Ordinary People, Extraordinary Profits How to Make a Living as an Independent Stock, Options, and Futures Trader

by Nassar, David S.

• ISBN13: 9780471723998
• ISBN10: 0471723991
• Edition: 1st
• Format: Hardcover
• Copyright: 2005-11-04
• Publisher: Wiley

Summary

David Nassar delivers a complete and proven system for aggressively and successfully trading in today's markets in Ordinary People, Extraordinary Profits. He explains the fundamentals of technical analysis and risk management, giving you a solid foundation to approach the market, and then describes a variety of trading strategies that will help you make consistently large profits without undue risk. Unlike other trading advisors who advocate a single approach to trading, Nassar provides a variety of strategies you can choose. In addition, he explains how to use new trading instruments such as E-Mini contracts, options, and exchange-traded funds. If you're looking for a complete, proven system for aggressively trading the stock market, this book is an ideal guide.

Author Biography

David S. Nassar is founder and CEO of MarketWise.com, LLC, and a pioneer in electronic trading. He has been seen on CNBC, NBC Nightly News, and CNN, and interviewed in numerous national publications, including the Wall Street Journal, BusinessWeek, and Forbes. Nassar is also a New York Times bestselling author.

Table of Contents

Preface	xi
Acknowledgments	xiii
Introduction	1	(1)
Trade the Professional Way	2	(1)
Ride the Statistical Edge. . . Like Betting Seven in Craps	3	(1)
Master the Inner Game	4	(1)
Foundational Analysis	5	(64)
Charts	7	(5)
Two Types of Analysis	12	(2)
What Exactly Is Technical Analysis?	14	(5)
The Four-Stage Theory	19	(15)
Stage 1: Accumulation	22	(3)
Stage 2: Markup	25	(4)
Stage 3: Distribution	29	(1)
Stage 4: Decline	29	(5)
Support and Resistance	34	(9)
Definitions of Support and Resistance	34	(2)
Once Broken, Support Tends to Act as Resistance	36	(1)
Once Broken, Resistance Tends to Act as Support	37	(1)
The More Often Support or Resistance Is Tested, the More Likely That Level Is to Fail to Hold Back Price Movement	38	(3)
The Longer the Trend Has Been Neutral (Consolidating), the More Significant the Eventual Breakout Becomes	41	(2)
Trends	43	(8)
Trading Volume	51	(7)
Moving Averages	58	(11)
Risk Management	69	(16)
Discipline---The Key to Trading Success	70	(1)
Discipline Perspectives	70	(1)
Avoid Trading with Scared Money	71	(1)
Terra Nova Trade Evaluator	71	(1)
Your Goal: To Trade without Emotion	71	(2)
Plan Your Trade and Trade Your Plan with Risk-Reward Ratios	73	(2)
Setting Stops---Overview	75	(5)
Overall Protective Stop Guidelines	75	(1)
Protective Stops and Trading Time Frames	76	(3)
Percentage of Price Stops	79	(1)
Time Stops	80	(1)
Avoid This Mistake	80	(1)
RealTick® Can Help	80	(1)
Risk Management and Trading with the News	81	(2)
Risk Management and Share Size	83	(1)
Summary	84	(1)
Basic Chart Formations	85	(28)
Time Frames	88	(4)
Weekly Charts	89	(1)
Daily Charts	90	(1)
Intraday Charts	90	(1)
Sixty-Minute Charts	91	(1)
Ten-Minute Charts	91	(1)
Interpreting Chart Patterns	92	(1)
Reversal Patterns	92	(8)
Head and Shoulders Chart Formation	92	(2)
Long Base and Saucer Formations	94	(2)
Saucer Bottoms and Tops	96	(1)
Cup and Handle Formation	97	(1)
Bull and Bear Traps	97	(3)
Continuation Patterns	100	(11)
Rectangle (Box)	100	(2)
Flags and Pennants	102	(3)
Triangles	105	(6)
Summary	111	(2)
Going Short	113	(20)
Finding Shorting Opportunities	115	(10)
Price/Earnings Ratio Imbalance	115	(1)
Gap Openings	116	(2)
