Ebook: Trading for Dummies

Supporting and Resisting Trends -- Drawing trend lines to show support -- Using channels -- Trending and channeling strategies -- Seeing Gaps -- Common gap -- Breakout or breakaway gap -- Continuation gap -- Exhaustion gap -- Island gap -- Waving Flags and Pennants -- Withstanding Retracements -- Three-step and five-step retracements -- Subsequent trading ranges -- Dealing with Failed Signals -- Trapping bulls and bears -- Filling the gaps -- Deciding whether to reverse directions -- Chapter 11 Calculating Indicators and Oscillators -- The Ins and Outs of Moving Averages -- Simple moving average -- Exponential moving average -- Comparing SMAs and EMAs -- Interpreting and using moving averages -- Support and resistance factors -- Deciding the moving average time frame -- Understanding Buy and Sell Pressure through Stochastic Oscillators -- Calculating stochastic oscillators -- Interpreting stochastic oscillators -- Tracking Momentum with the MACD -- Calculating the MACD -- Using the MACD -- Revealing Relative Strength -- Calculating relative strength -- Putting relative strength to work -- 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 -- Thinking of trading as a business -- Recognizing the trader's dilemma -- Finding a better plan -- Protecting Your Principal -- Recovering from a large loss: It ain't easy -- Setting a target price for handling losses -- Strategies for managing profitable trades -- Understanding Your Risks -- Market risks -- Investment risks -- Trading risks -- Chapter 13 Combining Fundamental and Technical Analyses for Optimum Strategy -- Seeing the Big Picture -- Knowing when the Fed is your friend -- Keeping an eye on industrial production;Keeping a Trading Journal;Settling trades -- Free riding -- Chapter 4 Putting Your Key Business Tool to Work: The Computer -- Making Use of Your Computer -- Identifying trading candidates -- Managing your account -- Improving your trades -- Finding Price Charts -- Checking out Internet charts with delayed prices -- Considering Internet charts with real-time prices -- Looking into charting software -- Digging Up Fundamental Data -- Accessing Analyst Reports -- Selecting a Trading Platform -- Browser-based trading environments -- Integrated trading platforms -- Features to consider -- Determining Computer Requirements -- Weighing Windows versus Mac versus Linux -- Configuring your computer system -- Accessing the Internet -- Picking a browser -- Securing your computer -- Part 2 Reading the Fundamentals: Fundamental Analysis -- Chapter 5 Fundamentals 101: Observing Market Behavior -- The Basics of the Business Cycle -- Understanding how periods of economic growth and recession are determined -- Using economic indicators to determine the strength of the economy -- Relating bull markets and bear markets to the economy -- Employing a Sector Rotation Strategy -- Early recovery -- Full recovery -- Early recession -- Full recession -- Sector rotation -- Understanding Economic Indicators -- Interest rates -- Money supply -- Inflation rate -- Deflation -- Jobless claims -- Consumer confidence -- Business activity -- Using Data from Economic Indicators -- Chapter 6 Digging Into Fundamental Analysis -- Checking Out the Income Statement -- Revenues -- Cost of goods sold -- Gross margins -- Expenses -- Interest payments -- Tax payments -- Dividend payments -- Profitability -- Looking at Cash Flow -- Operating activities -- Financing activities -- Investment activities -- Scouring the Balance Sheet -- Analyzing assets -- Looking at debt -- Reviewing goodwill -- Determining Stock Valuations;Title Page -- Copyright Page -- Table of Contents -- 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 -- Position trading -- Short-term swing trading -- Day trading -- 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 -- Stock markets -- Futures markets -- Bond markets -- Options markets -- Reviewing Stock Exchanges -- New York Stock Exchange (NYSE: ICE) -- NASDAQ -- Amex (now NYSE MKT LLC) -- Electronic communications networks (ECNs) -- Understanding Order Types -- Market order -- Limit order -- Stop order -- Stop-limit order -- Good-'til-canceled order -- Other order types -- Chapter 3 Going for Broke(r): Discovering Brokerage Options -- Why You Need a Broker -- Exploring Types of Brokers and Brokerage Services -- Full-service brokers -- Discount brokers -- Direct-access brokers -- Proprietary trading firms -- Futures brokers -- Services to Consider When Choosing a Broker -- Types of orders supported -- Data tools -- Charts -- ECN access -- Knowing the Types of Brokerage Accounts -- Cash accounts -- Margin accounts -- Options -- IRAs and other retirement accounts -- Choosing the Right Broker for You -- Considering more than price -- Doing a little research -- Understanding how you'll be paying -- Getting to Know the Rules -- Margin requirements;Watching sector rotation -- Finding the dominant trend -- Selecting Your Trading Stock -- Trading Strategies -- Trading the bullish transition -- Trading in a bull market -- Trading the bullish pullback -- Trading the bearish transition -- Trading in a bear market -- Trading the bearish pullback -- A hypothetical trading example -- Chapter 14 Minimizing Trading Risks Using Exchange-Traded Funds -- What Is an ETF? -- Examining the advantages -- Avoiding the flaws -- Does Family Matter? -- Market-weighted ETFs -- Equal-weighted ETFs -- Fundamentally weighted ETFs -- Sector Rotation Strategies -- Early recovery -- Full recovery -- Early recession -- Full recession -- Analyzing ETFs -- Portfolio Construction -- International trading with ETFs -- Commodities and ETFs -- Currency trading and ETFs -- Leveraged ETFs -- Inverse ETFs -- Chapter 15 Executing Your Trades -- Entering and Exiting Your Trade -- Keeping straight the bid and the ask -- Understanding the spread -- Devising an effective order-entry strategy -- Timing your trades: Entering orders after the market closes -- Reviewing a week in the life of a trader -- Selling Stocks Short -- Avoiding Regulatory Pitfalls -- Understanding trade-settlement dates -- Avoiding free riding -- Avoiding margin calls and forced sales -- Avoiding pattern-day-trader restrictions -- The Tax Man Cometh -- Chapter 16 Developing Your Own Powerful Trading System -- Understanding Trading Systems -- Discretionary systems -- Mechanical systems -- Trend-following systems -- Countertrend systems -- Selecting System-Development Tools -- Choosing system-development hardware -- Deciding on system-development software -- Finding historical data for system testing -- Developing and Testing Trading Systems -- Working with trend-following systems -- Using breakout trading systems -- Accounting for slippage;Earnings -- Earnings growth rate -- Figuring Your Ratios: Comparing One Company's Stock to Another -- Price/earnings ratio -- Price/book ratio -- Return on assets -- Return on equity -- Chapter 7 Listening to Analyst Calls -- Getting to Know Your Analysts -- Buy-side analysts: You won't see them -- Sell-side analysts: Watch for conflicts -- Independent analysts: Where are they? -- The Importance of Analysts -- Tracking how a company's doing -- Providing access to analyst calls -- Pointers for Listening to Analyst Calls -- Understanding the analysts' language -- Developing your listening skills -- 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 -- Finding everything in the price -- Seeing that price movements are not always random -- Balancing supply and demand -- Understanding where you've been -- Understanding where you're headed -- Answering the Detractors -- Walking randomly -- Trading signals known to all -- Executing Your Trading Plan -- Using StockCharts.com -- Chapter 9 Reading Bar Charts Is Easy (Really) -- Creating a Price Chart -- Looking at a single price bar -- Measuring volume -- Coloring charts -- Identifying Simple Single-Day Patterns -- Single-bar patterns -- Reversal patterns -- Recognizing Trends and Trading Ranges -- Discerning a trading range -- Spotting a trend -- Paying attention to time frame -- Searching for Transitions -- Support and resistance: The keys to trend transitions -- Finding a breakout -- Sipping from a cup and handle -- Deciding what to do with a double bottom -- An alternative double-bottom strategy -- Looking at other patterns -- Chapter 10 Following Trends to Boost Your Probability of Success -- Identifying Trends