Transcription
Trading3rd Edition
Trading3rd Editionby Michael Griffis and Lita Epstein
Trading For Dummies , 3rd EditionPublished by: John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030-5774, www.wiley.comCopyright 2014 by John Wiley & Sons, Inc., Hoboken, New JerseyPublished simultaneously in CanadaNo part of this publication may be reproduced, stored in a retrieval system or transmitted in any formor by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except aspermitted under Sections 107 or 108 of the 1976 United States Copyright Act, without the prior writtenpermission of the Publisher. Requests to the Publisher for permission should be addressed to thePermissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax(201) 748-6008, or online at http://www.wiley.com/go/permissions.Trademarks: Wiley, For Dummies, the Dummies Man logo, Dummies.com, Making Everything Easier, andrelated trade dress are trademarks or registered trademarks of John Wiley & Sons, Inc., and may not beused without written permission. All other trademarks are the property of their respective owners. JohnWiley & Sons, Inc., is not associated with any product or vendor mentioned in this book.LIMIT OF LIABILITY/DISCLAIMER OF WARRANTY: WHILE THE PUBLISHER AND AUTHOR HAVE USEDTHEIR 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 ANDSPECIFICALLY DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR APARTICULAR PURPOSE. NO WARRANTY MAY BE CREATED OR EXTENDED BY SALES REPRESENTATIVES OR WRITTEN SALES MATERIALS. THE ADVICE AND STRATEGIES CONTAINED HEREIN MAYNOT BE SUITABLE FOR YOUR SITUATION. YOU SHOULD CONSULT WITH A PROFESSIONAL WHEREAPPROPRIATE. NEITHER THE PUBLISHER NOR THE AUTHOR SHALL BE LIABLE FOR DAMAGESARISING HEREFROM.For general information on our other products and services, please contact our Customer CareDepartment within the U.S. at 877-762-2974, outside the U.S. at 317-572-3993, or fax 317-572-4002. Fortechnical support, please visit www.wiley.com/techsupport.Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some materialincluded 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, youmay download this material at http://booksupport.wiley.com. For more information about Wileyproducts, visit www.wiley.com.Library of Congress Control Number: 2013948025ISBN 978-1-118-68118-3 (pbk); ISBN 978-1-118-80500-8 (ebk); ISBN 978-1-118-80503-9 (ebk)Manufactured in the United States of America10 9 8 7 6 5 4 3 2 1
Contents at a GlanceIntroduction. 1Part I: Getting Started with Trading. 5Chapter 1: The Ups and Downs of Trading Stocks. 7Chapter 2: Exploring Markets and Stock Exchanges. 19Chapter 3: Going for Broke(r): Discovering Brokerage Options. 31Chapter 4: Putting Your Key Business Tool to Work: The Computer. 47Part II: Reading the Fundamentals:Fundamental Analysis. 63Chapter 5: Fundamentals 101: Observing Market Behavior. 65Chapter 6: Digging Into Fundamental Analysis. 83Chapter 7: Listening to Analyst Calls. 103Part III: Reading the Charts: Technical Analysis. 117Chapter 8: Reading the Tea Leaves: Does Technical Analysis Work?. 119Chapter 9: Reading Bar Charts Is Easy (Really). 131Chapter 10: Following Trends for Fun and Profit. 151Chapter 11: Calculating Indicators and Oscillators. 167Part IV: Developing Strategies forWhen to Buy and Sell Stocks. 187Chapter 12: Money Management Techniques:When to Hold ’em, When to Fold ’em. 189Chapter 13: Using Fundamental and Technical Analysesfor Optimum Strategy. 205Chapter 14: Minimizing Trading Risks Using Exchange-Traded Funds. 223Chapter 15: Executing Your Trades. 233Chapter 16: Developing Your Own Powerful Trading System. 251Part V: Risk-Taker’s Paradise. 269Chapter 17: The Basics of Swing Trading. 271Chapter 18: The Basics of Day Trading. 285
Chapter 19: Doing It by Derivatives. 299Chapter 20: Going Foreign (Forex). 317Chapter 21: Trading for Others: ObtainingTrading Licenses and Certifications. 333Part VI: The Part of Tens. 347Chapter 22: More Than Ten Huge Trading Mistakes. 349Chapter 23: Ten Trading Survival Techniques. 357Index. 363
Table of ContentsIntroduction. 1About This Book. 2Foolish Assumptions. 2Icons Used in This Book. 3Beyond the Book. 3Where to Go from Here. 4Part I: Getting Started with Trading. 5Chapter 1: The Ups and Downs of Trading Stocks . . . . . . . . . . . . . . . . . 7Distinguishing Trading from Investing. 8Seeing Why Traders Do What They Do. 8Successful Trading Characteristics. 9Tools of the Trade. 10Taking Time to Trade More Than Just Stocks. 10Position trading. 10Short-term swing trading. 11Day trading. 11Going Long or Short. 12Managing Your Money. 12Understanding Fundamental Analysis. 13Getting a Grip on Technical Analysis. 14Putting Trading Strategy into Practice. 15Trading at Higher Risk. 17Remembering to Have Fun!. 17Chapter 2: Exploring Markets and Stock Exchanges . . . . . . . . . . . . . . 19Introducing the Broad Markets. 19Stock markets. 20Futures markets. 20Bond markets. 21Options markets. 22Reviewing Stock Exchanges. 22New York Stock Exchange Euronext (NYSE). 22NASDAQ. 24Amex (now NYSE MKT LLC). 25Electronic communications networks (ECNs). 26
viiiTrading For Dummies, 3rd EditionUnderstanding Order Types. 26Market order. 27Limit order. 27Stop order. 28Stop-limit order. 29Good-’til-canceled orders. 30Other order types. 30Chapter 3: Going for Broke(r): Discovering Brokerage Options . . . . . 31Why You Need a Broker. 31Exploring Types of Brokers and Brokerage Services. 32Full-service brokers. 32Discount brokers. 34Direct-access brokers. 34Proprietary trading firms. 35Futures brokers. 36Services to Consider When Choosing a Broker. 36Types of orders supported. 36Data feed. 37Charts. 37ECN access. 38Knowing the Types of Brokerage Accounts. 38Cash accounts. 38Margin accounts. 38Options. 39IRAs and other retirement accounts. 39Choosing the Right Broker for You. 41Considering more than price. 41Doing a little research. 41Understanding how you’ll be paying. 42Getting to Know the Rules. 43Margin requirements. 43Settling trades. 45Free riding. 45Chapter 4: Putting Your Key Business Toolto Work: The Computer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47Making Use of Your Computer. 48Identifying trading candidates. 48Managing your account. 48Improving your trades. 49Finding Price Charts. 49Checking out Internet charts with delayed prices. 51Considering Internet charts with real-time prices. 51Looking into charting software. 52
Table of ContentsDigging Up Fundamental Data. 53Accessing Analyst Reports. 54Selecting a Trading Platform.
viii Trading For Dummies, 3rd Edition Understanding Order Types . 26 Market order. 27
