Preface
	Please don’t be concerned by my book’s title. Although “basics” may sound introductory it’s actually what counts in trading. It’s the simple methodologies that work and stand the test of time. If you don’t believe me then you should listen to Tom DeMark, a well-respected market participant who has worked with market wizard Paul Tudor Jones. He remarked in the Art Collins book Market Beaters:  The bottom line was, after 17 programmers and 4 or 5 years of testing, the basic 4 or 5 systems worked best. So take it from me, and from Tom DeMark, that when it comes to trading, simple is best and that basic does work. And wouldn’t you like to know what actually works in trading? Wouldn’t you like to start making money in a consistent and reliable fashion? Wouldn’t you like to stop jumping between failed trading methodologies? Wouldn’t you like to learn a trading approach anchored in sound logic that works in some of the biggest and best trading markets in the world? If so then this book is for you.  If you wish to make money trading then I am going to show you how by getting you back-to-basics. It won’t be perfect (but nothing is in trading) and it won’t be pretty (as only indicators and picture perfect chart examples can be). But you will make money if you follow my basic plan.  But first up, the plan will expect you to be a good loser. If you aren’t and can’t take losses, then the plan and I can’t help you. If you are and you can, then my basic plan can become your effective trade plan. And even if you believe you can do better than mine, at least it will give you a minimum benchmark to work from and measure alternative trade plans against.   My hope is that this book will become your one stop trading guide. It’s my objective to give you everything you’ll need to survive and prosper in active trading. If you’re really serious about making money from trading, and not just looking for an adrenaline rush to distract you from your well organised and stable life, then this book will have everything you’ll need to succeed.  This book will give you the answers to make money. It will drill home the importance of monitoring and trading a portfolio of the biggest and the most liquid and volatile markets. It will drill home the importance of trading with an effective trade plan. It will drill home the importance of trading with a statistical zero percent risk-of-ruin.  But I’m getting ahead of myself. Let’s take this one step at a time.  To make money from the markets you’ll need the following:  Around 10 highly liquid and volatile markets to monitor and trade; An effective trade plan; and A broking service to execute your orders. This book will deal with the first two.   This book will show you which markets are the best to trade. You’ll learn that the best are those that represent the best combination of size and volatility. Size will give you liquidity and protect a market from third party manipulation. Liquidity will allow you to enter and exit a market at your timing and not the markets. Size will give you competitive brokerage and reduce your cost of trading. Size will give you narrow bid and offer spreads and will reduce your slippage. Volatility will give you price movement. Price movement will give you profit.  The biggest markets today, ranked by size are the currency markets followed by the bond markets and the share markets. The biggest ranked by volatility are the currency markets, the share markets and bond markets. The two that represent the best combination of size and volatility are the currency and share markets, or equity indices.  This book will show you that following a single market and becoming an expert in its nuances may not be enough. You’ll learn that it places too much pressure on a trader to derive all their profit from a single source. You’ll learn that a medium term trend trader will only need to monitor and trade around 10 markets to find enough high probable set-ups to trade. You’ll learn that focusing on currency markets will provide the minimum number of markets you’ll need. By doing so you’ll be diving into the deepest end of the trading pool.  This book will show you that an effective trade plan will ensure that you’ll only risk a small percentage of your account balance on any one trade. An effective trade plan will ensure that your winning trades will, on average, be larger than your losing trades. The winning trades will be large enough to pay for all the losses and make a profit. You will learn that an effective trade plan doesn’t necessarily need a high accuracy rate to make money. You will learn that an effective trade plan can have a low accuracy rate of 33% and still make 32 cents for every dollar you place in a trade, as long as its average win is three times its average loss. An effective trade plan will ensure that you begin trading with a statistical zero percent risk-of-ruin and a positive expectancy. An effective trade plan will make sense to both your conscious and subconscious minds. An effective trade plan will be comfortable to trade.  You will learn my Key Level Trading System methodology is an effective trade plan. You will learn it’s grounded in sound and practical logic. You will learn it has an edge. This book will show you that by marrying Key Level and the global index markets with sensible money management and a clear mind that you will make money. This book will show you that it won’t be easy. This book will keep it real and tell you how it is. You will learn that you will get bruised at times and that you will suffer disappointment along the way. However, the book will show you that if you remain a good loser and if you stick to the basic plan, you will make money, but only if you’re serious.  This is what I hope the book will give you. If this is what you want then make sure you keep this book close at hand when trading. Do yourself a favour by putting time aside to study it thoroughly. Put the effort in and validate what I say and I believe you’ll start to behave like a winning trader.  Wishing you successful money management and the fortitude of character to be the best loser.  Brent Penfold Sydney, Australia