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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Serie: Wiley Trading Series
- Sprache: Englisch
Introducing Deron Wagner's Sector Trading Strategies - a brilliantly simple way to target profits in every market. Wagner walks you through his strategies for charting the market sectors, helping you determine if your stock, option, or other financial product is positioned for huge profit - or actually at risk for a loss. Wagner focuses first on the skills necessary for sector trading - identifying the realm of tradeable sectors, picking the best indicators, and analyzing risk - then lays out his top three strategic methodologies for effective sector trading. To maximize the power of this guide, you'll also receive access to an interactive online review tool at Traders' Library's Education Corner. Inside, learn the nuts and bolts of successful sector trading: * The basics of reciprocal relationships and how to profit from them; * How to follow mutual fund and other institutional money flow to find the next big trade; * How and when to rotate your investment capital and optimize your returns; * How to identify strong and weak sectors to place trades that have the best possible upside; * Various methods for entering and exiting positions to gain and protect profits; * How to increase your daily number of trading opportunities to exploit any market condition; * How ETFs and options can be leveraged to get the most from the least; * How to analyze risk to increase your trading peace of mind. To obtain the trading power of the big institutions, you need Wagner's Sector Trading Strategies. With his help, you will be able to generate consistent profits no matter what the markets throw your way.
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Seitenzahl: 153
Veröffentlichungsjahr: 2016
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Table of Contents
From the Publisher
Meet Deron Wagner
Chapter 1: Fundamentals of Sector Trading
Follow Institutional Money Flow
Rotate into Strong Sectors
Rotate out of Weak Sectors
Learn Reciprocal Relationships
Chapter 2: The Realm of Tradable Sectors
Chapter 3: Technical and Fundamental
Technical Indicators
Fundamentals Indicators
Chapter 4: Sector Rotation Strategies
Always Trade with the Trend of the Markets
Trade Sectors Based On Relative Strength or Weakness
Trade the Leaders, Not the Laggards
Remember that Volume Speaks Volumes
Chapter 5: Sector Tracking Indices
Case Studies:
Sector Leader- Johnson and Johnson
Chapter 6: Swing Trading on the Sector Level
Three or More Days in One Direction
Narrow Trading Day
Unusually High Volume in a Single Day
Chapter 7: Buing Long and Selling Short
You Are Willing to Acquire and Hold the Stock until the Price Trend Changes
You Enter a Stop-loss Order to Cut Losses Before They Become Too Extreme
You Minimize Your Capital Exposure
Chapter 8: The Exchange Traded Fund (ETF) Approach
Chapter 9: Sector Trading with Options
Appendix A: Table 1: Example Breakdown of Sectors
Appendix B: Efficient ETF Executions
Appendix C: Options Basics
Glossary
Bibliography
Copyright © 2007 by Deron Wagner
Published by John Wiley & Sons, Inc., Hoboken, New Jersey
Published simultaneously in Canada
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at www.wiley.com/go/permissions.
Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with the respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor the author shall be liable for damages arising herefrom.
For general information about our other products and services, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993 or fax (317) 572-4002.
Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-on-demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com. For more information about Wiley products, visit www.wiley.com.
Library of Congress Cataloging-in-Publication Data:
FROM THE PUBLISHER
The editors at Marketplace Books have always kept a steady goal in mind, and that is to present actionable information on stock trading in the most straight-forward, practical medium available. Sometimes this involves a book, sometimes a newsletter, a DVD, or an online course program. What we’ve learned from the many products we’ve developed over the years is that a cross-medium approach is the most effective way to offer the greatest possible value to our readers.
So an idea was born. This innovative book and DVD set is one of the first in a series that combines a full course book derived from the actual presentation itself. Our idea grew out of a simple question. Students of stock trading spend a great deal of their own money attending lectures and trade shows. After all the travel, effort, and expense, that student will still have to assimilate a host of often complex theories and strategies. Sometimes he or she may want to ask a question or dig deeper into an issue, but they hold back; maybe because they still don’t know enough about the bigger picture or maybe they don’t even know some of the basic terminology. They may buy the DVD, but still. . .a lecture in itself is not a comprehensive learning tool and a person may still need yet another lecture or host of trial and error book purchases to master the subject.
