The StockTwits Edge E-Book

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

Seitenzahl: 554

Veröffentlichungsjahr: 2011

Beschreibung

Profitable trade set-ups from StockTwits leading traders One of the biggest secrets on Wall Street is that to become consistently profitable, you need to specialize in a distinct setup. That is, you need to know how to read the signals that can help you identify an opportunity to buy or sell. In The StockTwits Edge: 40 Actionable Trade Setups from Real Market Pros, both well-known professional masters of the market and lesser-known individual traders describe their highest probability setups to teach you about an assortment of time frame and asset class-related market methods along the way. Drawing on the wisdom of some of the top minds at StockTwits, the leading stock market social networking site, this book has something for everyone, giving you exactly what you need to come up with profitable ideas and avoid financial risk, every day. * Includes key trading insights from the experts at StockTwits * Explains which factors of a setup are important, and why While there are many factors involved in successful trading and investing, the ability to identify profitable situations is paramount, and The StockTwits Edge gives you everything you need to achieve that goal.

Leseprobe

Contents

Cover

Series

Title Page

Copyright

Dedication

Introduction

Part I: Trend Following

Chapter 1: Find Trends, Ride Them, and Get Off

LESS IS MORE

CATCHING BIG TRENDS

SIMPLE IS GOOD

UNDERSTANDING MOMENTUM

MACRO TRENDS TODAY

EXAMPLES

HERE COMES THE SUN

Chapter 2: Trade, Trend, Tail

MAKE MONEY OR GO HOME

PAY ATTENTION TO VOLATILITY

BEARISH AND BULLISH FORMATIONS

GET ME SOME GOLD

Chapter 3: Don't Quit

BURNING DESIRE

TOP-DOWN APPROACH

FAVORITE SETUP

WORDS OF WISDOM

Chapter 4: Know Thyself

FOLLOWING IN THE STEPS OF MY FATHER

THE TREND IS YOUR FRIEND

BASE FORMATIONS ON QUIET VOLUME

THE MASTERCARD TRADE

WORDS OF WISDOM

Chapter 5: Insider Information Is Reflected in the Charts

MARKET BIO

BREAKOUTS FROM LONG CONSOLIDATION

BREAKOUT FROM A LONG BASE

Part II: Value Investing

Chapter 6: Margin of Safety

INVESTING BIO

HUNTING FOR VALUE

FAVORITE SETUP

HOW DO YOU MANAGE RISK?

