Successful Stock Trading – A Guide to Profitability

Successful Stock Trading – A Guide to Profitability is designed to show you an alternative way of looking at profitability and your own trading. Nick Radge has been trading and investing for 26 years. He has “seen it all” when it comes to the markets. This practical guide is Nick’s stock traders bible – Nick explains the simple maths behind profitablity. It’s not how often you win, it’s how much you win when you win.

Author’s Note:

My reputation in the retail marketplace is as a specialist in risk management and systematic trading strategies. While systematic trading may sound complicated to the new trader, it simply means a strategy that is defined by very specific rules – rules to define the trend, enter and the market and manage risk. This is the way I have always traded and I am happy to share my insights into trading the global markets.

I deal with technical analysis rather than fundamental analysis. It’s my belief that the picture of a stock’s current price action and price history cannot be disputed – it is a 100 per cent certainty. A company’s balance sheet, earnings and disclosures, however, can be disputed. Bear Sterns, Lehman Brothers, MF Global and Enron are some better known and recent examples where many fundamental analysts got it plain wrong and, unfortunately, investors paid the price for the poor analysis. Other examples are just as bad and I collected a huge number of examples in the early 2008 deluge of earnings downgrades. We can see the same trend of poor disclosure throughout the world. While an in-depth look at all of these examples is beyond the scope of this book, suffice to say I believe the reliance of many analysts on company disclosures is questionable.

I readily accept that the application of both types of analysis is equally subjective. In order to establish a fair valuation for a stock, a fundamental analyst must make assumptions on future earnings growth and other contributing factors, such as the expected period of growth, non-growth periods and benchmark interest rates. Once these assumptions have been plugged into analysts’ models, the resulting valuations vary considerably. These valuations are easily accessible by reviewing consensus data. However, the same applies for the technicians. The way one pattern is read can vary among analysts. In this area, I see technical analysis and fundamental analysis standing side by side.

However, the main benefit of technical analysis over fundamental analysis is that the charts provide a very specific right or wrong point where protective stops can be placed and monetary losses can be limited. As you’ll see shortly, the limitation of losses is paramount to the success of a trader and an investor, both financially and psychologically.

Contents:

• AIMS
• SKEWING THE NUMBERS TO WIN
• ENTRIES, FREQUENCY AND MIND-SET
• RISK MANAGEMENT
• CONCLUSION AND FURTHER READING
• APPENDIX A – STOPS AND LONG TRADING
• APPENDIX B – STOPS AND SHORT TRADING

Successful Stock Trading - A Guide to Profitability By Nick Radge pdf