It’s actually quite simple:

Pick one specific trading strategy, and focus all of your time and attention on it.

Until you have mastered it.

Too often, new traders jump from one strategy to another.

They never stay in one place long enough to learn from their mistakes.

Or to learn from their winning trades.

The trading strategy that you are about to learn is simple, and yet extremely powerful.

It’s a great strategy for anyone who is just getting started trading.

In this book, I will show you how to find the right stocks to trade, and then what to do once you’ve found them.

A final note before we get started:

When you are first learning how to trade, it is important not to focus on the money.

You should focus on only 3 things:

• Your entry price
• Your profit target
• Your stop loss

If you can focus on just these 3 things, then the money will begin to take care of itself.

I know that this works, because that’s what happened to me.

I first worked on perfecting my technique and discipline.

As these evolved, the money naturally followed.

Now it’s time to turn to the details of this powerful trading strategy.

The Rubber Band Stocks strategy uses Bollinger Bands, with a period set to 80 days.

You don’t need to know exactly how Bollinger Bands are calculated for now.

All you need to know is that when a stock closes below the lower Bollinger Band, it should always get your attention.

Each bar or “candlestick” represents one trading day.

If the candlestick is red, it means that the stock’s closing price is lower than its opening price.

If the candlestick is green, it means that the stock’s closing price is higher than its opening price.

The top of the “wick” shows the stock’s daily high price, and the bottom of the “wick” shows the stock’s daily low price.

I’ve put 2 big arrows on the chart above to show you the days on which the stock closed below the lower Bollinger Band.

The bottom of the red part of the candlestick is the closing price.

I’ve built a free chart that you can use with any stock here:

https://www.tradingview.com/chart/QxHMkmnE/

To use this chart, just enter a ticker in the upper right-hand box, press enter, and then double-click on the symbol to have it load on the chart.

You may need to sign up for a free account with TradingView.com in order to change the ticker in the chart.

(By the way, my only affiliation with TradingView.com is as a paying customer myself).

Here we are using daily bars, and we have set the Bollinger Bands to use an 80-period (80 days) look-back.

You will notice that the middle band is just an 80-day moving average.

The upper Bollinger Band is always two standard deviations above this moving average.

And the lower Bollinger Band is always two standard deviations below this moving average.

Under a normal distribution, approximately 95% of observations will fall between -/+ two standard deviations.

So if we close above the upper Bollinger Band, or below the lower Bollinger Band, it’s definitely a fairly rare event, and we need to wake up and take notice.

Readers often ask me why I use an 80-day period, rather than another setting.

The short answer is this:

To continue reading this book, click here.

Momentum is not one of them.

Momentum was first documented as a stock market anomaly in the early 1990’s.

And it’s still working.

Once you learn how to trade momentum stocks, you will have a tool in your trader toolbox that you can use for the rest of your life.

So what exactly is a "momentum stock"?

It is any stock that keeps moving in a certain direction (whether up or down) for an extended period of time.

During the dot-com boom of the late 1990's, Yahoo, eBay, Oracle, and Cisco were momentum stocks.

They went straight up for a couple of years, and then straight down even more quickly from 2000-2002.  These stocks had momentum on the upside and on the downside as well.

Buy and hold investors who held these stocks over this period saw their wealth soar, and then plummet.

As you might guess, a buy and hold investment strategy should never be used with momentum stocks. 

There is a better way—one that is much less stressful.

It’s called “trend following.”

You probably have heard the expression "the trend is your friend."

But you may not have realized just how powerful trend-following can be.

John W. Henry used it to earn enough money to buy the Boston Red Sox. 

Studies have shown that there have always been trends in the markets, even going back hundreds of years. 

This makes sense, since human nature is a constant.

Trend following seeks to profit from this collective behavior of market participants, who move into and out of the market, driven by vast alternating waves of fear and greed.

In a trend-following strategy, you only buy stocks that are rising, and you sell them immediately if they begin to fall.

You don’t try to predict the future.

You simply use the price action itself to tell you what you should be doing.

As you will see, there are precise ways to measure this price action, so that you will never need to second-guess yourself.

The trading rules that you will learn here are quite simple.

