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Traders are looking for gains within days or weeks typically, so they want to play volatility and don’t mind seeking short-term profits, say, being bullish on an asset this week and cashing in quickly for a profit and playing the other side (bearish) if they feel the same asset is ready to decline in price the following weeks. My associate Charlie puts it nicely: “While I play the ‘tides,’ typical traders play the ‘ripples.’”

Traders gravitate to the following choices:

 Stocks (some play stocks directly; see Chapter 7)

 Futures (see Chapter 12)

 Options on stocks/ETFs (see Chapter 13)

 Options on futures

Of the choices, the most common are options because they’re lower-cost vehicles and offer plenty of upside and downside volatility in the short term.

When it comes to stock speculating and trading, it pays to read the exploits of those who truly mastered the craft. One of the greats in the history of financial markets is Jesse Livermore. In the late 1920s, he speculated on a stock market crash (which famously occurred in late 1929), and he made $100 million on that speculation — an astounding amount at that time. His thoughts on trading can be found in the book Reminiscences of a Stock Market Operator by Edwin Lefèvre (Wiley).