So the question was: Does the average student of trading get enough out of an individual session to effectively carry their studies home and master a subject? The answer was a resounding no! Most attendees get bits and pieces of the message out of a long and expensive lineage of lectures, with critical details hopefully captured in page after page of scribbled notes. For those who are gifted with a photographic memory and vast organizational skills, the visual lecture is just fine, but for the rest of us, the combination of the written word and a visual demonstration is the golden ticket to the mastery of any subject.
A comprehensive approach to learning is the course you are about to embark upon. We’ve taken Deron Wagner’s original lecture and extracted his core content into an easy to read and understand course book. You’ll be able to pour over every word of Wagner’s groundbreaking presentation, taking in each important point in a step by step, layer by layer process. All of this is possible because our editors have developed this title in classic textbook form. We’ve organized and highlighted the key points, added case studies, glossaries, key terms, and even an index so you can go to the information you need when you need it most.
Let’s face it, stock trading in any medium takes years to master. It takes time to be able to follow charts and pick out the indicators that mark the wins you’ll need to succeed. And beyond the mathematical details and back-tested chart patterns, every presenter has three very basic premises for every student trader; they are to control your emotions, stay close to your trading plan, and do your homework. It’s so important to know the full picture of the profession because it could either make you rich or put you in line for that second night job.
This DVD course book package is meant to give you all the visual and written reinforcement you need to study, memorize, document, and master your subject once and for all. We think this is a truly unique approach to realizing the full potential of our Traders’ Library DVDs.
As always, we wish you the greatest success.
Meet Deron Wagner
Deron Wagner is the founder and head trader of Morpheus Trading Group. His daily focus is managing and trading the Morpheus Capital Hedge Fund, which he founded in April of 2004. He also teaches his trading methodology through several newsletters, including The Wagner Daily, The MTG Stalk Sheet, and The Wagner Weekly.
This book is a companion coursebook for Wagner’s best-selling video, Sector Trading Strategies (Marketplace Books, June 2002). It discusses one of the often overlooked strategies, that of “sector trading.” This is a method in which specific market sectors are targeted and timed to maximize profitability. This book explains how sector trading works; how to follow mutual fund and other institutional trends; how and when to rotate your investment capital; how to identify strong and weak sectors; and various methods for entering and exiting from positions (long equity positions, selling short, and using options).
The reputation of some short-term trading strategies (such as day trading and swing trading) has suffered in recent years. This has been due to the activity among some traders leading to unexpected and often very large losses. But remember, when a minority of traders abuses a sound system, it does not mean the system itself is flawed. In this book, you will discover the methodical and sensible path to success in sector trading, including risk analysis and identification of methods for deciding whether a particular strategy is right for you.
Wagner is also co-author of The Long-Term Day Trader (Career Press, April 2000) and The After-Hours Trader (McGraw Hill, August 2000). Past television appearances include CNBC, ABC, and Yahoo! FinanceVision. He is also a frequent guest speaker at various trading and financial conferences around the world.
The author also is a professional short-term trader and he teaches numerous seminars on sector trading and short-term trading strategies.
For a complimentary trial to Wagner’s trading newsletters, or to learn more about the materials contained in this book, please visit www.morpheustrading.com.
Chapter 1
Fundamentals of Sector Trading
The most troubling and most common question people ask me—“How can I trade this market?” Uncertainty is the most frequently seen condition, even when some (but not all) of the indicators are strong. No matter what the overall market did yesterday or last month, you really have no way to tell which direction the market will go next.
The problem, though, is that most people judge the market based on index movement. The Dow Jones Industrial Average, NASDAQ, and S&P 500 involve the average movement of many stocks. If half the stocks in the index rise and the other half fall, the net result is a flat (uncertain) market. Using index measurements is not accurate for this reason. Just as you cannot rely on the national averages of housing prices to decide whether the timing is right to invest in real estate, you need to be able to take a closer look at sectors, parts of the market rather than a collective whole. You need a more dependable way—not only to time your decisions but also to recognize real trends, in real time, to earn real profits. That’s where sector trading becomes a valuable strategy; it provides you with the means for focusing in on a segment of the market, identifying a trend, and then acting.
Some people think they can out-perform the averages by following single stocks, but every stock is affected directly by other stocks in their sectors. Remember, a sector is, by definition, a grouping of companies in the same industry, sharing the same competitive and market challenges, and subject to the same supply and demand cycles.
