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Vic Speradeo has traded for such famous traders as - George Soros, Leon Cooperman and BT Alex Brown. His market crash prediction during the September 1987 Barron’s interview earned him widespread fame and he is frequently featured in media and has authored several best selling books.

Here we will look at some simple trading rules he introduced in his first book Trader Vic Methods of a Wall Street Master.

In technical analysis Spreandeo follows various standard technical indicators to define trends and lock into them. The following are methods which are simple and are used in his trading strategy. First let's look at his definition of a trend and trend line and then look at the 1,2,3 Rule, the 2b Rule and the 4 Day Rule.

Definition of aTrend

The 1-2-3 Rule

Sperandeo identifies a change of an uptrend as:

1. Trend line (defined above) broken.: 2. Prices no longer making new highs.: 3. Prices fall below a previous minor rally low

Or conversely for a down trend:

1. Trend line (defined above) broken.: 2. Prices no longer making new lows.: 3. Prices fall rise above a previous minor rally high.

Either of 1 or 2 is a probable trend change. Two of the three conditions is an increased probability of a change. All three is the definition of a trend change.

The 2B Rule

Point 2 above is really the failure of prices to carry past a previous rally (or previous sell off). Sometimes prices go just past then they immediately reverse direction. Such a case is Sperandeo's rule 2B,

Even if the rule worked only 1 in 3 times, the risk to reward is so good, it can be a highly effective and lucrative way to trade.

The Four Day Rule

The four day rule is Sperandeo's favourite set up for a change in the intermediate trend. The rule is
“ In an intermediate trending move, a reversal in the form of 4 days against the trend is highly likely to lead to a trend change”.

He defines a variant as the "four-day corollary",

“In an intermediate trending move, a sequence of 4 days with the trend followed by 1 against is highly likely to lead to a trend change.

This rule is looking for a climax over a series of days, instead of a single high-volume climax day.

Trader Vic — Methods of a Wall Street Master

This is simply a book every trader should have on their bookshelf and contains a bit of everything from trading strategy, to money management to psychology.

"Victor Sperandeo is gifted with one of the finest minds I know. No wonder he’s compiled such an amazing record of success as a money manager. Every investor can benefit from the wisdom he offers in his new book. Don’t miss it!" —Paul Tudor Jones Tudor Investment Corporation

"Here’s a simple review in three steps: 1. Buy this book! 2. Read this book! 3. See step 2".

Trader Vic – Methods of a Wall Street Master – Published By John Wiley

Final Words

The above book is an investment book which has a little bit of everything, from how to use technicals and fundamentals, to how to employ proper money management and get the mindset of a winner – so buy it and can some great advice for bigger profits from a real pro.