You will learn exactly when to buy a stock, when to take profits, and when to exit a losing trade.

You will learn how to size a position.

And most importantly, you will learn what pond to fish in, if you want to catch the best momentum stocks.

I've been trading for over 20 years.

I’ve learned what works in the markets-- and what does not.

Trend-following is a strategy that works extremely well with momentum stocks.

Even better, it does not require you to be glued to your computer monitor all day long.

You will not need multiple charts, news feeds, or dozens of indicators.  

You will never suffer from "analysis paralysis," where one indicator is telling you to buy while another indicator is telling you to sell.

You will have the freedom to put on a position, and then leave your computer and go to the beach for the day.

As a long-term trader, you will enjoy a much higher quality of life than a short-term trader.

As you will see, trend following is a simple, elegant method of extracting wealth from the markets.

For example, the trend-following system that you are about to learn bought Tesla (TSLA) in December 2012 and held it until July 2013 for a gain of 300%.

It bought Apple (AAPL) in May 2003 and held it until January 2005, for a gain of 300%.

And then a few years later, it did it again, buying Apple in May 2009 and holding it until February 2012 for another gain of 300%.

So where should we look to find the next Tesla or Apple?

Buy one, and stick it in the corner of your living room.

Every three months, it will burp out a nice slug of cash.

If you save this cash, you will soon be able to buy a few more little cash machines.

Pretty soon, they will be all over your house, spraying cash all over your carpet.

And they will keep doing this-- whether or not you get out of bed in the morning.

That's the beauty of dividend investing.

It's simple.

It's powerful.

And it's one of the best proven ways to build wealth.

Ronald Read spent the first half of his life as a gas station attendant.

And then the rest of his life as a janitor at his local J.C. Penney department store.

When he died at the age of 92, he left behind an $8 million fortune.

All of it in dividend-paying stocks.

Well-known stocks like Wells Fargo, Procter & Gamble, Colgate-Palmolive, American Express, and many more.

If you assume an average 3% dividend yield across his portfolio, he was collecting $20,000 every month in dividends at the time of his death.

At the same time that he was probably making just $13/hour as a janitor.

It's a good reminder that you don't need to collect a massive paycheck to become a millionaire.

You just need to spend less than you earn.

And then invest the rest in dividend stocks.

If you invested just $6,300 every year for 50 years, you’d end up with $8 million like Ronald Read.

It’s something that anyone can do.

In this book, I'll teach you how.

You are going to learn:

• Exactly how to set up your own portfolio of dividend stocks

• Where to set up a brokerage account

• Which dividend stocks to pick, and which to avoid

• How to super-charge your returns

• How to ride out a bear market

• And much much more

I'm going to help you start your own collection of “little cash machines.”

There's no better feeling than waking up in the morning, and suddenly finding that some more cash has been deposited into your bank account while you were sleeping.

As the years pass by, that cash will continue to pile up.

You'll be able to use it to travel the world.

To pay for your grandchildren's college.

To create a secure retirement income.

Or even to buy more dividend stocks.

The choice is yours.

Once you get started, you'll be hooked.

Your life will never be the same, once you see how you can create crisis-proof, inflation-proof income streams in the stock market.

We'll begin at the very beginning.

If you spend most of your time with criminals or lazy people, odds are that your life looks very much like theirs. 

If you spend most of your time associating with millionaires, you too will most likely become a millionaire. 

There's nothing magical about this. 

It's simply a product of the law of averages and human susceptibility to influence. 

And yet not everyone is lucky enough to be able to rub shoulders with millionaires every day. 

I've been very lucky in my life. 

My parents sent me to the same elite private high school that Bill Gates attended. 

I was able to use this education as a spring board to get an undergraduate degree from Stanford University, and then a PhD from UC-Berkeley. 

It was at Stanford that I met Peter Thiel-- founder of PayPal, early Facebook investor, and now a billionaire. 

After graduate school, Peter hired me to work at his multi-billion dollar hedge fund. 

After that, I ran my own hedge fund. 

I'm now retired from the money management business. 

Today I run www.trader.university, where I teach the best stock trading strategies and investment techniques used by professional traders. 

I've been skilled (or lucky) enough to have one success after another. 

