“dig deep” to find that liquidity and become aggressive sellers,hitting low bids. If PHCM (Phone.com) is trading 90 bid to 903⁄16ask, for example, while buyers are evaporating quickly at 90, liquidity will be nonexistent for sellers at 903⁄16. As sellers becomemore aggressive when the 90 bids fade, prices at the bid will tendto spread out, creating more volatility. The next bid may be at891⁄4, representing little or no liquidity at each price levelbetween the 891⁄4 bid and the 90 bid that just disappeared. Eventhough PHCM may have been very liquid throughout the day,once a strong imbalance occurs (supply side greater thandemand), liquidity can become elusive. As experience grows,thinner stocks may be traded, but risk increases dramatically.Many who trade low-price penny stocks (stocks with a market value of less than $5 and low market capitalization) learn thiscritical rule when they are left holding the bag looking for buyersto take their stock when none are in sight for many price levelsbelow their cost basis in the stock. We refer to this situation asgetting trapped in a stock, and it is the last place you want to be.As liquidity fades, stock activity become more chaotic, whichleads to this related rule: Avoid chaotic stocks. This takes theother side of the spectrum when stocks have excessive marketinterest. These stocks often also lack liquidity and become chaotic.Now you must be saying at this point, “Wait a minute!” Thefirst section makes sense: After all, we have all seen scenarios inwhich a lack of demand has caused prices to adjust (fall) to
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incent buyers to come forward and create liquidity, but how canthe direct opposite also be true?The answer lies within another common scenario that wehave undoubtedly encountered or experienced: a lack of supplydue to excessive interest. The examples are endless, from thestampeding fools who trample each other to buy the last BeanieBaby on the department store shelf (a good reason to love Internetcommerce!) to the multiple-hour wait for a table at the hot newrestaurant in town. It is all once again about supply and demand.Whether there is a lack of dolls or tables, excessive interest canand will cause a lack of liquidity in supply and hence causevolatility.When an IPO trades so rapidly due to excessive interest(irrational demand) and there is a limited supply of stock available (the float), stocks will trade with low liquidity at each pricelevel or even each handle depending on the demand. That doesnot mean low daily volume or activity. In fact, excessive interestin a stock like an IPO or a stock that is the recipient of big newswill cause the stock to trade big daily volume, but it will be thinat price levels within the trend line. As a given issue ascends ordescends rapidly, buyers and sellers respectively are rushing inor out of trades while causing an imbalance in supply anddemand. In the example with the rapidly ascending IPO, as buyers rush in to buy the stock with various types of orders, such asmarket orders, sellers are illiquid at current price levels on theway up, trading chaotically, moving the most on light volumewhile moving the least on heavy volume. This gives the illusionthat there is good liquidity based on aggregate daily volume,when in fact the big moves throughout the day tend to occur onthe lightest volume. This is certainly not always the case, but itis very common with high-volatility stocks like IPOs, or stocksthat are the recipients of news.For example, if an IPO is offered at 25 (prior to trading in thesecondary market) but trades to or even opens at 70 (trade gap), avery low volume of stock would trade between 25 and 70. If theIPO opens at $70 and follows through to higher prices, more liquidity is found as prices rise. As prices rise, more and more sellers will be incented to offer their stock for sale to take profits,and therefore more liquidity is found as prices rise, with themost sellers available at the saturation point (resistance), the pre-
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cise point at which buyers with market orders get filled! The saturation point will be the price level where sellers begin to exceedbuyers, leading the way for a retracement. IPO retracements havea greater propensity for rapid price decline than most other market events once this saturation point is met, causing the wildvolatility we know to be associated with IPOs and other big newsstocks. Once the saturation point is reached, liquidity once againcan be equally elusive when buyers disappear as the stockretraces or falls. This seesaw ride of misery seems to be the fateof many new electronic traders who fall victim to greed by selecting sexy stocks with poor liquidity. Liquidity for buyers on theway up is most prevalent at the saturation, which is where market orders will be filled, and the liquidity for the sorry buyerswho now want to be sellers after being filled at the saturationpoint is also found near the lows of the day called support. Thesesupport levels are also the highest presence of market orders foramateur sellers. They become market orders of misery for theamateur as professionals buy their weakness, and market ordersof greed as professionals sell them overpriced stock. Hencebegins the seesaw ride of misery for those that trade chaos,putting them on the “victims’ list” by not adhering to this criticalrule.In closing, think of a thin market as a shallow lake and thickmarket as an ocean. When a storm hits the lake, it becomes veryrough, very quickly. The ocean, on the other hand, can absorb anenormous amount of energy from a storm before the waves beginto rise. Trading thin markets can be very tricky while balancingnot just supply and demand but also risk and reward. Professionaltraders seek low-risk–high-reward opportunities in the market.Low-liquidity stocks generally do not fit this criteria and put theodds against you, and, therefore, they are simply not worth therisk.If a less-than-liquid stock is to be traded based on soundresearch, follow the rule Match volume to time. By measuringaverage daily volume to the time horizon, you absorb the stock’sprice volatility to the trade time horizon you plan to trade.Therefore, if you want to buy an illiquid stock because you havereason to believe there is longer-term upside bias, price volatilitybecomes less critical assuming you are trading a lower-pricedsecurity that you expect to “put away” for a while.