GOING WITH iGo

Chapter 7: The BeanScreen

SUCCESSFUL INVESTING REQUIRES DUE DILIGENCE AND TIME

THE TORTOISE AND THE HARE

THE BEANSCREEN

EQUITY SELECTION

RISK MANAGEMENT

HOW THE BEANSCREEN HAS HELPED OUR INVESTING

Chapter 8: Fallen Angels

PROFESSIONAL BACKGROUND

VALUE AND THE BIG MAC THEORY

BUYING GREAT COMPANIES AT LOW PRICES

THE IMPORTANCE OF MIND SHARE

WORDS OF WISDOM

Chapter 9: Dividends Don't Lie

MY PROFESSORS WERE WRONG

THE KIND OF STOCKS I LIKE: ONLY THE HIGHEST QUALITY

AFLAC, THE DUCK STOCK

ORPHAN STOCKS: THE SHARES OVERLOOKED BY WALL STREET

DEEP TRUTHS ABOUT THE MARKETS AND INVESTING

Part III: Day Trading

Chapter 10: Only Price Pays

LEARNING THE HARD WAY

THE TRUE VALUE OF TECHNICAL ANALYSIS

TREND ALIGNMENT

Chapter 11: Intraday Earnings Momentum Gap Trade

FINDING THE RIGHT APPROACH

TECHNICAL ANALYSIS RULES

TRADING EARNINGS MOMENTUM

FSYS IS GAPPING UP ON A STRONG EARNINGS REPORT

Chapter 12: Trading the News

THE PROPRIETARY TRADER

STOCKS IN PLAY

MY “A” SETUP

SHORTING TOYOTA MOTOR CORPORATION

Chapter 13: Intraday Momentum

PROFITABLE BY MONTH FOUR

EMBRACE MOMENTUM

TRADING THE NEWS

CONFIRMING BULLISHNESS OF FUNDAMENTAL HEADLINES

RISK MANAGEMENT

Chapter 14: The Underlying Psychology of Large Players

Burn the Ships

Fear and Greed

The Balance between Buyers and Sellers

Juniper Networks

Part IV: Swing Trading

Chapter 15: Flags and Wedges

Serving Chivas to the Wall Street Sharks

I Try to Be Where the Money Is

Experience Can't Be Bought

Use Stops or Don't Bother Trading

The Falling Wedge

Can You Still Win the Game, or Is It Rigged?

Chapter 16: Breakout from a Tight Base

IT IS LIKE A CHESS STRATEGY

LOOKING FOR AN EDGE

BREAKOUT FROM A TIGHT BASE

FOLLOWING MY PLAN

WORDS OF WISDOM

Chapter 17: The Base Is Everything

SURVIVING THE CRASH

COMBINING TIME FRAMES: THE INTRADAY AND THE DAILY

OUR UNIQUE MARKET APPROACH

DAILY BREAKOUT SETUP

Chapter 18: Trading People, Not Stocks

FROM ENGINEER TO FULL-TIME TRADER

TRADE THE TRADERS

SWING TRADING REQUIRES SPECIFIC WAY OF THINKING

NU SKIN ENTERPRISES, INC.