And yet it's important to note that I don't consider myself a self-made millionaire. 

I’ve had a lot of help along the way. 

Without my wife, my children, my parents and my brother, my friends, my teachers, and other mentors, I would never be where I am today. 

Unfortunately, not everyone can launch their careers by attending Stanford University like I did. 

In fact, I'm pretty certain I couldn't get into Stanford today. 

So we're faced with a dilemma. 

To become a millionaire, you need to hang out with other millionaires. 

And yet it's difficult to hang out with other millionaires, if you are not a millionaire yourself. 

It's a classic catch-22. 

My solution is this book. 

I’ve interviewed five ordinary people who became self-made millionaires. 

They did not just inherit a large chunk of change. 

Instead, each of them earned every penny of it. 

For this book, I won't be interviewing Peter Thiel, or any of the other professional hedge fund managers or Silicon Valley founders and investors that I know.

Those will have to wait for a later book. 

For this book, I wanted to focus on ordinary people who became millionaires. 

These are people who worked hard, but also worked smart. 

All of them have another thing in common: 

They are readers of my books on trading and investing. 

I’m blessed to have been able to interview them.

One of the best things about writing and publishing books is all of the interesting people who contact you.

The self-made millionaires in this book are all voracious readers.

Even after making millions, they have never stopped reading and learning. 

I’m grateful to them for having agreed to do these interviews with me.

By sharing their different paths to wealth, they are going to help a lot of people who read their stories. 

That being said, all of them are private individuals who are not looking for publicity. 

For this reason, I've omitted their names, and changed some identifying details to protect their privacy. 

Even so, you are still going to get to "hang out" with them by reading these interviews. 

Reading this book will change your perspective on life, business, and money. 

Take out a pen and paper, and take some notes.

Absorb the morning routines, business hacks, investing strategies, and life philosophies that you will encounter. 

Most of all, get inspired. 

If they could do this, so can you. 

In the 21st century, anyone can become a millionaire. 

All it takes is some hard work and the right road map. 

Now it's time to turn the page, and start learning from these millionaire road maps.

To continue reading this book, please click here

I was born in 1960 in the Bay Area, where I've lived ever since.  My father was a plumber, and I decided to follow him into the trade.  I've always been good with my hands, and not afraid of a little dirt.  It's not glamorous work, but I enjoy the freedom of being my own boss. 

Did you go to college?

I did not.  I went straight into plumbing after high school.

Do you focus on residential or commercial plumbing?

I only do residential plumbing.  I'm a one-man shop.  No employees, no business location.  Besides my plumbing tools, all I need is a cell phone, an old van, and a good Yelp listing.  I don't even really need Yelp, since most of my business is word of mouth at this point.  Being a plumber is a great business, because you don't need a lot of assets (or business loans) to start your business.

Some of my readers might be surprised to learn that you are a millionaire.  There are lots of people with MBA's and law degrees that are not millionaires.

Like I said, there's nothing glamorous about what I do.  You don't need a 120 IQ to install a toilet or unplug a sink.  The good news is that robots haven't put me out of a job yet.  When someone calls me on a Sunday night with a flooded toilet, I'm as important to them as a trusted attorney or tax adviser.

What do you charge?

$150/hour plus materials.  I could probably charge more, since folks are usually desperate when they call me.  But that's about the going rate.

How many hours do you work per week?

I work about 30 hours per week on average, not counting time spent in traffic.

So that's about $18,000/month before taxes?

Yes.

That's incredible.  You're basically making the same amount of money as a Google engineer.

Yes, but without the stock options, of course.  Your readers need to realize that the Bay Area is a very expensive place to live these days.  The median price of a home in my area is over $1.5 million, and that's for a pretty crappy house.  I'm lucky to have bought my house in the 1980's before tech took off.

So I imagine that your house has helped to make you a millionaire.

Yes, I have more than a millionaire dollars in equity in my house.  But that's only a part of the story.

Really?

I've been a beer drinker all of my life.  It's my only vice, though I wish I exercised more.  Ironically, it's my beer habit that has made me more money than anything else.  I've been drinking Sam Adams beer for as long as I can remember.  It's still my favorite beer.  

