The Stock Market Course

463 Pages·2001·4.04 MB·english

by  George A. Fontanills

B u s i n e s s C u l i n a r y A r c h i t e c t u r e
C o m p u t e r G e n e r a l I n t e r e s t
C h i l d r e n L i f e S c i e n c e s B i o g r a p h y
A c c o u n t i n g F i n a n c e M a t h e m a t i c s
H i s t o r y S e l f - I m p r o v e m e n t H e a l t h
E n g i n e e r i n g G r a p h i c D e s i g n
A p p l i e d S c i e n c e s P s y c h o l o g y
I n t e r i o r D e s i g n B i o l o g y C h e m i s t r y
e
WILEY
B O O K
WILEY
JOSSEY-BASS
PFEIFFER
J.K.LASSER
CAPSTONE
WILEY-LISS
WILEY-VCH
WILEY-INTERSCIENCE
THE STOCK MARKET COURSE

WILEYTRADING ADVANTAGE
Beyond Candlesticks / Steve Nison
Beyond Technical Analysis/ Tushar Chande
Campaign Trading/ John Sweeney
Contrary Opinion/ R. Earl Hadady
Cybernetic Trading Strategies/ Murray A. Ruggiero Jr.
Day Trade Part-Time /John Cook and Jeanette Szwec
Encyclopedia of Chart Patterns / Thomas Bulkowski
Expert Trading Systems / John R. Wolberg
Fundamental Analysis / Jack Schwager
Gaming the Market/ Ronald B. Shelton
Genetic Algorithms and Investment Strategies/ Richard J. Bauer Jr.
Intermarket Technical Analysis/ John J. Murphy
Long-Term Secrets to Short-Term Trading/ Larry Williams
Macro Trading and Investment Strategies / Gabriel Burstein
Managed Trading/ Jack Schwager
McMillan on Options/ Lawrence G. McMillan
Neural Network Time Series Forecasting of Financial Markets/ E. Michael Azoff
New Market Timing Techniques/ Thomas R. DeMark
New Trading Dimensions / Bill Williams
Nonlinear Pricing/ Christopher T. May
Option Market Making/ Alan J. Baird
Option Strategies, Second Edition/ Courtney Smith
Pattern, Price & Time /James A. Hyerczyk
Point and Figure Charting/ Thomas J. Dorsey
Profits from Natural Resources/ Roland A. Jansen
Schwager on Futures / Jack Schwager
Seasonality/ Jake Bernstein
Stock Index Futures & Options / Susan Abbott Gidel
Study Guide for Trading for a Living / Dr. Alexander Elder
Study Guide to Accompany Fundamental Analysis / Jack Schwager
Study Guide to Accompany Technical Analysis/ Jack Schwager
Technical Analysis / Jack Schwager
Technical Analysis of the Options Markets/ Richard Hexton
Technical Market Indicators/ Richard J. Bauer Jr. and Julie R. Dahlquist
The Day Trader’s Manual/ William F. Eng
The Dynamic Option Selection System / Howard L. Simons
The Hedge Fund Edge/ Mark Boucher
The Intuitive Trader/ Robert Koppel
The Mathematics of Money Management/ Ralph Vince
The New Market Wizards / Jack Schwager
The New Money Management / Ralph Vince
The New Options Market, Fourth Edition / Max Ansbacher
The New Science of Technical Analysis/ Thomas R. DeMark
The New Technical Trader/ Tushar Chande and Stanley S. Kroll
The Option Advisor / Bernie G. Schaeffer
The Options Course/ George A. Fontanills
The Options Course Workbook/ George A. Fontanills
The Stock Market Course/ George A. Fontanills and Tom Gentile
The Stock Market Course Workbook/ George A. Fontanillsand Tom Gentile
The Trader’s Tax Solution / Ted Tesser
The Trader’s Tax Survival Guide, Revised Edition/ Ted Tesser
The Trading Game /Ryan Jones
The Ultimate Trading Guide/ John Hill, George Pruitt, and Lundy Hill
The Visual Investor/ John J. Murphy
Trade Options Online / George A. Fontanills
Trader Vic II/ Victor Sperandeo
Trading Applications of Japanese Candlestick Charting/ Gary Wagner and
Brad Matheny
Trading Chaos/ Bill Williams
Trading for a Living/ Dr. Alexander Elder
Trading on Expectations/ Brendan Moynihan
Trading Systems & Methods, Third Edition/ Perry Kaufman
Trading the Plan/ Robert Deel
Trading to Win/ Ari Kiev, M.D.
Trading with Crowd Psychology/ Carl Gyllenram
Trading without Fear/ Richard W. Arms Jr.
THE STOCK MARKET COURSE
George A. Fontanills and Tom Gentile
JOHN WILEY& SONS, INC.
New York • Chichester • Weinheim • Brisbane • Singapore • Toronto
This book is printed on acid-free paper. ∞
Copyright ©2001 by George A. Fontanills, Tom Gentile, and Richard M. Cawood.
All rights reserved.
Published by John Wiley & Sons, Inc.
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 Sections 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, MA01923, [phone], fax [phone]. Requests to the
Publisher for permission should be addressed to the Permissions Department, John Wiley &
Sons, Inc.,
605 Third Avenue, New York, NY10158-0012, [phone], fax [phone],E-Mail:
[email protected].
This publication is designed to provide accurate and authoritative information in regard to
the subject matter covered. It is sold with the understanding that the publisher is not engaged
in rendering professional services. If professional advice or other expert assistance is
required, the services of a competent professional person should be sought.
Designations used by companies to distinguish their products are often claimed as