Chapter 19: The Top-Down Technician

ALL ROADS LEAD TO TECHNICAL ANALYSIS

FROM BROAD TRENDS TO SPECIFIC PICKS

STRONG TREND LINES AND THE ROOM TO RUN

APPLICATION OF THE SETUP

Chapter 20: Identifying Trend Shifts

LEARNING FROM THE MASTERS

EMOTIONS DRIVE PRICES

THE NEWS ABSORPTION TRADE

PRICE BATTLE FOR WHIRLPOOL

IMPORTANCE OF SENTIMENT AND FUNDAMENTAL SHIFTS

Chapter 21: A Chart Will Never Lie to You

JOURNALING TO STAY ACCOUNTABLE

HAVING A PLAN

THE STOCK MARKET REFLECTS HUMAN EMOTIONS

TRADE STOCKS THAT ARE LEADERS IN THE SECTOR

THE DESCENDING TRIANGLE

THE THOUGHT PROCESS BEHIND MY TRADES

WORDS OF WISDOM

Chapter 22: The Short Squeeze Trade

THE COLD CALLER

PHIL, THE MENTOR

THE IMPORTANCE OF RISK MANAGEMENT

THE ART OF CONTRARY THINKING

TYPICAL SHORT SQUEEZE TRADE

Chapter 23: The Price Tells the Story

MY TRADING JOURNEY

PRICE TELLS THE STORY

THE WEDGE PLAY

RECENT TRADE IN CAB

Chapter 24: Force Confirmations, Not Trades

BACKGROUND

THE SWAN BROTHERS

FORCE CONFIRMATIONS, NOT TRADES

FLAG AND PENNANT FORMATIONS

EXAMPLE

WORDS OF WISDOM

Chapter 25: The Birth of a New Trend

THERE IS NO SUBSTITUTE FOR EXPERIENCE

WHEN ELEPHANTS DANCE, THEY LEAVE TRACES

HIGH VOLUME RANGE EXPANSION

LIQUIDITY FOLLOWS PRICE

THERE ARE NO PERFECT SETUPS

Chapter 26: The Trend Intensity Breakout Setup

LEARNING WHAT WORKS AND WHAT DOESN'T WORK

LOOKING FOR ENDURING STRUCTURAL EDGES

CAPTURING A SWING

Part V: Options Trading

Chapter 27: Unusual Options Activity

HACKING MY PARENTS’ TRADING ACCOUNT

SEVEN SIMPLE STEPS

ALIGNMENT OF TECHNICALS, FUNDAMENTALS, AND OPTIONS FLOW

KELLOGG IS IN TROUBLE

Chapter 28: Put Ratio Spread

IMPORTANCE OF A NONFINANCIAL BACKGROUND

THE MARKET IS IMPERFECT

MANAGING PUT RATIO SPREADS

SETUP APPLICATION

WORDS OF WISDOM

Chapter 29: Know What You Don't Know

OPTIONS TRADING WAS A BIT OF A FAMILY BUSINESS

ON AND OFF THE FLOOR

SELLING PREMIUM IN MOMENTUM NAMES

Chapter 30: There Is Always an Option

LEARNING THE RULES OF THE GAME

FOLLOW THE INTERMARKET FLOW

HOW OPTIONS WORK

PLAY THE BIG MOVE

THE SETUP

WORDS OF WISDOM

Chapter 31: Selling Premium

SECTION 1256 CONTRACTS

HISTORICAL FOUNDATION

TECHNICAL FOUNDATION

CHOOSING STRIKES

PROACTIVE TRADING

Chapter 32: The New High Dip

THE MORNING PAPER

VAK TRADING

THE NEW HIGH DIP STRATEGY

MY OPTIONS APPROACH

Part VI: Forex Trading

Chapter 33:: They Call Me Mrs. Cable

FINDING MY TRADING STYLE

THE ROAD TO SUCCESS IS IN SPECIALIZING

THE TRANSITION FROM DEMO TO LIVE TRADING

KEEPING IT SIMPLE

RISK MANAGEMENT

APPROACHING THE MARKET

PUTTING IT INTO PRACTICE

WORDS OF WISDOM

Chapter 34: The Mind of a Chartist

THERE MUST BE A WAY

CHARTS ARE MY LANGUAGE

DOW THEORY

FINDING THE RIGHT APPROACH

CAPITALIZING ON CORRECTIONS WITHIN THE CONTEXT OF A TREND

Part VII: The Art of Trading

Chapter 35: Trading Is an Art

BORN TO WIN

KNOWING WHEN TO PRESS A BET

SCALING IN

RIDING THE VXX

Chapter 36: Embrace the Tape

NEVER AGAIN!

