Markets in Profile E-Book

James F. Dalton

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: Wiley Trading Series
• Sprache: Englisch

Seitenzahl: 304

Veröffentlichungsjahr: 2011

Beschreibung

Markets in Profile explores the confluence of three disparate philosophical frameworks: the Market Profile, behavioral finance, and neuroeconomics in order to present a unified theory of how markets work. The Market Profile is an ever-evolving, multidimensional graphic that gives visual form to the market's continuing auction process, revealing the myriad underlying dynamics that influence market activity. Behavioral finance posits that investors are driven more by emotional factors and the subjective interpretation of minutia than by "rationality" when making investment decisions. And neuroeconomics is the study of how investor psychology permeates and affects the financial markets. Mr. Dalton explicates the ways in which irrational human behavior influences the market's natural auction process, creating frequently predictable market structure, which results in opportunities for investors to ameliorate risk. The book will improve investors ability to interpret change in markets, enabling better, more confident investment decisions.

Leseprobe

Table of Contents

Title Page

Copyright Page

Dedication

Preface

MARKETS ARE RATIONAL, PEOPLE ARE NOT

IS THIS BOOK FOR YOU?

THERE IS NO CERTAINTY—THERE ARE ONLY PROBABILITIES

KNOW THE MARKET, KNOW YOURSELF, MANAGE RISK

SO WHY LISTEN TO ME?

Acknowledgments

CHAPTER 1 - The Only Constant

THE CREATION OF ERISA

THE RISE AND FALL OF RELATIVE PERFORMANCE

THE FALL OF THE GREAT BULL

THE RISE OF ABSOLUTE RETURN

SUCCEEDING IN AN ABSOLUTE RETURN MARKET ENVIRONMENT

PURE, UNBIASED INFORMATION

PEOPLE CHANGE MARKETS, MARKETS CHANGE PEOPLE

CHAPTER 2 - Information

FUNDAMENTAL INFORMATION

RATIONAL OR IRRATIONAL?

MARKET-GENERATED INFORMATION

THE AUCTIONS

FAIR VALUE

MARKET PROFILE FUNDAMENTALS

DEMYSTIFYING MARKET BEHAVIOR

CHAPTER 3 - Timeframes

BREAKING DOWN MARKET TIMEFRAMES

YOUR TIMEFRAME IS YOUR STRATEGY CORNERSTONE

CHAPTER 4 - Auctions and Indicators

THE SEARCH FOR VALUE

KEY MARKET-GENERATED INDICATORS

PERFECTING THE ART OF VISUALIZATION

CHAPTER 5 - Long-Term Auctions

AUCTIONS IN ACTION

THE COMPOUND-AUCTION PROCESS

THE EBB AND FLOW OF BALANCE

WHERE DO TRENDS END AND BRACKETS BEGIN?

CLARITY IN THE MAELSTROM

THE BIG PICTURE

ASYMMETRIC OPPORTUNITIES AND RISK

LONG-TERM STRATEGY DEVELOPMENT

ASSEMBLING THE BIG PICTURE: CONTEXT WITHIN CONTEXT

CHAPTER 6 - Intermediate-Term Auctions

CONVERGENCE AND THE BRACKETING PROCESS

DEFINING THE INTERMEDIATE TERM

THE TRANSITION FROM BRACKET TO TRENDS

THE TRANSITION FROM TREND TO BRACKET

THE CONVERGENCE OF INTELLECT AND EMOTION

ACCELERATE THE LEARNING PROCESS

PRELUDE TO A SEA CHANGE

HEAR THE BELLS A-RINGING

COUNTERTREND AUCTIONS

THE QUEST TO DO BETTER THAN “NORMAL”

OH, THE DIFFERENCE A FEW POINTS MAKES

CHAPTER 7 - Short-Term Trading

ANALYZING SHORT-TERM MARKETS

COMMON MIND TRAPS

WHEN AND WHERE TO LOOK FOR SHORT-TERM TRADES

OPPORTUNITIES AROUND INTERMEDIATE-TERM BRACKETS

TECHNICAL INDICATORS

YOUR OWN WORST ENEMY: YOUR BRAIN

SEEKING THE “EXCEPTIONALLY TASTY PATTERNS”

ALL PRICES AND OPPORTUNITIES ARE NOT EQUAL

ONGOING FORENSIC INVESTIGATION

LOOKING FOR THE ALL-IMPORTANT REFERENCE POINTS

NEVER BE A LAGGARD

A GOLDEN OPPORTUNITY

FADE THE EXTREMES, GO WITH BREAKOUTS

“THE EXPERT REASONS CONTEXTUALLY”

CHAPTER 8 - Day Trading Is for Everyone

WHAT’S A DAY TRADER TO DO?

WHAT YOU DON’T DO MAY BE MORE IMPORTANT THAN WHAT YOU DO

THE REAL WORLD IN ACTION

TOP DOWN

LACK OF CONVICTION

FLIGHT TO SAFETY

INVENTORY IMBALANCES

CORRECTION OF INVENTORY IMBALANCES

TREND TRADERS’ TRAP

MARKET CONDITION

YESTERDAY’S TRADE

THE MARKET IS OPEN

DAY TRADER’S CHECKLIST

PRACTICE, PRACTICE, PRACTICE

CHAPTER 9 - Profiting from Market-Generated Information

TIMEFRAME DIVERSIFICATION

THE NEW PARADIGM

APPENDIX A - Market Update

About the Authors

Index

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The Wiley Trading series features books by traders who have survived the market’s ever changing temperament and have prospered—some by reinventing systems, others by getting back to basics. Whether a novice trader, professional or somewhere in-between, these books will provide the advice and strategies needed to prosper today and well into the future.

For a list of available titles, visit our Web site at www.WileyFinance.com.

Copyright © 2007 by James Dalton, Robert Bevan Dalton, and Eric Jones. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data:

Dalton, James F.

Markets in profile : profiting from the auction process / James Dalton,

Robert B. Dalton, Eric T. Jones.

p. cm.—(Wiley Trading Series)

Includes bibliographical references and index.

ISBN-13: 978-0-470-03909-0 (cloth)

1. Investments. 2. Auctions. 3. Risk management. I. Dalton, Robert B. II. Jones, Eric T., 1961- III. Title.

HG4521.D1197 2007 332.64—dc22

2006030339

To all those intrepid traders who - from this day forward - will accept both the financial and emotional risks inherent in making that final decision to buy or sell.

Preface

You can manage risk but not return.

—Peter Bernstein

This book is about gaining an advantage over your competitors.

To achieve this advantage, you must first discard the belief that there is a linear relationship between risk and reward. The primary objective of investing (and trading) is to identify asymmetric opportunities.To capitalize on these opportunities, you must learn to identify imbalances that reveal themselves in evolving market structure. But that is only the beginning—you must also understand the way you process and respond to information, so your ability to act is not blocked or distorted by peripheral influences.

Markets in Profile: Profiting from the Auction Process introduces a unified theory that explains the market’s auction process in relation to the human decision-making process, and the way market behavior affects human behavior. The bottom line? You are equipped to manage risk, which puts you miles ahead of the pack.

MARKETS ARE RATIONAL, PEOPLE ARE NOT

The “efficient markets” theory is half right. The market’s mechanism for allocating prices is extremely fair. It’s a simple two-way auction process by which price moves over time to facilitate trade either up or down—an extremely rational, efficient process.

The other half of the efficient market equation, however, is often wrong; people are seldom rational when they make financial decisions. The first step toward more profitable investing is to accept that market irrationality is due to the fact that people make decisions based on (unavoidably) incomplete information, which often results in the worst decisions being made when it is most important to be right.