A Beginner's Guide to Short-Term Trading - Toni Turner

301 Pages·2007·19.09 MB·English

~ inner's
guide to
•
TONI TURNER
IJ
Adams Media Corporation
Avon, Massachusetts
Copyright ©2002, Toni Turner. All rights reserved.
This book, or parts thereof, may not be reproduced in any form
without permission from the publisher; exceptions are made for brief
excerpts used in published reviews.
Published by
Adams Media Corporation
57 Littlefield Street, Avon, MA 02322. U.S.A.
www.adamsmedia.com
ISBN: 1-58062-570-3
Printed in Canada.
JIHGFEDCBA
Library of Congress Cataloging-in-Publication Data
Turner, Toni.
A beginner's guide to short-term trading I by Toni Turner.
p. cm.
Includes index.
ISBN 1-58062-570-3
1. Speculation. 2. Stocks--Charts, diagrams, etc.
3. Stock price forecasting. 4. Investment analysis. I. Title.
HG6041 .T87 2001
332.63'228--dc21 2001046345
This publication is designed to provide accurate and authoritative information with regard to the sub-
ject matter covered. It is sold with the understanding that the publisher is not engaged in rendering
legal, accounting, or other professional advice. If legal advice or other expert assistance is required,
the services of a competent professional person should be sought.
-From a Declaration ofPrinciples jointly adopted by a Committee of the American Bar
Association and a Committee of Publishers and Associations
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I dedicate this book to my students, worldwide. You have become
my teachers and my friends. Thank you for your unending gifts
ofsupport and encouragement, laughter, and inspiration!
Contents
ACKNOWLEDGMENTS • • • • • • • • • • . • • • • • • • • • • • • • • . . • • . • • • • • • xi
FOREWORD BY STEVE NISON ••••.•••••••••••••••••••••••• xiii
INTRODUCTION ••••••••.••••••••••••••••••.•••••••••••• xv
America's Love Affair; How the Romance Began; The Internet Played Cupid;
Enter the Day Traders; My Relationship with the Stock Market; Why I Wrote
This Book; Strategy Overview; What You'll Need to Succeed; Short-Term
Trading: The Good News; The Flip Side; The Journey . .. ; It's Showtime!
CHAPTER1-WALLSTREEn
THE GREATEST GAME ON EARTH. • • • . • • • • • . • • • • • • • • • • • • • 1
Where It All ~tarted; Out of Chaos Comes O~der: The 'Crash of 1929; The
Crash of 1987: More Chaos and the Resulting Order; The New York Stock
~xchange: How It Works; The Nasdaq Stock Market: How It" Works; The
American Stock Exchange LLC: How It Works; Let's Dissect the Indexes;
Wall Street as "The Animal House": The Bulls and the Bears, the Sheep and
the Hogs; Two Emotions That Rule the Markets (and Most ofthe Rest ofthe
World); Supply and Demand; Check Your Understanding; What Is "Center
Point"?; Center Point: You . .. A Golden Buddha
CHAPTER 2-0FF TO A RUNNING START:
SETTING UP YOUR BUSINESS•••••••••••••••••••••.•••• 17
Map Your Business Plan; What's Your Time Commitment? Your Most
Important Commitment: Money; Quick Asset Allocation Plan;
Selecting/Updating Your Office Equipment; Choosing a Broker; The
Commission Maze; Slippage: What It Means; Margin Accounts: How They
Work; You Gotta Have Goals; Check Your Understanding; Center Point:
Commit: Transform Your Dreams into Goals
vii
viii A BEGINNER'S GUIDE TO SHORT-TERM TRADING
CHAPTER 3-MASTER A MONEY-MAKING MINDSET••••••.•••.•• 33
The Market as an Unstructured Entity; The Stock Market Is Always Right;
Meet Your Emotions-Up Close and Personal; The Winning Mindset-Train
Your Brain; The End Result: What It Looks Like; R & R: Don't Go Shopping
Without It; Self-Respect and Deservability; Check Your Understanding;
Center Point: Make Your Circle Bigger
CHAPTER 4-MARKET MACHINATIONS 101:
THE FUEL THAT SPARKS THE ENERGY••••••••••••••••••• 45
The Buck Stops Here; Fundamental Analysis vs. Technical Analysis: The Tug
o'War; Fundamental Analysis, Quick Yet Thorough Sources; IBD
Proprietary Corporate Ratings; More Instant Info, CNBC, CNN, and
Bloomberg; Wonderful Web Sites to Wander Through; Magazines; Check
Your Understanding; Center Point: Invite Spontaneity into Your Life
CHAPTER 5-MARKET MACHINATIONS 102:
BASIC CHARTING TECHNIQUES THAT MAKE YOU MONEY•.•• 55
Cycles: The World's Operating System; Let's Draw the Curtain on Stage
Analysis; Different Stages Call for Different Reactions; Additional Cycle .