The Loaded Spring	118	(4)
Day-Trading ``Tape Resistance''	122	(1)
The Short Squeeze (Be Cautious)	123	(2)
Margin Accounts	125	(7)
The Federal Reserve Board's Regulation T	125	(1)
Opening a Margin Account	126	(1)
Calculating Initial Requirements	127	(1)
Excess Equity	128	(1)
Calculating Maintenance Requirements	129	(1)
Minimum Maintenance Requirements	129	(1)
Change in Market Value	129	(1)
Short Sales and Margin Requirements	130	(1)
NASD/NYSE Minimum Deposit on Short Sales	131	(1)
Margin Maintenance Calls on Short Sales	131	(1)
Shorting-against-the-Box	132	(1)
Summary	132	(1)
Other Trading Vehicles	133	(34)
What Is an E-Mini S&P 500 Contract?	134	(1)
E-Mini Symbols	135	(1)
Initial and Maintenance Margin Requirements	136	(1)
Treatment of Settlement	136	(1)
The E-Mini Contract versus the Pit-Traded Contract	137	(1)
Price and Percentage Limits	137	(1)
Single-Source Liquidity	138	(1)
E-Mini Standard & Poor's 500 as a Hedge	139	(1)
Tax Advantages with the E-Mini	140	(1)
The E-Mini Nasdaq 100	140	(1)
Chicago Board of Trade Mini-Dow Futures Use $5 Multiplier	141	(1)
Who Regulates Futures Trading?	142	(1)
Program Trading and Fair Value	142	(2)
Predicting the Opening	144	(1)
How to Calculate Fair Value	144	(1)
What about Exchange-Traded Funds?	145	(1)
The QQQQs	146	(1)
E-Mini Is Hard to Beat	146	(1)
Put and Call Options	146	(1)
A Brief History	147	(1)
Puts and Calls and Standardized Options	148	(1)
Shares per Option	148	(1)
Pricing	149	(1)
Symbology	150	(1)
Settlement	151	(1)
In-the-Money or Out-of-the-Money	151	(1)
Rights versus Obligations	151	(1)
Opening and Closing Transactions	152	(1)
Open Interest	152	(1)
Opening Rotation	153	(1)
Option Positions	154	(2)
Long Stock	154	(1)
Short Stock	155	(1)
Long Call	155	(1)
Short Call	155	(1)
Long Put	155	(1)
Short Put	156	(1)
Conversions, Reversals, and Synthetics	156	(5)
The Greeks and Delta Value	161	(4)
Position Delta	161	(1)
Gamma	162	(2)
Position Gamma	164	(1)
Long/Positive Gamma	164	(1)
Short/Negative Gamma	164	(1)
Omega	164	(1)
Vega	164	(1)
Theta	165	(1)
Summary	165	(2)
Trading Strategies	167	(18)
The Profiler's-Systems Trading	170	(7)
Pricing Puts/Calls---A Strategy You Can Use	177	(8)
Indicators and Oscillator	185	(16)
Stochastics	186	(4)
Stochastics---Interpretation	186	(4)
Relative Strength Index	190	(2)
ARMS Index	192	(4)
Using the TRIN	195	(1)
Fibonacci Retracements	196	(5)
Traditional Pivot Analysis	201	(18)
The Pivot Formula	202	(1)
The Pivot in Action	203	(2)
Calculating Pivots	204	(1)
Choosing the Right Data for Calculations	205	(1)
The Area between R1 and S1	205	(2)
Illustrating Pivot Lines on RealTick	207	(1)
Archiving Pivot Levels	208	(1)
Pivotal Psychology	209	(1)
Paper Trading	209	(1)
Strategy and Money Management	210	(1)
Lining Up Levels on Multiple Time Frames	211	(2)
Trading a Confluence Zone	213	(2)
Swing Trading with Confluence Areas	215	(3)
Summary	218	(1)
Planning and Staying on Track	219	(8)
What Is Your Time Commitment?	219	(1)
How Will You Fund Your Trading Account?	220	(1)
What Style of Trading Will You Pursue?	220	(2)
What Are Your Profit Objectives?	222	(1)
How Will You Manage Your Profits?	222	(1)
Do You Evaluate All Your Trades?	222	(1)
Are You Keeping a Journal?	222	(3)
Summary	225	(2)
Your Path to Success	227	(6)
Where to Next?	229	(2)
Summary	231	(2)
Appendix: MarketWise Tools---Routes to Success	233	(6)
MarketWise Web Site Resources	235	(1)
Tuning to the Market Intraday	236	(3)
Glossary	239	(16)
Bibliography and Exchange Contact Information	255	(4)
Exchange Contact Information	257	(2)
Index	259