The selection of one sector over another, based on business trends and current cyclical strength or weakness, is a sensible way to invest. Using the overall market index is not reliable because these are averages of many stocks. Using single stocks is equally unreliable because each stock follows its sector leaders. In addition, single stocks may or may not act according to the larger sector trend, which is why you also need to know how to pick the best stocks—the leaders—in a sector to ensure that you time decisions properly. In other words, if a sector at large is making a specific move, you need to make sure you pick the right stocks that are leading that trend.
Each sector is defined by characteristics: cyclical business changes, seasonal marketing patterns, and economic trends like interest rates, trade imbalances, and employment. A sector is not just a bunch of companies competing with each other; it is also a grouping of companies subject to the same tendencies, market actions and reactions, and economic and business forces. Sectors can be further broken down into subcategories, and these distinctions are crucial, as I will demonstrate later. The subcategories, may also share distinct and unique models for timing and selection, based on their sub-cycles, sub-economics, and sub-marketing.
My goals in explaining how to trade sectors are to show you how to:
All of these goals are realistic and possible, assuming that you are willing to spend the time needed to master the basics and apply sensible rules within a strategic and methodical approach to investing. In this book, I am going to provide you with several important tools in two primary groupings or “lessons.” In the first group, I will focus on skills. I’m going to show you how to identify the realm of tradable sectors, pick the most effective technical and fundamental indicators, apply sector rotation strategies, make effective use of sector-tracking indices, and analyze risks to pick the right trading exposure for you. This section concludes with my discussion of four keys to sector trading.
In the last group of lessons, I provide you with three strategic methodologies for achieving effective sector trading profits. First is the best known—the use of equity positions in companies within specific sectors. You can buy stock (go long) or sell stock (go short). The various methods of approaching these two positions contain specific risk elements. You can also use Exchange Traded Funds, or ETFs, to move in and out of specific sectors. ETFs are traded just like stocks but consist of a bundle of stocks usually within the same sector. Finally, you can also use options to leverage your capital within sectors, involving single stocks, indices, or ETFs.
I like to narrow down my guidelines for sector trading into four general areas. These are summarized in Figure 1.1.
Figure 1.1 - Fundamentals of sector trading
Let’s talk about each one of these for a moment.
Follow Institutional Money Flow
The big institutions—mutual funds, pensions, and insurance companies—account for about two thirds of all daily trading volume, as I wrote in “Follow Institutional Traders – Here’s How” (see www.tradingmarkets.com). You can learn a lot about the market by how institutions act. The first skill I recommend is that you watch how these companies move billions of dollars in and out of specific sectors. Not only do institutional managers trade sectors continuously; because they are so large, their decisions may impact a sector’s strength or weakness.
This is an important point to remember about institutional traders like mutual funds. They buy and sell in huge blocks of stock in single trades; for the individual, or retail investor, this means that the market and the prices of stock are often determined by the timing of institutional managers. If you observe how institutions trade stocks, you will see a cause and effect in sector performance and pricing. This gives you incredible insight about the market and helps you to better time your decisions.
Rotate into Strong Sectors
I encourage you to buy stocks or ETFs in strong sectors. I define a strong sector as one whose potential for price growth is better than average. Later on, I will talk about specific sectors and grouping of sectors that exhibit certain characteristics of strength (or weakness) consistently, based on the same conditions.
Rotate out of Weak Sectors
When people hear my advice to them to rotate out of a sector, they usually think I am suggesting they sell stocks they had previously bought. This is only partially true. You can also initiate a trade by selling short, an alternative way to play the sector market. The attraction of short selling is that it doubles your possibilities for profit. Under traditional buy-hold-sell strategies, you have to buy as the first step, so you are constantly seeking sectors or individual stocks that are oversold and run too high. You then have to wait for prices to fall and accept the possibility that you missed the opportunities. But when you sell short, you reverse the sequence to sell-hold-buy, so you never have to miss an opportunity again. If you start out by identifying a sector that has been run up too high, you can sell short within that sector, wait for prices to fall, and then close the position with a buy order.
Rotating in and out of sectors does not mean selling something you have now and buying something else, although that is certainly one common way to rotate your holdings. It can mean just the opposite. If you are short on a sector, you can rotate by closing your position with a buy order and then either selling or buying a different sector, so rotation is not always replacement. It can also be repositioning—replacing one long position with another or moving from one short to another. Most people tend to rotate by selling A and buying B, or vice versa. But remember, it can go the other way too. Sector trading, especially using multiple strategies and tools, is both flexible and multi-faceted, helping you identify profit potential in both up and down markets.