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Remember, volatility like market demand is a two-edgedsword for active electronic traders. Without it, you have littleopportunity. Active traders need a certain amount of volatility inorder to take profits, but too much volatility due to poor liquidity, as defined, is dangerous. Conversely, if the price of a stocksits at one price or trades in an extremely narrow range, tradingit for a profit is difficult or even impossible. Trading “balancedstocks” is what active traders are looking for. Balanced in thatthey have good volatility, but also good liquidity.Highly volatile, low liquidity stocks are chaos and should beignored for additional reasons. You have not had time to developyour skills reading Level II and the tape or the TAS screen. Onvery chaotic issues, prices can stream by so quickly that only theseasoned trader can make sense out of them, and even this traderis entering a high-risk scenario. The opportunity to spot the tapesupport and resistance levels and other patterns is a lowpercentage trade and is best ignored. Instead, it should be tradedfrom a swing trade (1 to 3 days) or trend trade (1 to 10 days) timehorizon on much lower size, if at all.
SPECIALIZATIONMy next rule is to encourage you to Specialize. As active traders,we want to “know the stock” characteristically. Knowing howyour stock acts on a Level II screen and a TAS screen, how itranges and trends on charts, how it acts within its sector orgroup, and who the dominant market makers are would begin todefine the characteristics that are important to an active trader.Too many new traders surf the market looking for anythingthat wiggles and jiggles, having no allegiance to any sector or basket of stocks. That is a mistake. Like a specialist on a listedexchange floor, learning how a stock acts through a variety oftools that make up an EDAT system tells the trader a great dealabout the personality of a stock. Yes, stocks have personalitiesbecause the market segment that trades a given issue shapes thatpersonality every day. NASDAQ market makers who are assignedto stocks can tell you a great deal about the stocks they trade. Specialists on listed exchanges can tell you even more since the
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listed market is not as fractured or fragmented as is the NASDAQmarket. By becoming a specialist in a small basket of stockswithin an active liquid sector, such as biotechs or semiconductors, you feed your ability to recognize patterns that will repeatthemselves as the result of the trading tendencies from professional market participants. There is good reason why marketmakers and specialists are assigned stocks that they stay with forlong periods of time. That same rationale should be adopted byelectronic traders.Certainly, news events will disrupt these patterns. Thismust always be kept in mind, but like a spinning top that is stable at high speeds, readable patterns can become known bystudying and trading a few issues versus aimlessly surfing themarket as many amateurs do. The news events can and will wobble the top (stock), and it is at these times that it pays to be moreinelastic in terms of risk tolerance due to the excessive volatilityoften associated with news. But remember also that the mostprofitable and consistent trading patterns are usually associatedwith the stable top that provides adequate volatility with readable patterns. Stocks move quickly when unstable, and thesemoves are foolish to chase if you are not already in the tradeahead of the move. While they appear sexy in retrospect, they arethe nemesis to traders’ success. When news events occur, thesepatterns will change the range that you thought you knew, setting stocks in new trends and creating new ranges. It is at thesetimes that it makes sense to slow down your active trading inthese stocks and, instead, match a style of trading more condusive to trends such as swing trading. In time, new patterns thatyou will recognize will take shape and allow you to increaseyour activity once again in the issue.Once you have specialized, I would tell you to follow therule Trade stocks with good correlation. Correlation betweenstocks and major indices and sector leaders provides relativeindications for traders. The correlation will indicate how a stockis moving in relation to the indices and sectors in which it istraded. For example, if the NASDAQ 100 is strong for the day,stocks that are also strong for the day within this group would betradable issues if they are as strong as the sector if not stronger(relative strength). A few major indices and indicators I payattention to are the U.S. Long Bond Futures Contract, the S&P
