The Art of Trend Trading

Foreword ix Michael Di Gioia Chapter 1: Wishing You a Slow Rise 1 Setting Goals 2 1 Percent aDay Keeps the Ka-Chingos Comin'! 3 Don't Be in Such a Rush to Lose Your Money 4 Chapter 2: Bear with Me 5 The Achilles Have It 6 Identifying Your Achilles' Heel 6 Chapter 3: Breakout City and Riding the Horse to Gains 11 The 10 a.m. Intraday Break 11 The Play 12 The Technical Breakout 16 The 52-Week-High Breakout 16 Buy Low and Sell High? 18 The All-Time-High Blue Skies Breakout 24 Chapter 4: Power Trading 25 Be You...Be Powerful! 26 Intraday Primer 26 Time Frames 29 9:30-10:00 a.m.: Gaps 30 10:00-1:00 p.m.: 10 a.m. Rule in Effect 32 1:00-2:30 p.m.: Lunchtime Lull/Reversal 33 2:30-3:20 p.m.: Post-Lunch Activity 34 3:20-3:40 p.m.: Afternoon Lull 34 3:40-4:00 p.m.: Market on Close/End of Day 35 8:00-9:30 a.m./4:00-8:00 p.m.: After-Hours, News Rules! 35 Time Frame Examples 37 News Trader 38 Swing Trades 40 Gap Me, Baby 41 Laggards 41 Market Close 42 After Hours 42 Chapter 5: $12,500 to $3.8 Million 45 Bull, Bear--I Don't Care! 45 Chapter 6: Options (Pretty) Basic Primer 49 What Are Options? 50 Underlying Assets 51 Rights and Obligations 52 Weekly Options 55 Option Strategies Introduction 60 Spreads 62 Chapter 7: Trading Options 65 Out-of-the-Money Options 65 More than One Month Out 69 Leveraging and Hedging 71 Index Options 73 LEAPs 77 Straddles 78 Strangles 82 Bull Spread 83 Bear Spread 85 Chapter 8: Trading Gaps Animal Spirit Guide (Stalking, Leopard) 87 What Are Gaps? 87 Planning Your Gap Trade 92 Daily Gap Goals! 92 Contents vii Objectives 94 News/News/News 95 Come Out, Come Out, Wherever You Are, Mr. Gap! 96 Order Flow 97 Managing Risk 98 Know When to Hold 'Em or Fold 'Em 100 Believe! 102 Trading Gap Downs 103 Trading Gap Ups 106 Chapter 9: My Favorite Animal Spirits 109 Gap Fades 110 Earnings Runs 113 Earnings Straddles 121 FOMC Fades 123 10:00 a.m. Rule Plays 126 Chapter 10: Trading Gaps Using Technical Analysis 133 Reversal Bars 134 Doji 134 When to Enter 136 Reversal Bars 141 The OOPS Entry 145 Gap and Goooooooooo!!! 147 Exit Strategies 152 Taking Profits 156 Know When to Fold 'Em 159 Using Stops 161 Gaining an Edge 165 Chapter 11: News Rules! Trading News 171 Laggard News 171 Guidelines for Trading News 172 News Stories 174 Potential News 183 Managing Risk 185 Chapter 12: Trading Laggards 187 What Is a Laggard? 187 If It Looks Like a Laggard, and It Smells Like One... 188 Watchlists 188 Sectors 188 News and Laggards 192 Chapter 13: Trends Are Your Friends 193 Stick with the Trend! 194 Window Dressing 196 Earnings Runners 199 FOMC Runs 206 The January Effect 210 Chapter 14: Finding Your Own Animal Spirit 215 Next Steps 215 Choices 216 Laws of Attraction 216 Are You a Leopard? 218 Chapter 15: Zen and the Art of Rich 221 Society 221 Control... 222 Money 223 Cockroaches 224 Integrity 225 Zen 226 Chapter 16: What Animal Spirit Are You? 229 About the Author 231 Index 233