Trading For Dummies

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Lita Epstein. Trading For Dummies

Introduction

About This Book

Foolish Assumptions

Icons Used in This Book

Beyond the Book

Where to Go from Here

Part 1. Getting Started with Trading

Chapter 1. The Ups and Downs of Trading Stocks

Distinguishing Trading from Investing

Seeing Why Traders Do What They Do

Successful Trading Characteristics

Tools of the Trade

Taking Time to Trade More Than Just Stocks

Going Long or Short

Managing Your Money

Understanding Fundamental Analysis

Getting a Grip on Technical Analysis

Putting Trading Strategy into Practice

Trading at Higher Risk

Remembering to Have Fun!

Chapter 2. Exploring Markets and Stock Exchanges

Introducing the Broad Markets

Reviewing Stock Exchanges

Understanding Order Types

Chapter 3. Going for Broke(r): Discovering Brokerage Options

Why You Need a Broker

Exploring Types of Brokers and Brokerage Services

Services to Consider When Choosing a Broker

Knowing the Types of Brokerage Accounts

Choosing the Right Broker for You

Getting to Know the Rules

Chapter 4. Putting Your Key Business Tool to Work: The Computer

Making Use of Your Computer

Finding Price Charts

Digging Up Fundamental Data

Accessing Analyst Reports

Selecting a Trading Platform

Determining Computer Requirements

Accessing the Internet

Part 2. Reading the Fundamentals: Fundamental Analysis

Chapter 5. Fundamentals 101: Observing Market Behavior

The Basics of the Business Cycle

Employing a Sector Rotation Strategy

Understanding Economic Indicators

Using Data from Economic Indicators

Chapter 6. Digging Into Fundamental Analysis

Checking Out the Income Statement

Looking at Cash Flow

Scouring the Balance Sheet

Determining Stock Valuations

Figuring Your Ratios: Comparing One Company’s Stock to Another

Chapter 7. Listening to Analyst Calls

Getting to Know Your Analysts

The Importance of Analysts

Pointers for Listening to Analyst Calls

Locating Company Calls

Identifying Trends in the Stock‐Analyst Community

Part 3. Reading the Charts: Technical Analysis

Chapter 8. Seeing Is Believing: An Introduction to Technical Analysis

Understanding the Methodology

Answering the Detractors

Executing Your Trading Plan

Using StockCharts.com

Chapter 9. Reading Bar Charts Is Easy (Really)

Creating a Price Chart

Identifying Simple Single‐Day Patterns

Recognizing Trends and Trading Ranges

Searching for Transitions

Chapter 10. Following Trends to Boost Your Probability of Success

Identifying Trends

Supporting and Resisting Trends

Seeing Gaps

Waving Flags and Pennants

Withstanding Retracements

Dealing with Failed Signals

Chapter 11. Calculating Indicators and Oscillators

The Ins and Outs of Moving Averages

Understanding Buy and Sell Pressure through Stochastic Oscillators

Tracking Momentum with the MACD

Revealing Relative Strength

Part 4. Developing Strategies for When to Buy and Sell Stocks

Chapter 12. Money Management Techniques: Building a More Robust Portfolio

Achieving Your Trading Goals with Smart Money Management

Managing Your Portfolio

Protecting Your Principal

Understanding Your Risks

Chapter 13. Combining Fundamental and Technical Analyses for Optimum Strategy

Seeing the Big Picture

Selecting Your Trading Stock

Trading Strategies

Chapter 14. Minimizing Trading Risks Using Exchange‐Traded Funds

What Is an ETF?

Does Family Matter?

Sector Rotation Strategies

Analyzing ETFs

Portfolio Construction

Chapter 15. Executing Your Trades

Entering and Exiting Your Trade

Selling Stocks Short

Avoiding Regulatory Pitfalls

The Tax Man Cometh

Chapter 16. Developing Your Own Powerful Trading System

Understanding Trading Systems

Selecting System‐Development Tools

Developing and Testing Trading Systems

Keeping a Trading Journal

Evaluating Trading Systems for Hire

Part 5. Risk‐Taker’s Paradise

Chapter 17. The Basics of Swing Trading

Selecting Stocks Carefully

Looking at Swing‐Trading Strategies

Using Options for Swing Trading

Getting a Grip on Swing‐Trading Risks

Chapter 18. The Basics of Day Trading

What Day Trading Is All About

Understanding Account Restrictions

Strategies for Successful Day Trading

Recognizing That Risks Are High

Avoiding the Most Common Mistakes

Chapter 19. Doing It by Derivatives

Types of Derivatives: Futures and Options

Buying Options and Futures Contracts

Options for Getting Out of Options

The Risks of Trading Options and Futures

Minimizing Risks

Chapter 20. Going Foreign (Forex)

Exploring the World of Forex

Understanding Money Jargon

Looking at How Money Markets Work

Taking Necessary Risks in the World Money Market

Getting Ready to Trade Money

Part 6. The Part of Tens

Chapter 21. More Than Ten Huge Trading Mistakes

Fishing for Bottoms

Timing the Top

Trading against the Dominant Trend

Winging It

Taking Trading Personally

Falling in Love

Using After‐Hours Market Orders

Chasing a Runaway Trend

Averaging Down

Ignoring Your Stops

Diversifying Badly

Enduring Large Losses

Chapter 22. Ten Trading Survival Techniques

Build Your Trading Tool Chest

Choose and Use Your Favorite Tools Wisely

Use Both Technical and Fundamental Analyses

Count on the Averages to Make Your Moves

Develop and Manage Your Trading System

Know Your Costs

Have an Exit Strategy

Watch for Signals, Don’t Anticipate Them

Buy on Strength, Sell on Weakness

Keep a Trading Journal and Review It Often

About the Authors

Authors’ Acknowledgments

WILEY END USER LICENSE AGREEMENT

Отрывок из книги

Trading used to be the purview of institutional and corporate entities that had direct access to closed securities trading systems. Technical advances leveled the playing field, making securities trading much more accessible to individuals. After the stock market crash of 2000, when many people lost large sums of money because professional advisors or mutual fund managers didn’t protect their portfolio principal, investors chose one of two options – getting out of the market altogether and seeking safety or finding out more about how to manage their own portfolios. Many who came back into the market ran from it again in late 2008, when the market saw its worst year since the Great Depression. In 2017, the stock market roared to a high of the Dow Jones Index topping 21,000, but will they be spooked again after the next correction?

The concept of buying and holding forever died after that 2000 stock crash; it saw some revival from 2004 to 2007 but then suffered another death in 2008. People today look for new ways to invest and trade. Although investors still practice careful portfolio balancing using a buy‐and‐hold strategy, they look much more critically at what they’re holding and are more likely to change their holdings now than they were before the crash. Others have gotten out of the stock market completely.

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You can also discover plenty of information about how money supply, inflation rates, deflation, joblessness, and consumer confidence impact the mood of the market and stock prices and how the economy can be driven by how confidently (or not) political and monetary leaders speak out about it. We discuss the role of the Federal Reserve (Fed) and how when the Fed Chairman speaks, the markets listen.

Essentially fundamental analysis looks at company financial performance, as well as the performance of the economy, to analyze the future profit potential of a stock or other equity purchase. Understanding how the economy works isn’t the only fundamental analysis tool that’s important to you. You also need to read financial statements to understand the financial status of the companies you want to buy. We delve into financial statements in Chapter 6.

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