Components; Support and Resistance, or Action and Reaction; Quiz; Center
Point: Develop a Prosperity Mindset
CHAPTER &-JUMP-START ON CHARTING BASICS ••••••••••••• 73
Charting Essentials: Line Charts and Bar Charts; Candlestick Charting
Basics; Quiz; Center Point: Reach for Your Highest Potential
CHAPTER 7-eHARTING CLOSE-UPS:
THE PIECES OF THE PUZZLE ••••.••••••••••••••••••.•• "93
Anatomy ofYour Friend: The Uptrend; Buy Signals: What to Look For; How
to Draw an Uptrend Line; Trading in a Range, Congestion, and
Consolidation; Anatomy ofa Downtrend; Overview ofSell Signals: What to
Look For; How to Draw a Downtrend Line; Quiz; Center Point: The Power
ofSynchronicity
CHAPTER 8-PUTTING THE PUZZLE TOGETHER • • • • • • • • . . • . . • 119
Volume: A Mega-Important Indicator; Moving Averages: What They Are,
How to Use Them; Quiz; Center Point: Thoughts Are "Things"
ix
CHAPTER 9-THE BELLS AND WHISTLES:
HOW THEY CHIME AND TWEET. • • • • • • • • • • • . • • • • • • • • • • • 135
Oscillators: What They Are; The RSI, What It Is, How to Use It; Stochastic
Oscillator: What It Is, How to Use It; The MACD: What It Is, How It Works;
On-Balance Volume: What It Is, How to Read It; Bollinger Bands: What They
Are, How to Read Them; Fibonacci Retracements: What They Are, How You
Read Them; Gaps: A Trader's Black Hole; Quiz; Center Point: You Are
Perfect Right Now!
CHAPTER 1O-IT'S SHOWTIME! ••••••••••••••••••••••••••• 157
Continuation and Reversal Patterns: What They Are; Reversal Patterns: What
They Look Like; Let's Take Itfrom the Top!; Big Picture Dynamics; Choose a
Leading Stock in a Leading Industry, Check Out the Fundamentals; The
Industry Group or Sector Shows Immediate Strength; Indicators." All Systems
Are Go!; The Urge to Fudge; Get Ready to Pull the Trigger: The Buy Setup;
Buy Trigger List; Quiz; Center Point: Awaken to Forgiveness
CHAPTER ii-WHERE THE RUBBER MEETS THE ROAD:
MONEY-MANAGEMENT TECHNIQUES •.•••• •' • • • • • • • • • • • • 183
Plan Your Trade and Trade Your Plan; Piece of the Pie; RiskIReward Ratio:
What It Means, How to Calculate It; Where to Place Your Stop-Loss Orders;
Now That You've Got It, What Do You Do with It?; Intra-day Reversal
Periods: What They Are, What They Mean to You; Market Orders, Limit
Orders, and More; Quiz; Center Point: The Circle ofGiving
CHAPTER 12-WINNING STRATEGIES FOR SELLING SHORT ••••• 199
Overcoming Mental and Emotional Roadblocks to Selling Short; Selling
Short: The Rules; Here's the Process; What Makes Your Shorts Fall Down;
Fundamentals: What to Look For; Chart Patterns and Setups: What to Look
For; Shorting Indicators: Ugly Is Good!; How to Place Your Order; Shorting
Strategy: The Overextended Stock; Shorting Strategy: The Overextended
Double Top; Sell Short Trigger List; Shorting Tips: FAQs (Frequently Asked
Questions); Quiz; Center Point: Banish Fear and Let Your Light Shine
x A BEGINNER'S GUIDE TO SHORT-TERM TRADING
CHAPTER 13-ANATOMY OF A TRADE •.••••••••••••••.••••• 219
Find an Industry Group or Sector to Target; The Preparation; The Journey;
The Rest of the Story . ..; A Quick Look at Intra-day Charts; Center Point:
Detachment Brings New Possibilities
CHAPTER 14-YOU, THE WIZARD OF ODDS •••••••••••••••••• 237
Back up and Look at the Big Picture; The "If, Then" Mindset; Analyze the
Broader Markets; Learn to Assess the Trading Environment; The
AdvancelDecline Line: Market Narrator in a Capsule; A "Heads Up" on
Economic and Earnings Reports; Options Expiration Day-You're Outta'
Here!; FOMC Reports; Mother Market's Contrarian Indicators; Stay Tuned
to Changing Conditions; A Word about Losses; The Best Gift to Give
YourseIf..' A Trading Journal; Level-II Trading: Is It for You?; Quiz; Center
Point: Come Back to Center
GLOSSARY OF TRADING AND FINANCIAL TERMS ••••••••••••• 253
RECOMMENDEI) READING ••••••.••••••••••••••••••.••••• 273
INDEX••••••••••••••••••••••••••.••••••••••••••.••••• 275
Acknowledgments
If ever a book was created out of patience and love, this is the one!
I consider myself blessed to have been surrounded by so many people who
gave of their encouragement and support while I wrote this manuscript. My thanks
and gratitude to ...
First and always, my daughter Adrienne, who is the light of my life and my
best friend.
My agent, Deidre Knight, the best ally an author could have, along with
being a business partner, friend, and mother of another beautiful soul, Tyler.
My editor, Gary Krebs, who helped shape and mold this book into final
form, editorial assistant Elizabeth Gilbert, whose patience shall endear her to me
forever, business. editor Jill Alexander, and another patient soul, Copy Chief
Laura MacLaughlin.
Harold Komhaus, who offered constant support and lots of hugs.
Best friends Dan Gibby, David Kohn, and Vince Shorb, who gave wise
advice, along with gentle, much-needed prods when I slowed down.
Mark Frauman, mentor and friend, as well as Mike McMahon, Cathy Vlad,
Jennifer Perrier, Claud "OEX" Staples, and Chris Dover.
Dr. Dale Townsend of Tesserack, along with my wonderful friends, the "Hot
Dogs," who motivated me and pushed me to the outside of my personal envelope.
My Internet group, who gather each day for "Toni on Trading." They have
become like family.
Again, thank you all, and God bless!
xi
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