Well, in 1995, I began to see announcements on Sam Adams six-packs that the company was going to sell shares to the public.  There was a toll-free number that you could call to get 33 shares of stock at $15 each.  So I immediately called the number and purchased my $495 worth of the stock.  A few months later when the official IPO happened, those shares that I had bought at 15 were trading in the high 20's.  The stock got as high as 33 before crashing all the way down to 6.50 by the late 1990's.  The internet boom was in full swing, and nobody wanted shares of old economy companies like brewers.

I had a different opinion.  I knew that the Boston Beer Company (SAM) made the best microbrew beer in the world.  I drank a few bottles of Sam Adams every night, and so was constantly reminded of this.  And so I decided to start adding to my position in SAM by using all of my available cash to buy more shares.  I used all of the available profits from my plumbing business, after paying our household expenses, to buy more shares of SAM.  On the 15th of every month since 1998, I've been buying shares of SAM.  Those same shares that I paid between 6.50 and 10 for in 1998 are now worth over 300 per share.  I'm a multi-millionaire today because of SAM.

Have you ever sold any of your shares?

I sold some to pay for my children's college education, but I still own most of my shares.  Literally millions of dollars worth.  My wife keeps telling me that I should sell the whole thing and put the cash into a safe CD.  I might do that one of these days, but at this point I'm emotionally attached to them.  I love the beer, and I love the company that makes it.

We often hear that when investing you should not put all of your eggs in one basket.  Are you guilty of this?

I think that the second half of that proverb is that if you do put all of your eggs in one basket, make sure you watch that basket closely, or something to that effect.  I'm definitely guilty of not diversifying.  But I've also heard from folks like Warren Buffett that you can only get huge returns by owning just a few stocks.  If you own the 500 stocks in the S&P 500, your results will just be average.

I think that everyone has to decide for themselves what they are comfortable with.  I have read every annual report that SAM ever put out, so I am definitely watching my basket very closely.

Are you married?

Yes, I am married with 2 grown children.  One works for Google, and the other works for Facebook.  I'm not a bit sorry that they haven't followed me into my profession.

Is there anything about your morning routine that you would like to share?

Now that my children are all grown up, I like to wake up slowly in the morning.  The Bay Area is expensive, but the weather is just perfect here.  I usually have a leisurely breakfast sitting at an outside table in the sun.  I find that 20 minutes of early morning sunlight and fresh air really helps me to wake up and feel good about starting the day.

Any advice for high school or college students?

Don't be afraid to go into the trades.  Our country has a shortage of craftsmen, plumbers, electricians, repair men, etc.  College isn't for everyone.  Be realistic about student loans and what you are going to study in college.  Will you really be able to pay off those loans, which will otherwise stick with you for life?

Any other advice?

Invest in what you know.  If you are regularly spending money on something, why not get some of that money back from the company in the form of dividends and capital gains?  My life would be very different today if I had never invested in the Boston Beer Company.  Also make sure that you find a good spouse who shares your financial and personal values.  Take each day as it comes, and appreciate the small things.  Life just flies by, so take the time to appreciate the little moments.

Thanks for taking the time to talk with me today.

Click here to read more interviews with self-made millionaires

And probably multiple bear markets.

If you’ve already lived through one, you know how difficult they can be.

If you’ve never experienced a bear market, there is a good chance that you are not prepared for one.

Warren Buffett is famous for saying:

Only when the tide goes out do you discover who’s been swimming naked.

A bull market lifts all boats.

If you make trading mistakes, the gradually rising tide will usually bail you out.

Not so in a bear market.

When the tide rushes out, you can spot the newbie traders and fraudsters lying on the sand.

I don’t want this to happen to you.

I want you to be prepared for the next bear market.

I’ve lived through the great bear markets of 2000-2002 and 2008-2009.

In each one, I made some mistakes, but ultimately emerged wealthier (and wiser).

I want to share with you what I’ve learned.

This book will give you all the tools that you’ll need to spot a bear market on the horizon—and then to profit from it.

Here’s how I define bull and bear markets.

In a bull market, a stock market index (a collection of stocks, like the S&P 500) spends most of its time trading above the 50-day moving average.