trademarks. In all instances where the author is aware of a claim, the product names appear
in Initial Capital letters. Readers, however, should contact the appropriate companies for
more complete information regarding trademarks and registration.
Library of Congress Cataloging-in-Publication Data:
Fontanills, George.
The stock market course / George A. Fontanills and Tom Gentile.—1st ed.
p. cm.—(Wiley trading advantage)
Includes bibliographical references and index.
ISBN 0-471-39315-0 (cloth : acid-free paper)
1. Stocks—United States. I. Gentile, Tom, 1965– II. Title. III. Series.
HG4910.F598 2001
332.63'22—dc21 00-053368
Printed in the United States of America.
10 9 8 7 6 5 4 3 2 1
I would like to dedicate this book to
the Optionetics.com staff, writers, and traders.
Their innovative ideas and commitment to excellence,
hard work, and constant good humor are
the reasons Optionetics.com is enjoying
such phenomenal success!
Thank you, one and all.
Disclaimer
Hypothetical or simulated performance results have certain limitations. Un-
like an actual performance record, simulated results do not represent actual
trading. Also, since the trades have not actually been executed, the results
may have under- or overcompensated for the impact, if any, of certain factors,
such as lack of liquidity. Simulated trading programs in general are also sub-
ject to the fact that they are designed with the benefit of hindsight. No repre-
sentation is being made that any account will or is likely to achieve profits or
losses similar to those shown. There is a risk of loss in all forms of trading.
Important Notice
Trading stocks and options has large potential rewards, but also large poten-
tial risks. You must be aware of the risks and willing to accept them in order
to invest in the markets. Do not trade with money you cannot afford to lose.
This is neither a solicitation nor an offer to buy or sell stocks or options. This
book is published for educational purposes only and should not be relied
upon. Consult a licensed professional about your individual trading. Prior to
buying or selling an option, your brokerage firm should send you a copy of
Characteristics and Risks of Standardized Options. Copies of this document
are also available from the Chicago Board Options Exchange, 400 South La
Salle Street, Chicago, IL 60605, or can be viewed at the CBOE’s web site
(www.cboe.com), or at www.optionetics.com.
Acknowledgments
After my first two books on option trading were published, I was approached about
writing a comprehensive book on how to trade the stock market. At first the
prospect of writing a book on a scope as wide as the stock market shook me to the
core. But being the kind of person who loves a challenge, I soon warmed up to the
idea. It has been a long, sometimes arduous, journey.
After years of experience teaching people how to trade options, I have learned
many things about the process of learning. First and foremost, you can’t teach any-
one anything unless they have the desire to learn. Second, everyone learns at his or
her own speed. Third, you have to break the complexities of trading down into bite-
size, understandable pieces that are interesting enough that people naturally con-
tinue the learning process because they get it. If it gets too complicated, people give
up. Learning involves a feeling of accomplishment with a few epiphanies thrown in
here and there to spice things up and keep the process engaging. I am hopeful that
this book not only accomplishes these goals, but also helps people to understand the
stock market and gives them enough tools to make money in it.
As usual, I could not have written this book without the supreme effort of the
Optionetics.com staff and the research team that helped put it all together. I would
now like to take the time to acknowledge each one of these brilliant people.
At the top of the list, I want to thank my coauthor for this book, Tom Gentile. As
Chief Options Strategist at Optionetics.com and coinstructor at Optionetics Semi-
nars, Tom is one of the most brilliant traders I have ever had the pleasure to know.
Although this book is written from a first person perspective, please note that it is
the work of two authors. To his credit, Tom put in a phenomenal amount of time and
energy researching every aspect of this book while sharing his extensive experience
and insightful trading knowledge. His consistency and attention to detail make him
the best writing partner I can imagine. Thank you, Tom Gentile, for your supreme
effort in the completion of this book.
My deepest thanks go to Richard Cawood, the CEO of Optionetics.com, for his
unbiased support and can-do, positive thinking. He is the backbone of this organiza-
tion, and without him I would not be able to do all the things I love to do as well as
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