Trading for Dummies


  • Format: PDF
  • Pages: 387
  • Published Date: 2009


Trading For Dummies is for investors at all levels who are looking for a clear guide to successfully trading stocks in any type of market. It is also for investors who have experience trading and who are looking for new, proven methods to enhance the profitability of their investments. This nononsense guide presents a proven system for analyzing stocks, trends, and indicators and setting a buy-and-sell range beforehand to decrease risk in any type of market. It stresses the practice of position trading, conducting technical analysis on a company and its performance, and research methods that enable the trader to strategically select both an entry and exit point before a stock is even purchased. This updated guide features updated stock charts, position trading tips and techniques, and fresh ways to analyze trends and indicators.


We’ve broken this book down into six logical parts. Well, we tried anyway. The first focuses on tools, and then we explore the basics of fundamental analysis right before delving into technical analysis. After getting the basics out of the way, we discuss how you can use your newly discovered tools to develop and begin building your own strategies and trading system. Just in case you want to move on to riskier types of trading, we include some basic information about day trading, swing trading, and trading derivatives and foreign currency. That said, we highly recommend that you seek additional training before trying any of the riskier forms of trading.

Part I: So You Want to Be a Trader: Gathering Your Tools: Trading is a business, and just like any other business, you need to put together a good set of tools to be successful. In Part I, we talk about the basics of trading, introduce the markets and the exchanges, discuss various alternatives for finding a broker and setting up your brokerage account, and describe the minimum computer hardware and software necessities you need to succeed as a trader. We also discuss your Internet needs and point you to some good basic resources on the Internet that can help get you started.

Part II: Reading the Fundamentals: Fundamental Analysis: Many traders don’t use fundamental analysis. They believe technical analysis is the only thing you need to understand. We don’t agree. You can gather plenty of valuable information about the economy, markets, sectors, and individual stocks that can help you excel as a trader. We start you out with the economy, the basics of the business cycle, sector rotation, and various economic indicators, because they can help you make your calls. Next we show you how to delve into financial statements to find the crucial information you need to pick the companies whose stocks you want to trade. Finally, we talk about analysts and what information you can get and use from them and what you shouldn’t use. We also explain how you can listen in on analysts’ calls to get the most current information about a company and how executives perceive their company numbers.

Part III: Reading the Charts: Technical Analysis: You can’t even begin to think about trading if you don’t understand technical analysis and how to build and read charts so you can pick entry and exit points when buying and selling stocks. We take you step by step through the process of building a chart, and we describe how to identify trends and distinguish between transitions from one trend to another. In this part, you find out how to recognize bull and bear patterns and how to differentiate between a stock that is range bound and one that is trending. We also introduce you to some of our favorite tools and give you several examples of how to use them.

Part IV: Developing Strategies for When to Buy and Sell Stocks: After finding out how to use the tools of fundamental and technical analyses, you’re ready to develop strategies for your own trading. First you need to explore good money discipline to avoid taking major losses and be around to trade for another day. You also need to determine when to stay in a position and when to trade out of it. You certainly want to take your profits at the right time, but you also want to avoid standing idly by as a profit turns into a loss. Next we talk about how you can gather key information through fundamental analysis and then add the results of your technical analysis to build an optimum trading strategy. And we talk about the mechanics of trading before finally exploring how you can build your own trading system.

Part V: Risk-Taker’s Paradise: You may want to try the riskier forms of trading, such as swing trading, day trading, or trading in derivatives and foreign currency. We definitely won’t be sharing any strategies for actually participating in these types of trading, but we will introduce you to the basics and warn you about what you need to become familiar with before entering these wilder forms of trading. Be careful out there and don’t get caught up in any of the many frauds and scams that are common with these types of trading.

Part VI: The Part of Tens: The final part of the book is a hallmark of the For Dummies series — the Part of Tens. In it, we highlight the top ten huge trading mistakes and ways you can avoid them, and we review the top ten basics you’ll need to remember for surviving in the world of trading.


  • The Ups and Downs of Trading Stocks
  •  Exploring the Markets and the Stock Exchanges
  • Going for Broke(r): Discovering Your Brokerage Options
  • Putting Your Computer to Work: Your Key Business Tool
  • Fundamentals 101: Observing Market Behavior
  • Digging Into the Critical Parts of Fundamental Analysis
  • Listening to Analyst Calls
  • Reading the Tea Leaves: Does Technical Analysis Work?
  • Reading Bar Charts Is Easy (Really)
  • Following Trends for Fun and Profit
  • Calculating Indicators and Oscillators
  • Money Management Techniques: When to Hold ’em, When to Fold ’em
  • Using Fundamental and Technical Analyses for Optimum Strategy
  • Executing Your Trades
  • Developing Your Own Powerful Trading System
  • The Basics of Swing Trading
  • The Basics of Day Trading
  • Doing It by Derivatives
  • Going Foreign (Forex)
  • Trading for Others: Obtaining Trading Licenses and Certifi cations
  • Ten (Or More) Huge Trading Mistakes
  • Top Ten Trading Survival Techniques