How Markets Really Work: Quantitative Guide to Stock Market Behavior

How Markets Really Work: A Quantitative Guide to Stock Market Behavior shows that nothing has changed, that the markets behave the same way today as they have in years past, and that understanding this puts you in a prime position to profit. Written by two top financial experts and filled with charts and graphs that illustrate the market concepts they develop, the book takes a sometimes contrarian view of everything from market edges to historical volatility, and from volume to put/call ratio, giving you all that you need to truly understand how the markets function. Fully revised and updated, How Markets Really Work, Second Edition takes a level-headed, data-driven look at the markets to show how they function and how you can apply that information intelligently when making investment decisions.

Inroduction:

Presenting a unique but simple philosophy for looking at the financial markets, How Markets Really Work, Second Edition: A Quantitative Guide to Stock Market Behavior is the one-stop resource for individual and professional traders, investors, money managers, and anyone else interested in better understanding the markets and how they function. Although predominantly focusing on short-term market actions, the trading strategies introduced and explained here can be applied equally well to longer-term investment opportunities.

Designed to help readers identify where market averages have given investors an edge and how to exploit those edges over and over again, the book is based on one central theme: buying short-term weakness has outperformed buying short-term strength over the past fifteen years. Revised and updated, this Second Edition includes three new chapters to further its comprehensive scope. These include coverage of an oscillator for identifying overbought and oversold market conditions, cover-age of long-term market behavior that definitively illustrates that low-volatility stocks outperform high-volatility stocks, and an all-new short-term strategy for trading in S&P 500 stocks.

Packed with decades of market wisdom from financial experts Larry Connors and Cesar Alvarez, the book tackles common beliefs about investing head on, finding that much of what the trading world takes for granted is simply not true. Utilizing an illustration-rich format that clearly demonstrates market action, How Markets Really Work refutes the value of volume, shows that the rule of thumb for determining market strength—a market that rallies for a few days in a row is strong while one that drops over the same period is weak—is a faulty indicator, and much more.

Predicated on the belief that, contrary to common wisdom, markets don’t change, How Markets Really Work, Second Edition takes a clearheaded look at the facts of the last twenty-plus years to help you understand the real history of the financial markets and how you can profit from them.

Contents:

• Market Edges
• Short-Term Highs and Short-Term Lows
• Higher Highs and Lower Lows
• Up Days in a Row versus Down Days in a Row
• Market Breadth
• Volume
• Large Moves
• New 52-Week Highs, New 52-Week Lows
• Put/Call Ratio
• Volatility Index (VIX)
• The Two-Period RSI Indicator
• Historical Volatility
• Creating a Sample Strategy from This Research
• Applying the Information in This Book

How Markets Really Work: Quantitative Guide to Stock Market Behavior By Larry Connors, Cesar Alvarez pdf