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The New Sell and Sell Short
How To Take Profits, Cut Losses, and Benefit From Price Declines
Alexander Elder (Author)
9780470632390, Wiley
Paperback / softback, published 5 April 2011
368 pages, Charts: 185 B&W, 0 Color; Tables: 3 B&W, 0 Color
22.9 x 15.5 x 2.3 cm, 0.567 kg
A detailed look at one of the most underestimated aspects of trading-selling In The New Sell and Sell Short, Second Edition, Dr. Alexander Elder explains how to exit a stock at the right time and how to initiate a short position to profit from a stock that is showing weakness. Often overlooked, selling properly enables a trader to cut losses and maximize profits. Moreover, short selling in a weak market can generate big profits and should be a part of every trader's arsenal of tools. The new edition contains numerous examples of short selling stocks from the 2008-2009 bear market, demonstrating very clearly why traders do themselves a disservice by only focusing on the long side. In addition, the new edition contains an extensive study guide to help readers master the material prior to trading. Elder shares real-world examples that show how to manage your positions by adjusting your exit points as a trade unfolds. Understanding where and when to sell is essential to successful trading. The New Sell and Sell Short, Second Edition is the definitive reference to this overlooked, but vitally important, aspect of trading.
Introduction xv Why Sell? xv About the Q&A xvii Part One Psychology, Risk Management, & Record-keeping 1 Chapter 1 On Buying 3 THE Three Great Divides 3 One Trader’s Toolbox 7 Chapter 2 Trading Psychology and Risk Management 9 Your Mind as a Trading Tool 9 Risk Control 11 Chapter 3 On Keeping Records 13 Good Records Lead to Good Trading 13 Trader’s Spreadsheet—basic Accountability 14 Trading Diary—your Key to Lasting Success 16 How to Document Your Trading Plan 20 Margret’s Method—put it on the wall 24 How to Grade Your Performance 24 Two Types of Trading 26 Questions 29 Answers 45 Part Two How to Sell 57 Chapter 4 Selling at a Target 61 Selling at a Moving Average 63 Selling at Envelopes Or Channels 71 Selling at Resistance Levels 83 Chapter 5 Selling on a Stop 95 The Iron Triangle 97 Market Or Limit Orders 99 Hard and Soft Stops 101 A Bad Place 102 Reducing Slippage—tighter by a Penny 109 Nic’s Stop—tighter by a Day 110 When to Use Wider Stops 117 Moving Stops 120 A Safezone Stop 123 Volatility-drop Trailing Stops 124 Chapter 6 Selling “Engine Noise” 129 Weakening Momentum 130 An “engine Noise” Exit From a Short-term Trade 132 A Discretionary Exit From a Long-term Trade 135 Selling Before Earnings Reports 139 The Market Rings a Bell 143 Trading with the New High–new Low Index 148 The Decision Tree for Selling 151 Questions 157 Answers 183 Part Three How to Sell Short 203 Chapter 7 Shorting Stocks 207 Your First Shorts 211 The Asymmetry of Tops and Bottoms 214 Shorting Tops 216 Shorting Downtrends 221 Shorting Fundamentals 224 Finding Stocks to Short 233 Short Interest 237 Chapter 8 Shorting Non-Equity Instruments 243 Shorting Futures 243 Writing Options 252 Forex 258 Questions 265 Answers 279 Part Four Lessons of the Bear Market 291 Chapter 9 Bears Make Money 293 The Bear Was Beginning to Stir in Its Cave 293 The Sentiment Indicators Are Early 295 The Top of the Bull Market 297 Bearish Divergence at the 2007 Top 299 The Bubble Pops: Mgm 300 Shorting a High-flyer 302 A Bear Market Is a Destroyer of Value 304 Swinging in and Out of a Major Downtrend 307 Trading in a Downchannel 308 Prepared for a Surprise 310 “Bull Markets Have No Resistance And Bear Markets Have No Support” 312 For Whom the Bell Tolls Or the Hound Barks Twice 315 Mr. Buffett Buys Too Soon 317 May I Pour Some Gasoline on Your Fire? 319 Keep Shorting on the Way Down 321 Chapter 10 Groping for a Bottom 325 This Stock Market Is Not Going Down to Zero 325 A “double Helix” Gives a Buy Signal 327 Just in Time for the Party 328 My Favorite Major Bottom Signal 331 Selling a Bull 332 Every Bull Stumbles 335 A Screaming Short 337 Conclusion 341 Handling Profits—the Personal Dividend 342 The Road Into the Future 343 References 345 Acknowledgments 347 About the Author 349
Subject Areas: Finance & accounting [KF]