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Futures Index, NASDAQ futures, and Dow futures and theirrespective price levels. The U.S. Long Bond Future Contracttrades on the Chicago Board of Trade, while the other productsall trade on the Chicago Mercantile Exchange (CME). Otherstrong measures of the market and sectors include:• The biotech index (BTK)• The technology index (TXX)• The Morgan Stanley High Tech index (MSH)• Philadelphia Semiconductor Index (SOX)Good resources for these products and indices can be found atwww.cbot.com, www.cme.com, www.amex.com, and www.phlx.com. Generally, futures contracts act as leading indicators tostock price movement. To illustrate this, let’s do a basic overviewof futures.Buying a financial futures contract is essentially a bet orbelief that stock (in this example) will increase in price in thefuture. By buying the futures contract, instead of the actual stock,money managers and arbitrageurs can leverage their investmentsubstantially since the price of buying a futures contract is far lessthan the cost of buying the actual stock. A money manager for pension funds, for example, may not have received the capital yet tobuy the actual stock he or she wants due to the lag time betweenpayroll deductions. Money managers that perceive that stockprices will be higher in the coming days or weeks can pre-positionthemselves to own the equivalent of those stocks at today’s priceswithout actually investing dollars or capital to buy the underlyingasset (the stock). Simply stated, mutual fund managers might buyfutures to take advantage of today’s prices in baskets of stocks suchas the S&P 500 until they receive their periodic influx of cash from401k and retirement contributions. This is just one example of theactivity that takes place in the futures market. To understand howthe futures market can be used as a leading indicator, you mustfirst understand how futures contracts trade and what the comparative impact is when viewed with the actual underlying assetsof the index itself (the stocks).Like stock, with futures contracts one party buys contractsand one sells, based on each’s prediction of stock prices in thefuture. When the futures contracts expire (quarterly), you make
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or lose the difference between what the underlying basket ofstock is worth and what you bought and or sold the futures contract for. Because futures contracts trade completely independent of stocks, an arbitrage opportunity is created. Futures tradeon the Chicago Mercantile Exchange, while most stocks of theS&P 500 trade on the NYSE and other listed exchanges, with asmaller basket trading on NASDAQ. Because they trade independently of each other, inefficiency can exist whereby arbitrageurs, known as arbs, make money by selling one instrument(futures contracts) to free up capital to buy another (stocks), orvice versa.As the two competing markets change their trend from up todown or down to up, you will see the associated basket of stocksfollow suit, such as the S&P 500 Index (cash), NASDAQ 100, orthe Dow Jones Industrial Average (DJIA). Therefore, if arbs areselling futures and buying stocks, the act of buying the stockleads prices higher, but the leading indication is revealed asfutures are being sold with the expectation that stock will be purchased.These patterns, led by the associated futures contracts, create a leading indication that should not be ignored. You alsooften find a similar pattern within a stock sector. For example,among chipmakers, if Intel moves higher or lower, it can pull theother chipmakers with it because of its size. We call this the gravitational pull, not unlike what occurs in the physical universe.When large issues like Intel move, they carry the weight of aleading indicator on many smaller stocks within their own sector. Sometimes the relationship is direct, while other times it isindirect. Understanding the correlation to major indices andfutures contracts as well as major stocks is yet another criticalrule to help spot market bias. The more bodies in alignment, themore strength that indicator has, giving you gravitational pulldirectly correlated to the indicator or inversely correlated. Eitherway, the indication is valuable.
SECTOR ROTATIONAnother critical rule I personally follow is: Trade strong sectors.“Never push a bad position” simply means that where there is
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poor market participation, there is less opportunity. Sectors thatare strong gain the attention of institutional money, traders,and—yes!—the amateur crowd. When the semiconductors arestrong, I trade them. When money is flowing from one sector toanother, I trade both. The fleeting sector is shorted while therecipient sector of money flow is traded long. This, by the way, iswhat true hedge funds do, whereas mutual funds generally onlytrade from the long side of the market. Hedge funds will tradeboth sides of the market while limiting overall portfolio risk byconstantly being hedged. They make their money by taking sector risk, while eliminating market risk.The stocks that lead the given sectors at hand are thenclosely monitored for relative strength or weakness in relationto the basket of stocks that make up the sector. These baskets canbe researched at Web sites, such as www.spglobal.com andwww.nasdaqtrader.com, that clearly indicate which stocks arestrongest and weakest on a daily basis.
