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Stock Market Trading: The Event Driven Method

by Geary Hooper

162 pages; quality trade paperback (softcover); catalogue #03-1225; ISBN 1-4120-0857-3; US$29.95, C$39.00, EUR25.35, £17.57

A must-read for all stock traders, this book describes how and when to buy, hold, and sell stocks using economic and psychological events as your guide.

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about the book      about the author      sample excerpts      catalogue info

About the Book "Buy low, sell high" If you have ever traded stocks in the stock market, then I am sure that you have heard of this phrase. Have you ever purchased a stock that you thought was low in price, only to see it go lower after you have purchased the stock. Well if you have, you are not alone. Because this happens to just about everyone that has invested in the stock market. The problem is, knowing when a stock is at a low price and it is time to purchase it. This is really very simple. The only time a stock is at a low price is when it goes up after you purchase it. By now you are saying to your self, I know that. Well could you have known that the stock was going up without a tip from some one? Even with that tip, could you have analyzed the stock to see for your self? If not, then this book is for you. Its main purpose is to enable you to find, analyze, purchase, and sell stocks on your own while making a hansom profit along the way. With this book you will be able to find main events in a stock's history right up to the current time to let you know if this is a stock to purchase and when, or to leave it alone.

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About the Author Geary Hooper resides in Texas, with his wife and four children. After ten years of trading in the stock market and working for JPMorgan/Chase, Geary has developed a different approach to buying and selling stocks in the stock market. Using this approach you can take the guess work out of trading in the stock market. For more information about the author or this book, visit www.stocktradingbook.com.

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Sample Excerpts

BUYING TOP NOTCH STOCKS

This chapter deals with buying stocks and is broken down to show the major different components that you need to look for when scouting for stocks to buy.

After reading this chapter you will know how to find the stocks that are leading are or about to lead the current market and all probability will contiue to lead the market. These are "high powered" stocks, the kind every one wants to own but their current prices make them seem too high to purchase. But the opposite is true, what seems too high to purchase now could really be very cheap compared to future prices. Most investors want to buy low and sell high. Nothing wrong with what except what is low now will probably be lower tomorrow or soon thereafter. Please take the time to learn how to purchase stocks correctly, you won't regret it later.

Below are the examples that I was talking about showing the major buying signals. When using them keep in mind to always keep a sharp eye on the market.

DON'T go against the markets. When buying make sure the markets are in an upward trend. As well make sure they are in a downward trend when shorting stocks. The general markets are the only guide needed to let you know if you should be buying or selling stocks.

Most investors label themselves as short or long term players. Do not get caught in that frame of mind. Instead think of yourself as an EVENT driven trader. This tyope if thinking will help keep you out of trouble when it comes to investing. Event driven trading means simply that you are waiting on a set of events that you want to happen before you purchase a stock, is the stock is blasting into and out of its pivot point from a good pattern. Time has little to do with investing in a stock. It's the events that lead up to the purchasing, holding, and the selling that count. Some stocks you could hold for years and others for less than a day. Let the stock (the events that occur when holding) tell when to sell after you buy. The following indicators (events) will help you to purchase the right stock at the right time.

SELLING TOP NOTCH STOCKS

First I would like to start by saying, it is a lot easier to sell when you are buying correctly.

With experience, you will find that most of your profits will come at the end of a stock move. Make sure that you learn your buy and sell rules so they will be automatic to you.

A football palyer must run a play over and over until he is not thinking about what to do when the play is called. He runs it automatically. Learn to be that way in stock trading. Remeber you will always be a student in the stock market. You will always be getting ON THE JOB TRADING.

Below are examples that show the major sell signals, when reading them keep in mind to always keep a sharp eye on the market.

DON'T go against the markets.

CLIMAX RUNS

Research shows that about 30% of top notch stocks will end their runs with a climax blow off.

The climax run comes after a stock has already gained 100% or more from its breakout. It suddenly shifts into high gear and soars 20% to 50% or more within one to three weeks.

When this happens, sell into the stock's unusual strength to lock in the biggest possible gains because very few stocks ever recover from a climax run. Even if they do, it could take years to bounce back to new highs. Climax tops often precede future weakness in a company's fundamentals.

When a stock goes on a climax run and blast ahead to a new high ground, news begins to swirl. The crowd buys into the hype, grabbing shares at any price. When this happens, it usually means few buyers are left to send the stock still higher. Sell into this excitement before it's too late.

In many cases during a climax run, a stock will rise in price eight out of ten straight days before it tops. Almost always a climax run will have at least three days of much higher prices with high volume. The top could also post the greatest one-day price on the highest volume since the start of its advance.

During the climax run, a stock should close within 25% of its high for the day. The closer it closes to the high for the day the better. Failure to close in the top half of the high for a day is a big warning that the climax run could almost be over.

MARKET PSYCHOLOGY

This chapter is broken down into two main themes. We will talk about psychology as it relates to the market and talk about market psychology as it relates to you. You must know and understand both. If you don't then your success will be limited and your profits small. At the end of this chapter there will be a list of items describing the dos and don'ts relating to your emotional state.

The hallmark of good trading and money management in the stock market requires traders to act rather tahn react. Acting means having a specific, predetermined plan, no matter what the market is doing at the time. Reacting mans waiting for something to happen and then respond as most traders do. This type of trading is handled on a case by case basis handling each situation differently. In other words no specific trading and psyche plan.

Throughout this book I have laid out a methodology and a plan on how to go about trading in the stock market. Actually you need two plans. The first one that has been laid for your psyche. In other words, how to keep your emotions under control at all times. To do this, first you must understand yourself and how emotions move stocks and the market, then come up wth a plan to manage it. This is just as important as your "physical trading plan".

The markets themselves are driven up and down mostly by emotions. That's the way it has always been and that's the way it always will be. They are driven by the two extremes of FEAR and GREED. The swings in the market change when people are greedy when they should be fearful or vice versa. Generally speaking, stocks do not sell for what they are worth but what investors think they are worth. This is important in understanding the emotions that are running through the markets at all times. Investors make investment decisions every day involving thousands of dollars with little or no knowledge on the stock that they are buying or selling. Their decision is based on a tip from a friend, broker, news release, etc. Most investors have a tendency of being greedy when buying a stock that they think is going up in price very soon. Don't get caught in these traps.

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Catalogue Information

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