Trading Against the Crowd: Profiting from Fear and Greed in Stock, Futures and Options Markets
$22.80
| Author(s) | |
|---|---|
| Pages |
222 |
| Format |
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| Published Date |
2004 |
Trading Against the Crowd is the first book to provide a comprehensive assessment of investor crowd psychology, offering valuable market timing tools and trading techniques.
Author’s Introduction:
In Trading Against the Crowd, I explain how to understand investor sentiment data, build custom indicators with that data, and incorporate these sentiment indicators in trading systems that I have developed and tested. While the premise of this book is that the speculative crowd tends to misread the market at the most extreme sentiment points, some of the trading systems presented here also profit from less extreme sentiment.
Profitable trading is shown to be possible in above- and below-average bearish and bullish sentiment cycles that operate within larger sentiment waves.Whether trading on short-term cycles (or waves) or longer-term ones, however, the systems tested and presented here provide powerful evidence of the nonrandom (thus, predictable) nature of markets.
While markets ultimately may be regulated by fundamentals, the common errors and misjudgments that regularly appear in the crowd’s actions suggest another dimension to market price behavior is at work. It appears markets become victim of the crowd’s emotions for periods of time longer than random walk theorists (who believe that predicting future price movements is not possible) are willing to accept. Examples of these crowd actions are the manias found in history like the stock market bubble of the 1990s, as well as short-term overreaction to news shocks. The goal of this book, therefore, is to develop trading systems that are capable of harnessing profitably such emotionally charged misjudgments.
Contents:
- Reflections of a Contrarian on Investor Psychology
- Measuring “Joe Options Trader” Sentiment
- Will the Real Put/Call Ratio Please Stand Up?
- The Options Trading Crowd at Extremes
- Does the Entire Group of Options Traders Get It Wrong?
- OEX Options Traders—Is This a Smart Money Crowd?
- From Statistical Tests to Sentiment Trading System
- Squeeze Play I: Pulling the Price Trigger
- Sentiment Squeeze Play II
- Squeeze Play II and LEAPS Surrogates
- The Tsunami Sentiment Wave Trading System
- Adapting Put/Call Ratios to Bond Futures
- Option Implied Volatility and Investor Sentiment
- Testing Option Volatility on Equity Indices
- Stock Options Volatility and Sentiment Long Waves
- Gauging Crowd Psychology with Short Selling Ratios
- Public Shorts: Still as Good as Ever as Crowd “Sentimeter”
- Trading Against the Advisory Opinion Crowd
- The Fourth Estate Crowd
- Postscript on Crowd Psychology in Financial Markets
Trading Against the Crowd: Profiting from Fear and Greed in Stock, Futures and Options Markets By John F. Summa pdf
5 reviews for Trading Against the Crowd: Profiting from Fear and Greed in Stock, Futures and Options Markets
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Jameson Kline (verified owner) –
Mr. Summa’s Trading Against the Crowd provides traders with distinct insight into the art of trading on contrary opinion. His groundbreaking approach to quantifying news articles into a bullish versus bearish intensity index should prove to be a very valuable tool for professional traders worldwide.
Mylah Ward (verified owner) –
The old adage is still true: to make money, do the opposite of the majority. Trading Against the Crowd shows you how to do just that.
Sawyer Solomon (verified owner) –
Lots of books have been written about options and related stuff like Greeks or complex strategies like “Short Iron Butterfly”. This book is not about options per se. It uses options merely as a tool to predict market tops and bottoms. It uses very simple indicators like as put/call ratios and option-implied volatility. This book does not teach you about options. It assumes that you are already familiar with stocks and options market.
Many books have been written about contrary opinion in regards to investing, and most famous is “Security Analysis” by Graham and Dodd. Actually, many of the original works in the area of investor sentiment are from a long-term investing perspective, and largely examine the issue through contrarian analysis of stock market fundamentals, such as intrinsic value and growth prospects. The book “Trading Against the Crowd” ignores fundamentals and instead focuses only on sentiment technicals. In addition to option put/call ratios and volatility, it relies on short sales, advisory opinion, investor surveys, and quantitative news flow. By using these sentiment measures, it is possible to identify investor sentiment extremes and associated market turning points. A unique dimension to this book is the combination of price triggers with sentiment gauges.
Caden Logan (verified owner) –
Not what I expected…. It’s all style of writing on psychology of trading. Hard for me to understand the concept.
Kora Jordan (verified owner) –
I suggest this book to everyone who wants to finally make money.