RESEARCHDo the research. To help you get started, I took some informationI included in my home study course, How to Get Started in Electronic Day Trading. At the risk of being redundant, I have addedthis content because I find that research is often the mostneglected progression. My hope is that, as an active trader, youwill discover how simple and enjoyable research can be.As discussed previously in the rules for stock selection, it isimperative to trade strong stocks that are well suited to your trading style. Quality research is the key that opens the door toensuring that you are always trading the stocks that yield thegreatest chance for success.To effectively achieve a high-quality list of tradable stocks,without burying yourself under a mountain of facts and figuresthat must be deciphered, using a sound research methodology iscrucial. One approach I suggest is the top-down approach. (SeeFigure 4.2.)This method is generally associated with technical analysis,and it begins with taking a macroview of the market and identi-
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FIGURE 4.2 Begin by looking for strong sectors or indices within the economy. The indices that represent these sectors will allow you to identify whichstocks or sectors are relatively strong within the index and uncover strong tradable activity.
fying those stocks within major industry groups that show signsof strength and activity. This approach is particularly useful forthe novice or intermediate trader because it exposes him or herto a wide array of different companies, thus broadening his orher overall market awareness. At the same time, it narrows theoften overwhelming list of all tradable securities down to a manageable selection.The top-down approach essentially starts at a baseline of allavailable stocks and uses individually tailored criteria to filterout the vast majority of these securities from consideration.First, identify a major index that fits your style of trading—the Dow, the S&P 100, the S&P 500, or the NASDAQ 100. Mosttraders tend to focus on either the S&P 500 or the NASDAQ 100
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as a beginning place for searching for tradable stocks. The S&P500 is often selected because (a) it includes both listed and overthe-counter stocks and (b) the vast number of securities withinthe index virtually guarantees that all industry sectors that makeup our greater economy will be well represented. Despite thecontinued dominance of the S&P as a starting ground for selecting stocks, the NASDAQ 100 has seen significant growth interms of its importance to traders. Primarily composed of technology issues and the recent focus of the day trader industry, theNASDAQ 100 is now a great place to start finding technologyrelated stocks that can quickly gather the momentum appealingto shorter-term traders. As for the Dow, it is unlikely it will provide a significant list of stocks for you to trade; nevertheless, dueto its continued importance as the bellwether index and itsinclusion of the strongest of the large cap companies, it shouldstill be watched closely as an indicator of overall market health.Once you have chosen a major index as a starting ground,analyze which sectors within that index also appeal to yourinterests (e.g., financials, technology, biotechs, or semiconductors). The Standard & Poor’s Web site not only lists each of thestocks within the S&P 500 but also gives a description of eachcompany and the sector and subsector classifications of each(http://www.spglobal.com/ssindexmain500text.html). Many ofyou might ask why you need to find sectors that are of particularinterest to you, rather than just picking the sector du jour. Thereason is passion. If you don’t have passion for the industry sector in which the stocks you are about to research reside, then youwon’t have the desire to actually do the research to the best ofyour abilities even when you are tired from a full day’s work. Ifyou don’t do the research thoroughly, you won’t have the factsyou need to gain the requisite knowledge; if you don’t have theknowledge, then you won’t have the confidence you need toreplace your fears; and then you might as well be throwing dartsat the Wall Street Journal along with the monkeys who often outperform both the professional and the dumb money in their quarterly contest.Once you have selected the sectors that appeal to you, reexamine the lists of stocks within that sector. Are there enoughstocks within that sector to continue refining your research, orshould you use the sector description to expand the list of stocks
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within that sector, even if the additional stocks are not withinyour major index? It is likely that you will have to conduct additional sector research to find a full list of stocks within that sector, which you can then continue to narrow down. Several goodWeb sites provide excellent research about particular groups ofstocks that can be used to create a robust list of stocks withineach sector, including the following:• www.amex.com The American Stock Exchange Web siteprovides lists of stocks within each of the Select SectorS&P Depository Receipts (Select Sector SPDRs) as wellas information about the stocks within the various Merrill Lynch & Company Holding Company DepositoryReceipts (HOLDRS). These are great sector groupings inwhich to find stocks within a particular sector. Seehttp://www.amex.com/structuredeq/holdrs_tth.stm foran example of a listing of securities within an HOLDRSsector.