And the 50-day moving average is above the 200-day moving average.

In a bear market, a stock market index spends most of its time below the 50-day moving average.

And the 50-day moving average is trading below the 200-day moving average.

Bull markets are almost always a leisurely affair.

They take their time to develop, and usually last 5-15 years.

Bull markets last until everyone is comfortable.

Bull markets make sure that almost everyone is fully invested—and even using lots of margin (borrowed money).

Bull markets last long enough to make sure that all of the amateurs feel like stock market geniuses.

Bull markets feel like a leisurely 10-course meal.

A smooth steady push upwards.

Not so with bear markets.

If bull markets take the escalator up, then bear markets take the elevator shaft down.

Bear markets are fast and furious.

They usually last 6 months to 2.5 years.

Bear markets feel like a crack in the earth opening up and swallowing you.

In a bull market, volatility (how much the market bounces around) usually stays low.

If the market dips (sells off a bit), everyone jumps in to “buy the dip.”

This happens again and again, until a whole generation has been trained to always buy the dip.

When everyone buys every dip, it helps to keep volatility low.

Today everyone is talking about “BTFD”—“buy the f***ing dip.”

We live in vulgar times, but the principle is the same.

Buying the dip has worked extremely well since 2009, but is about to end.

A dip is coming that is going to take out a whole generation.

In a bear market, traders who buy the dip get crushed.

As soon as they’ve loaded up on their position, the bottom falls out.

In a panic, they exit their positions and try to get short (betting on a continued market decline).

As soon as they are short, a fast and furious rally arrives and blows them out of their short position.

In a bear market, there are plunges followed by 2-5 day melt-ups.

Volatility is high.

You are glued to your computer screen and news feed.

Your cortisol levels and other stress hormones stay high.

Your neck and lower back ache all the time.

You see numbers on your screen and cannot believe your eyes.

Companies file for bankruptcy.

Some stocks go to zero.

You might even own a few of them.

In a bear market, you feel like you are walking in a dream.

The feeling is similar to the death of a loved one.

Disbelief, numbness, grief.

There’s only one way to stay sane:

Know what to expect in advance.

Here are some of the signposts:

After the stock market has been going up for many years, you will reach a point where you feel like you are missing out.

All of your friends and neighbors will be bragging about how muchmoney they are making.

Your wife will be asking you why you don’t own stock XYZ.

You’ll try to buy some more stocks, but will find that they are getting away from you.

You had a chance to buy that stock at 70 last month.

Yesterday it was at 90.

Today it’s at 110 after reporting great earnings.

You’re tired of waiting for a pullback that never comes.

So you take that chunk of cash (that you’ve been holding for 5 years), and use it to buy some random stocks that everyone is talking about.

Chances are, you’ve never read a 10-K for those stocks, or analyzed their charts.

But you feel good that you are going to finally make some money with everyone else.

For a few days, you are coining money.

The stocks that you have bought keep moving up.

Like little toy soldiers, they are steadily marching upwards.

Volatility is low, and every dip in the stock gets bought.

Suddenly you wake up one Monday morning and the Dow is down 400 points.

You look at your account and can’t believe your eyes.

Some of your stocks are down 3% and a few are even down 8%.

High volatility has returned to the markets.

The steady climb upwards is over.

Now you get to watch your stocks bounce all over the place.

You’re sweating bullets for a few days, but fortunately your stocks recover.

You’re almost back to your entry points in all of them.

One Friday afternoon, all of your stocks are up 3-5% on the day, and you’re feeling like a genius again.

The pundits on TV have all declared that the correction is over.

There’s still lots of volatility, but at least stocks are moving up.

Unfortunately, none of your stocks seem to be able to make it back up to their highs.

They keep bouncing around within a range (say from 90 to 110).

In addition, the SPY (S&P 500) and QQQ (NASDAQ 100) are having trouble staying above their 50-day moving averages for more than a few days.

Each 50-day moving average begins to droop and turn down.

During the bull market, they were pointing northeast on the chart.

Now they’re pointing southeast on the chart.

Then one bleak day, you realize that the 50-day moving average for the SPY has just moved below the 200-day moving average.

Then the roller coaster begins.

To continue reading this book, click here.