1,361 16.6%
11-Jan-11 TLB 6.22 6.25 500 $9 $1,414 0.5%
11-Jan-11 TSTC 8.06 8.20 400 $51 $1,465 1.7%
12-Jan-11 LF 4.18 4.28 400 $35 $1,500 2.4%
13-Jan-11 SMSI 13.45 13.05 200 ($82) $1,418 -3.0%
14-Jan-11 CVVT 6.95 7.74 300 $233 $1,651 11.4%
18-Jan-11 CSTR 41.78 42.26 60 $28 $1,679 1.1%
18-Jan-11 sh-SBIB 8.85 8.97 275 $30 $1,709 1.4%
19-Jan-11 LNET 3.14 3.50 800 $278 $1,987 11.5%
19-Jan-11 sh-RNOW 26.54 27.27 90 $65 $2,052 2.8%
20-Jan-11 FFIV 108.48 109.95 35 $51 $2,103 1.4%
20-Jan-11 MNKD 5.37 5.26 500 -$67 $2,036 -2.0%
20-Jan-11 IMAX 26.68 27.30 90 $54 $2,090 2.3%
21-Jan-11 VVUS 8.60 8.84 380 $82 $2,172 2.8%
25-Jan-11 WHX 15.00 17.45 85 $206 $2,379 16.3%
26-Jan-11 EK 4.04 3.81 600 -$152 $2,227 -5.7%
27-Jan-11 QTM 2.87 2.86 720 -$24 $2,203 -0.3%
27-Jan-11 sh-ALY 7.40 7.62 255 $50 $2,253 3.0%
27-Jan-11 SPWRA 13.88 13.22 150 -$102 $2,151 -4.8%
27-Jan-11 DRV 16.20 16.50 110 $30 $2,181 1.9%
28-Jan-11 INFN 7.46 7.63 340 $50 $2,231 2.3%
28-Jan-11 MWW 16.01 16.09 140 $8 $2,239 0.5%
31-Jan-11 sh-TNAV 10.04 9.99 200 -$15 $2,225 -0.5%
31-Jan-11 TV 24.08 24.26 85 $13 $2,238 0.7%

Hopefully this will set the record straight about this book. It has truly been a great help to my trading. What I needed was a step-by-step trading manual for short term trading. This is it!

Overall, I think this is a good book and should provide helpful ideas to traders across the spectrum of experience. However, it's not the end-all-be-all of trading books, and has some shortcomings. I'll try to outline the book's strengths and weaknesses below:

POSITIVES

1. The author presents fairly concise rules for the trading setups that he describes in his book. There are some moments of subjectivity (i.e., when he refers to "bullish" candlestick patterns but doesn't specify all the ones he looks at) but, by and large, his setups are specific. In my experience, many authors are nowhere near as specific, and the author should be credited for presenting his ideas in such a manner that they can be explored and tested.

2. The author includes a number of chapters on trading as a business, how to avoid blowing out, avoiding trading addiction, etc. For more seasoned traders, these are probably unnecessary but they will help newer traders avoid pitfalls.

3. The author presents setups that are useful to daytraders as well as multi-day traders or people who can't spend their entire day in front of the screens.

4. The author doesn't waste time explaining what a stochastic indicator is or how to calculate a moving average. There are many other books (and software guides) that explain how to do this.

NEGATIVES

1. As other reviewers have noted, the historical results presented in the book are not done using a standard program like TradeStation or MultiCharts. Instead, they are "eyeballed" which can introduce subjectivity into the process.

2. I'm always leery when an author trumpets annualized returns of 300%, 500% or more based on a trading strategy. The author does this several times in the book. Just realize that there is more to trading success than simply having the right rules: you have to make sure your execution is flawless, you have to keep your trading costs low (commissions, etc.) and you have to have the discipline to follow your strategy, even when it registers a string of losses. Most people can't do this, which is one reason why many people lose at the game of trading.

3. As other reviewers have noted, the author maintains that many of the strategies can be applied to a wide array of instruments (stocks, ETFs and futures) and on different time frames. In my limited experience in reviewing these strategies, some markets and timeframes work a lot better than others.

4. A few of the technical indicators aren't described clearly enough. For example, in the first strategy, the author refers to the Stochastic(5,3) but doesn't explain if that's a fast stochastic or slow. To his credit, when I contacted the author by email about this, he responded clearly and quickly to my inquiry (he recommended the slow stochastic, but said there's not much difference between the two).

In conclusion, any trading book that gives you a few good ideas is worth the cost. This book satisfies that requirement, although it's important to understand how a book like this fits into one's overall market approach. For me, it serves as a helpful source of ideas but is not a complete, stand-alone manual on trading.

For a beginning trader, I would say that the strategies presented in this book offer a starting point, but realize that (a) you shouldn't trade anything you haven't tested and reviewed yourself - some of these strategies take a sizable amount of risk, (b) short-term trading can generate a lot of commissions which will eat into your returns, (c) don't be hypnotized by returns of 100%, 300% or 500% - consistently achieving returns like that is extremely difficult, if not impossible and, finally, (d) note that it's important to have a trading style that matches your personality, so if you find it difficult to pull the trigger on these strategies, look for something else you're more comfortable with.