• www.phlx.com/index.stm The Philadelphia StockExchange Web site lists the stocks within several sectors,including the closely watched semiconductor sector,thestreet.com Internet sector, and the wireless telecomsector. The S&P Global Web site provides a listing of thestocks in the S&P 500 index and their sectors. If you havechosen a large sector such as technology, you may needto further narrow your choices to telecom, chipmakers,box makers, or some other subsector of technology.Once you have created a significant listing of stocks withinthe sector or two that are of interest to you, you need to narrowthose lists down to those stocks that are the most tradable. Referagain to Figure 4.2.After perusing the data available for each of the stockswithin the sector you have chosen, next choose five or six stocksfrom the sector to specialize in and add them to your interest liston your trading system before preparing for the next phase ofresearch.When you have a selection of stocks on which you willfocus your trading, the real research is about to begin. While toomuch general market information can often hinder a trader’s
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ability to focus on the behavior of one stock, when you are actingas a shepherd over a few stocks within one or two sectors, it is toyour benefit to garner all the knowledge you can about thosestocks. What follows is a list of various tools and methods youcan use to gather information about these stocks.First, visit the company’s Web site and spglobal.com tounderstand how the company desires to be portrayed within itssector as well as to obtain an accurate picture of the product or service in which the company specializes. For example, doing thisresearch on a few of the above-listed semis, you would learn thatAMD “designs, develops, makes and sells a variety of industrystandard integrated circuits which are used in product applications such as telecommunications equipment, data and networkcommunications equipment, consumer electronics, personalcomputers and workstations.” In contrast, AMAT, although alsoa member of the semiconductor sector, “develops, makes, sellsand services semiconductor wafer fabrication equipment andrelated spare parts for the worldwide semiconductor industry(source: www.spglobal.com/500mainframe.html). These descriptions describe two very different companies whose customersand company-specific risks are also quite different.Second, you can search the company’s Web site for pressreleases and all of their recent Securities and Exchange Commission (SEC) filings, which can be found at www.edgar-online.com.This is an excellent site for reviewing all recent SEC filings. Thesefilings can relay a lot of information regarding insider trading,major company acquisitions or product releases, issuances ofadditional shares, or other events that can foretell the future turnof stock prices.Third, familiarize yourself with key upcoming announcements for the company, particularly earnings announcements,since many trading opportunities exist, both short and long, inthe weeks surrounding these quarterly announcements. Seehttp://biz.yahoo.com/z/a/a/amd.html for a sample screen of pertinent earnings information.In addition to using research to make informed decisionsabout trading a stock prior to its earnings announcement, you cannow use the Internet to make better decisions about the futuredirection and strength of the stock as a result of the earningsannouncements. The quarterly conference calls—at which a com-
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pany announces its earnings, releases a statement, and then typically holds an informal question-and-answer session, all formerlyavailable only to those with connections to major trading firms ormembers of the press—are now available on the Internet. Sitessuch as Yahoo! (www.broadcast.com/Business_and_Finance) andON24 (www.on24.com) provide direct links to the quarterly conference calls where you can listen in. Much information can begathered not only from what the company has to say but also fromthe inflection in the voice of the CEO as he or she answers whatcan often be very pointed questions.Fourth, conduct routine technical analysis of your stocks tostay informed of any significant changes in the longer-term outlook. Where are the stock’s key levels of support and resistance?What do analyses such as the stochastic charts have to say aboutthe stock’s being overbought or oversold? Has volume beenshowing any significant changes: What indications does theMACD show? While technical analysis alone is not the best basisfor trading, it is an excellent way to graphically illustrate thechanges in supply and demand that have occurred and oftenhighlights clues as to what can next be expected.Fifth, gather trading information on your selected stocks.For over-the-counter issues, NASDAQ Trader (www.nasdaqtrader.com) has excellent historical data on each issue. Informationsuch as monthly share volume, monthly short interest, share volume by market maker, and other data compilations are available.In addition, visit www.cboe.com to gather information aboutyour stock and its derivatives, including the open interest in thestock’s options, the put-call ratio, and implied volatility. Whileeach of these bits of data alone is not overly significant, taken asa whole they provide an accurate picture to the reason behindprice movements. In addition, significant changes in the datamay also foretell pending price movement; for example, if theshort interest is declining, one would surmise that the formerlypessimistic shorts are buying to close out their short positions,thus creating an imbalance of demand over supply, causing thestock price to temporarily move up due to a potential shortsqueeze.Sixth, visit www.nasdaqtrader.com to determine who is thekey market maker in your stock. Who is the ax? The trading datalisted by market maker will give you a strong indication of which
