TRADING CHAOS APPLYING EXPERT TECHNIQUES TO MAXIMIZE YOUR PROFITS

Chaos theory now stands at the cutting edge of financial decision-making methods. The product of years of scientific investigation into unpredictable phenomena, it has the potential to offer traders entirely new perspectives on the movements of markets— and less risky routes to greater, more consistent profitability. Unlike other books on the subject, Trading Chaos takes chaos analysis out of the realm of the abstract and makes complex concepts easy to understand and use. It offers you the most practical, comprehensive guide available to applying chaos theory to the real world of trading and investing.

In this breakthrough work, author Bill Williams gives you the benefit of his unique qualifications: 35 years of successful trading and a PhD in psychology. The instructional techniques used in Trading Chaos have been tested and refined in the workshops, seminars, and private tutoring sessions Dr. Williams has conducted in 12 different countries.

Designed for all traders— from beginner to experienced professional— Trading Chaos introduces you to the financial applications of chaos in five graduated stages, starting with a clear, nontechnical introduction (Level One: The Novice Trader) all the way to chart analysis, fractals, Elliott wave, and advanced nonlinear dynamics (Level Five: The Expert Trader).

Trading Chaos probes depths of human and economic behavior that other books do not even mention, including: A detailed examination of the underlying structure of the market How individual belief systems affect the way we trade How to determine "what the market wants" Most importantly— "how towant what the market wants"

Numerous charts, trading models, analysis spreadsheets, and review questions reinforce the key concepts and help insure full comprehension of the material.

Regardless of your current degree of expertise, Trading Chaos will take you to new levels of trading confidence and increased profit.

This practical guide to the powerful tools of chaos theory will help you make better, more profitable trades

"Bill Williams brings a unique background and experience to the commodity trading world. His approach to becoming a successful trader includes many fresh and fascinating concepts for traders of all experience levels."— Bruce Babcock Editor, Commodity Traders Consumer Report

"Bill Williams has demystified the Elliott Wave. His technical approach is an innovative and effective way to trade markets for novice and expert traders alike."— Bob Koppel Skylane Trading Group

"Trading Chaos by Bill Williams is an excellent guide to profiting from a market which is nonlinear in structure. The book is divided into logical levels of trading techniques useful to the novice and expert trader. I was genuinely surprised that the expert can still learn refreshingly new techniques at each level presented."— Timothy C. Slater Managing Director of Dow Jones Telerate Seminars

Trading Chaos takes chaos theory out of the abstract realm and into the real world of practical investment decision-making. Using the techniques in this remarkable book, you will uncover the hidden patterns of what appear to be the random, unpredictable movements of the commodity, futures, and options markets. Regardless of your current level of experience, expert commodity trader andtrainer Bill Williams will give you the skills and insights to move to levels of trading ability you would not have imagined possible.

Clear, practical, and nontechnical— Unlike other books on chaos theory, Trading Chaos is designed to be easy to understand and use

Unique organizational format— Introduces the reader to the financial applications of chaos in five graduated stages, from Novice to Expert Trader

Expert advice on avoiding common psychological traps and pitfalls— Including such self-limiting afflictions as the "paralysis of analysis," "opinionitis," and the dangers of trading on individual belief systems

A wealth of supplementary materials— Charts, trading models, trade plans, analysis spreadsheets, and trading diaries illustrate and reinforce key concepts

Praise for

TRADING CHAOS

SECOND EDITION

"As a trader and an author for over fourteen years in stocks, futures, and options, it still amazes me when I read a book that teaches me new approaches to the market. This book is one of these amazing books that can teach the novice or the professional something important to take them to the next level of their trading. It is a must read for everyone interested in looking at the markets in a new way."

–George Fontanills, President Emeritus, Optionetics

"Bill and Justine Williams, two of the truly great teachers of market action, have written an outstanding book. It not only covers the psychology of personal trading but provides one with a well defined, coherent trading plan. This book is must reading for any serious trader, whether a beginner or experienced veteran."

–John R. Hill, President, Futures Truth Company

"What Bill Williams does best is raise questions and doubts in the minds of his readers. But, even better, he then provides wonderful new choices for thinking and acting. He has a deft lightness in his writing and a seriousness of purpose that drew me in like a magnet."

–Rodney Napier, PhD, head of The Napier Group

coauthor, The Courage to Act and Groups: Theory & Experience (now in its seventh edition)

Published in 1995, the bestselling first edition of Trading Chaos provided readers with the most practical and comprehensive guide for applying chaos theory to the real world of trading and investing. But today, the markets are different than they were even a few years ago. So with fresh research in hand, coauthors Bill Williams and Justine Gregory-Williams have updated their profitable methods and provide new techniques to help you take profits from the markets.

Trading Chaos, Second Edition will not only show you how to anticipate, recognize, and react to impending bull and bear market conditions, it will also introduce you to the latest findings in physics and psychology as applied to various markets–stock, bond, futures, indexes, and many others.

The first portion of this book is devoted to understanding how the rewards you’ll acquire in trading and investing are determined by what is happening inside of you. By digging through some very interesting and deep psychological principles, you can become a profitable "trade/vestor"–using technical techniques for good short-term entries and exits, but also holding on to long-term investments when the opportunity presents itself. Trading Chaos, Second Edition will help you build a solid psychological foundation before you enter the markets.

After you’ve learned how to gain an inner analytic edge, the authors will show you how the application of self-knowledge will improve your bottom line. Through numerous charts, checklists, and examples, you’ll be introduced to proven techniques that can make the unpredictable understandable and make your journey into the markets more profitable. You’ll learn how to:

• Sharpen entries and exits, and reduce whiplashes with the powerful "Alligator" indicator
• Get into a new trend very early with proper use of the "First Wise Man"
• Add on aggressively after your first entry using the "Second Wise Man" with the help of the Awesome Oscillator (AO)
• Make fractal breakout trades with the "Third Wise Man"–these almost guarantee profitable follow-through on a trade

In this early part of the twenty-first century, you have a choice to either be a part of the last generation of traders and investors using linear (ineffective) techniques or the first generation using effective nonlinear (chaotic) techniques. By reading the Second Edition of Trading Chaos, you’ll learn how you can take your trading skills to the next level and make steady profits in any market.

Includes bibliograhical references (p. 250-257) and index.

BILL WILLIAMS, PhD, CTA,is the founder of Profitunity.com, a leader in the education of traders and investors. Besides coaching over 1,000 traders in private tutorials, his two bestselling books, Trading Chaos and New Trading Dimensions, have contributed to furthering his unique trading concepts. A trader with over forty years of experience, Mr. Williams publishes a newsletter that provides insightful market commentary for approximately 1,800 readers. He is also well known on the speaker circuit, with a loyal following of high-level traders.

JUSTINE GREGORY-WILLIAMSis a full-time trader in the stock and commodity markets and President of the Profitunity Trading Group. She has trained over 1,000 traders in the Profitunity Methodology and also does private consultations for clients. Ms. Gregory-Williams has lectured nationwide, speaking at conferences such as Futures Industry Association, TAG, Omega World, and the Traders’ Library Trading Forum.