THE GAME

FADING THE OBVIOUS

A SYMPATHY PLAY

WORDS OF WISDOM

Chapter 37: Macro Setups at the Crest of Structural Change

BEGINNING OF PEAK OIL

MACRO SETUPS

THE RIGHT VEHICLES TO PLAY PEAK OIL

GOOD MACRO INVESTORS ARE CONTRARIANS

Chapter 38: Broken Butterfly Formation

MAJOR CORNERSTONES

PREPARATION IS ESSENTIAL

TRADING FIBONACCI RETRACEMENTS

APPLICATION OF MY SETUP

RISK MANAGEMENT PHILOSOPHY

Chapter 39: Always Happy, Never Satisfied

MAKE ALL YOUR MISTAKES EARLY IN YOUR CAREER

THINK MACRO, TRADE MICRO

THINKING A FEW MOVES AHEAD

THE GOLD/SILVER RATIO

WORDS OF WISDOM

Chapter 40: One Step Ahead of the Herd

A FINANCIAL ADVISER FOR OVER 12 YEARS

JOINING NAAIM

WHY TECHNICAL ANALYSIS WORKS

BEATING THE HERD

MY DBC TRADE

BUYING ON A LARGER THAN NORMAL PULLBACK

ATHEROS COMMUNICATIONS

HAVE A PLAN AND TRADE YOUR PLAN

Chapter 41: Change Is the Only Constant

IT'S A METHOD, NOT A SYSTEM

ABILITY TO ADAPT TO CHANGE

LOOKING FOR RELATIVE STRENGTH

Chapter 42: The Kirk Report

MY JOURNEY

MARKET PHILOSOPHY AND APPROACH

LESSONS LEARNED FROM MENTORING

Chapter 43: Stick with Names You Know

BUYING MY FIRST STOCK

PREPARATION, PREPARATION, PREPARATION

ANALYZING DIFFERENT TIME FRAMES

Chapter 44: Massive Trends and the Trajectory of Noise

DISCOVERING BEHAVIORAL ECONOMICS

IDENTIFYING MASSIVE TRENDS EARLY

CERADYNE AND THE WAR ON TERROR

Chapter 45: We Have Met the Enemy, and It Is Us

HAVING THE PROBABILITIES IN YOUR FAVOR

IT'S ALL ABOUT HAVING AN EDGE

THE PULLBACK TRADE

Chapter 46: A Contrarian at Heart

CUTTING LOSSES QUICKLY

AGAINST THE CROWD

SHORTING EXTREMELY OVERBOUGHT STOCKS

SHORT, SHORT, SHORT

Index

Founded in 1807, John Wiley & Sons is the oldest independent publishing company in the United States. With offices in North America, Europe, Australia, and Asia, Wiley is globally committed to developing and marketing print and electronic products and services for our customers' professional and personal knowledge and understanding.

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, please visit our Web site at www.WileyFinance.com.

Copyright © 2011 by Howard Lindzon, Philip Pearlman, and Ivaylo Ivanhoff. All rights reserved.

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, Inc., 222 Rosewood Drive, Danvers, MA 01923, [phone], fax [phone], 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, [phone], fax [phone], or online at http://www.wiley.com/go/permissions.

Limit of Liability/Disclaimer of Warranty: While the publisher and authors have used their best efforts in preparing this book, they make no representations or warranties with 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 authors shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

TD Ameritrade, Inc. and StocksTwits are separate unaffiliated companies and are not responsible for each other’s services or policies.

For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at [phone], outside the United States at [phone] or fax [phone].

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Library of Congress Cataloging-in-Publication Data:

Lindzon, Howard. The stocktwits edge : 40 actionable trade setups from real market pros / Howard Lindzon, Philip Pearlman, Ivaylo Ivanhoff. p. cm. — (Wiley trading ; 510) Includes index. ISBN 978-1-118-02905-3 (cloth); ISBN 978-1-118-08927-9 (ebk); ISBN 978-1-118-08928-6 (ebk); ISBN 978-1-118-08929-3 (ebk) 1. Foreign exchange market. 2. Foreign exchange futures. 3. Investment analysis. I. Pearlman, Philip. II. Ivanhoff, Ivaylo. III. Title. HG3851.L536 2011 332.64—dc22

The StockTwits Edge is dedicated to our incredible community of traders and investors, who have brought forth the amazing talent in this book.

Thanks Friends!

Introduction

At StockTwits, we believe the stock market can be a fun and profitable place. Whenever you bring together a group of highly talented and motivated people chasing profits and ask them to talk about what works for them, you're bound to hit upon some valuable ideas and unforgettable stories. Whether you trade once a year or every day, the learning never stops. And that's one of the key messages of The StockTwits Edge. It takes time, repetition, and strict discipline, but if you dedicate yourself to learning, you will discover the true power of money and your inner self.

StockTwits is an online “idea network,” a Facebook for finance, an American Idol or farm system for traders and investors, a virtual global trading floor. We strive to help people share and receive ideas, discover like-minded people, leverage a community of passionate people, build a publishing and research brand, and help people monetize their work. The community is made up of more than 100,000 people from all corners of the world who trade thousands of instruments. You can customize your StockTwits streams to get the ideas you want from the people you want and about the stocks that matter to you most. You can get them on the web site at http://stocktwits.com, or pushed to you on your phone or e-mail.

The real-time Web has changed many things for stocks, markets, and finance. Rapid connections and the miracle of discovery, curation, and serendipity have made the entire social networking industry difficult to value on Wall Street. I wrote extensively about this in my first book, entitled The Wallstrip Edge (Business Plus, 2009). The social Web and technology advances have evolved to create tools and platforms that will fuel finance and the sharing of ideas. With StockTwits, traders and investors are empowered more than ever before to learn and learn quickly through the leverage of others.