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trading firms are aggressive participants in that stock’s market.Thereafter, when you see this market maker staying on the bidand refreshing his quote, you know that an increase in price maysoon follow given that market maker’s historically stronger-thanaverage appetite for this stock.It simply translates into work and dedication. Stocks thatmeet the criteria set in this chapter are all that are needed to getstarted. Once a handful of stocks are selected and added to yourinterest list, specialize in them and get to know them intimately.Understand their patterns. Know when they release earnings andwhen their competition releases earnings. Study their reactionduring strong market days and weak ones. Know which marketmakers are most active in the stocks. Trade them often. This ishow trading expertise is found.There are no magic mathematical formulas or filters thatwill replace good old-fashioned familiarity that is found throughtrading. Research is important and rewarding, as highlightedabove, but too much research and not enough trading equates totoo much expectation and emotion associated with the overresearched stocks. Traders often marry stocks they invest too muchtime in before making any trades, and this is not considered specialization. Active participation mitigates emotion and makesyou more logical and familiar.I close this chapter with this rule: Forget about chat roomsand stock picking services that claim to do the thinking for you.If it were that easy, the market wouldn’t have any value. Remember, the benefits in these situations belong either to the manipulator who front runs the stocks that are highlighted in the chatrooms or to the recipient of the subscription fees that charge forsuch so-called services. Instead, invest in yourself by doing yourown work and gaining confidence, and save your capital formore useful applications like trading in the market. The marketis the best teacher, and although you can count on tough lessons,these lessons offer the most utility.
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RULES FOR ENTERINGTRADESRules of the TradeNo clarity, no trade.Size the open.Watch fair value.Cover or liquidate trades in the pre- andpost-market; don’t open them.Never use market orders.Always use limit orders.Never chase stocks.Always look for confirmation amongtrading signals.
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Always know who the buyers and sellers are.Survive before you thrive.
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ith most rules that are taught, the lesson usually beginswith the consequences for breaking the rule. In thischapter, I will start with the same caveat: “Don’t breakthe rules or else.” As I’ve stated numerous times already, themarket is unforgiving of mistakes, and the consequences areclear. The stock market has a natural self-cleansing mechanismbuilt into it by virtue of its capitalistic nature. A trader who continually breaks the rules of market engagement generally startsbreaking them in trade entry and stock selection. This individualwill then exacerbate the error because he or she will also lackdiscipline to exit the trade when necessary. Because the stockselection process is perceived to be the most difficult aspect oftrading, many new market participants will focus all their energyinto this process, with little regard to trade entry and exit means.As a day trader, I believe the opposite is true. Trade entry, thefocus of this chapter, and trade exit (Chapter 6) have a greaterimpact on performance than any other aspect of trading. Theskill set a day trader has in finding liquidity with precision execution, married to strong discipline, will be the greatest asset heor she has. Given the many decisions to be made during a tradingsession, poor discipline will be magnified and will acceleratethis self-cleansing process. The advantage, I suppose, for thisindividual is analogous to a quick death versus a slow death.Because new traders will often begin with less capital, dying afast death in the market may in fact save them many thousandsof dollars. It is the slow-death traders with large capital reserveswho suffer most, as they accumulate the greatest monetary lossesover the largest periods of time. These individuals, having oftenbeen successful in past endeavors, generally possess egos aslarge as the void that exists in their discipline. While this maysound cynical, it is true of many new traders, and the statisticsprove it. Therefore, trade entry skills (and exit skills) must bemastered, which in turn builds discipline.85
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Markets today are much more complicated than in yearspast. The “New Economy” stocks have truly changed the landscape of the market. Therefore, when evaluating the market andthe stocks to be traded within it, traders must form a perspectiveabout how to engage. In the past, hard work usually paid off inthe form of fundamental analysis. Today, that isn’t always true.Many amateurs made fortunes on the dot com revolution, whileother professionals like Soros got slammed and are nearly out ofbusiness