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Sector Trading Strategies von Wagner, Deron (eBook)

  • Erscheinungsdatum: 04.05.2016
  • Verlag: Wiley
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Sector Trading Strategies

Chapter 1 Fundamentals of Sector Trading The most troubling and most common question people ask me-"How can I trade this market?" Uncertainty is the most frequently seen condition, even when some (but not all) of the indicators are strong. No matter what the overall market did yesterday or last month, you really have no way to tell which direction the market will go next. The problem, though, is that most people judge the market based on index movement. The Dow Jones Industrial Average, NASDAQ, and S&P 500 involve the average movement of many stocks. If half the stocks in the index rise and the other half fall, the net result is a flat (uncertain) market. Using index measurements is not accurate for this reason. Just as you cannot rely on the national averages of housing prices to decide whether the timing is right to invest in real estate, you need to be able to take a closer look at sectors, parts of the market rather than a collective whole. You need a more dependable way-not only to time your decisions but also to recognize real trends, in real time, to earn real profits. That's where sector trading becomes a valuable strategy; it provides you with the means for focusing in on a segment of the market, identifying a trend, and then acting. Some people think they can out-perform the averages by following single stocks, but every stock is affected directly by other stocks in their sectors. Remember, a sector is, by definition, a grouping of companies in the same industry, sharing the same competitive and market challenges, and subject to the same supply and demand cycles. Sector is the name given to a division of the market, a grouping of companies in the same industry, sharing the same or similar market and competitive factors, and subject to the same supply and demand and business cycles.
The selection of one sector over another, based on business trends and current cyclical strength or weakness, is a sensible way to invest. Using the overall market index is not reliable because these are averages of many stocks. Using single stocks is equally unreliable because each stock follows its sector leaders. In addition, single stocks may or may not act according to the larger sector trend, which is why you also need to know how to pick the best stocks-the leaders-in a sector to ensure that you time decisions properly. In other words, if a sector at large is making a specific move, you need to make sure you pick the right stocks that are leading that trend. Each sector is defined by characteristics: cyclical business changes, seasonal marketing patterns, and economic trends like interest rates, trade imbalances, and employment. A sector is not just a bunch of companies competing with each other; it is also a grouping of companies subject to the same tendencies, market actions and reactions, and economic and business forces. Sectors can be further broken down into subcategories, and these distinctions are crucial, as I will demonstrate later. The subcategories, may also share distinct and unique models for timing and selection, based on their sub-cycles, sub-economics, and sub-marketing. My goals in explaining how to trade sectors are to show you how to: 1. Learn how to trade market sectors. 2. Pick specific sectors based on relative strength or weakness. 3. Increase the number of daily trading opportunities. 4. Minimize your risk while maximizing your profits.
All of these goals are realistic and possible, assuming that you are willing to spend the time needed to master the basics and apply sensible rules within a strategic and methodical approach to investing. In this book, I am going to provide you with several important tools in two primary groupings or "lessons." In the first group, I will focus on skills. I'm going to show you how to identify the realm of

Produktinformationen

    Format: ePUB
    Kopierschutz: AdobeDRM
    Seitenzahl: 164
    Erscheinungsdatum: 04.05.2016
    Sprache: Englisch
    ISBN: 9781118538685
    Verlag: Wiley
    Größe: 3609 kBytes
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Sector Trading Strategies

Chapter 1

Fundamentals of Sector Trading

The most troubling and most common question people ask me-"How can I trade this market?" Uncertainty is the most frequently seen condition, even when some (but not all) of the indicators are strong. No matter what the overall market did yesterday or last month, you really have no way to tell which direction the market will go next.

The problem, though, is that most people judge the market based on index movement. The Dow Jones Industrial Average, NASDAQ, and S&P 500 involve the average movement of many stocks. If half the stocks in the index rise and the other half fall, the net result is a flat (uncertain) market. Using index measurements is not accurate for this reason. Just as you cannot rely on the national averages of housing prices to decide whether the timing is right to invest in real estate, you need to be able to take a closer look at sectors, parts of the market rather than a collective whole. You need a more dependable way-not only to time your decisions but also to recognize real trends, in real time, to earn real profits. That's where sector trading becomes a valuable strategy; it provides you with the means for focusing in on a segment of the market, identifying a trend, and then acting.

Some people think they can out-perform the averages by following single stocks, but every stock is affected directly by other stocks in their sectors. Remember, a sector is, by definition, a grouping of companies in the same industry, sharing the same competitive and market challenges, and subject to the same supply and demand cycles.
Sector is the name given to a division of the market, a grouping of companies in the same industry, sharing the same or similar market and competitive factors, and subject to the same supply and demand and business cycles.
The selection of one sector over another, based on business trends and current cyclical strength or weakness, is a sensible way to invest. Using the overall market index is not reliable because these are averages of many stocks. Using single stocks is equally unreliable because each stock follows its sector leaders. In addition, single stocks may or may not act according to the larger sector trend, which is why you also need to know how to pick the best stocks-the leaders-in a sector to ensure that you time decisions properly. In other words, if a sector at large is making a specific move, you need to make sure you pick the right stocks that are leading that trend.

Each sector is defined by characteristics: cyclical business changes, seasonal marketing patterns, and economic trends like interest rates, trade imbalances, and employment. A sector is not just a bunch of companies competing with each other; it is also a grouping of companies subject to the same tendencies, market actions and reactions, and economic and business forces. Sectors can be further broken down into subcategories, and these distinctions are crucial, as I will demonstrate later. The subcategories, may also share distinct and unique models for timing and selection, based on their sub-cycles, sub-economics, and sub-marketing.

My goals in explaining how to trade sectors are to show you how to:
1. Learn how to trade market sectors. 2. Pick specific sectors based on relative strength or weakness. 3. Increase the number of daily trading opportunities. 4. Minimize your risk while maximizing your profits.
All of these goals are realistic and possible, assuming that you are willing to spend the time needed to master the basics and apply sensible rules within a strategic and methodical approach to investing. In this book, I am going to provide you with several important tools in two primary groupings or "lessons." In the first group, I will focus on skills. I'm going to show you how to identify the realm of

Weiterlesen weniger lesen

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