And since StockTwits is about crowdsourcing the best ideas and talent, that's just what you'll find in this book. It's our first book and therefore a labor of love. For this book, we invited 46 of our community members who love, live, and breathe the markets to each write a brief chapter in which they detail their favorite setups, including background, rationale, and examples. The StockTwits Edge features setups from different time frames, asset classes, and market styles.

Based on our research and thousands of interviews with traders and investors, we came to the conclusion that most successful people specialize in a favorite setup. A setup is a combination of factors that need to align in time and space in order to produce a buy or sell signal. In The StockTwits Edge, each trader presents a favorite setup in detail as well as the approach for finding new ideas and managing risk that the trader uses successfully on a daily basis. It is amazing how diverse the chapters are.

Some of the traders you'll meet in this book have been trading for 40 years and others for four, but each has an amazing focus and belief that if you can master one thing well in the markets you can succeed. While all of us may not always practice what we preach, the idea-generation engine of StockTwits makes it that much easier to stay focused and disciplined.

The idea for this book started with Ivaylo Ivanhoff, a community member who was finishing his MBA work in St. Louis when he reached out to me via e-mail. As I normally do when hit with a great idea, I called him directly. Ivanhoff has since come to work at StockTwits (shockingly, he calls it his dream job!) and was instrumental in pulling everything together for this book. My pal Phil Pearlman, head of content at StockTwits, is my trusted source for idea curation and he, too, has been on board since day one. I called the good people at John Wiley & Sons, and they said let's do it.

If you feel like you might be underinvested or that maybe you overtrade, this book is for you. This book is for all of us! It's no secret that I love stocks and I love trading and investing. I also love sharing ideas and, if I can, a few laughs. When I co-founded StockTwits in 2008, I knew it was a big idea and not sure I had the energy to get it off the ground. Over the years, StockTwits has become that perfect platform for me and so many others. Now we are a team of 20 and just plowing ahead into the social Web frontier.

We hope this book is a beginning point on your investing/trading journey. Armed with each contributor's favorite setup, you can visit the StockTwits web site and see the same people sharing live ideas around these setups. You can hold them to their own words. You can become friends and I hope challenge them when they drift from their styles, as we all inevitably do sometimes.

Though I don't believe in tips, I do have one for you here: If you come to the site, don't be concerned with contributing; it's likely that 80 to 90 percent of the audience is just eavesdropping anyway. There is nothing wrong with that. Positive and constructive feedback never hurts, though, and in the social world of the Web you will indeed catch more flies with honey.

We are excited about all the new and young faces that show up on StockTwits every day leveraging their ideas and sharing information. We hope you enjoy this book and get as much out of it as we did in putting it together for you.

A special thanks goes to my friend Doug Estadt, who has championed StockTwits from when he first met me, gave me a big bear hug, and ran to get his checkbook. Doug has been a huge supporter of StockTwits and a mentor to many young traders on the stream. Doug was traveling in China while we finalized chapters. You can follow him on Stocktwits@wsmco.

Because of the intense mentoring that occurs on StockTwits there are new stars discovered each and every day. To taste the true experience of StockTwits, head to the site.

Howard LindzonCo-Founder and CEO of StockTwits

Part I

Trend Following

Chapter 1

Find Trends, Ride Them, and Get Off

Howard Lindzon, http://stocktwits.com/howardlindzon

LESS IS MORE

In 1987, after earning my undergraduate degree, I took a job in the back office at a small brokerage firm in Toronto called Davidson Partners. I was in order entry. Brokers would fill out tickets and drop them in a box for me, and I would enter the orders to be filled. Two months into my job, the market crashed. I saw people lose everything. I was on the ground floor of a panic, and I was hooked.

It is now 2011 and I do not have the same 24 years to catch up on all my mistakes and wins, so I want this chapter to be about speed. My goal is to get you to an “aha” moment about the value of trend following whereby you can catch big moves in stocks and markets.

I trust everyone and trust no one. I can do that because I have tried just about every type of investing known to man. Today when I invest or trade in the global markets, I am in control. I make every decision. I take responsibility at some level for every made or lost dollar of mine in the markets.