The StockTwits Edge: 40 Actionable Trade Set-Ups from Real Market Pros
By Howard Lindzon, Philip Pearlman, Ivaylo Ivanhoff

From the Inside Flap

The Internet as we know it has changed many things for stocks, markets, and finance in general. The “social web” and advances in technology have helped create tools and platforms that are empowering traders and investors, and allowing them to capture consistent profits along the way.

StockTwits® has emerged as the leading stock market social network, providing individuals with a vehicle to exchange ideas and receive real-time market insights. Made up of over 100,000 people from all corners of the world, trading thousands of instruments, StockTwits is all about crowdsourcing the best ideas and talent, and that’s exactly what you’ll find here in this new book.

Created by StockTwits cofounder and CEO Howard Lindzon and his colleagues Philip Pearlman and Ivaylo Ivanhoff, this unique guide is comprised of over forty contributed chapters from both well-known professional traders and individual traders who have attracted a following on StockTwits. While some of the people you’ll meet have been trading for years, others have been in the business for just a short time—but each has an amazing focus and belief that if you can master one thing well in the markets you can succeed.

In The StockTwits Edge, each trader and investor presents his/her favorite setup in detail, highlighting the underlying psychology and real examples for better understanding of the rationale behind each step, including risk management. You will learn how to use their approach to find new ideas yourself.

Divided into seven comprehensive parts, this reliable resource covers a wide range of topics that can help improve your trading endeavors, such as:

1. Trend following
2. Value investing
3. Day trading
4. Swing trading
5. Options trading
6. Forex trading
7. The art of trading

Whether you trade every day or every so often, the ideas found here can help you make the most of your time in today’s markets. Armed with each contributor’s favorite setup, you can excel on your own or visit the StockTwits website and gain real-time insights into leveraging the wealth of information contained within these pages.

Click below for the table of contents which features the excellent list of contributors and their StockTwits handles (also their twitter handles):

40 Actionable Trade Setups from Real Market Pros

1. How to Make Money in Stocks (4th edition) by William J. O’Neil (1988)
2. Reminiscences of a Stock Operator by Edwin Lefevre (1923)
3. The Nature of Risk by Justin Mamis (1991)
4. Trader Vic: Methods of a Wall Street Master by Victor Sperandeo (1991)
5. Trade Your Way to Financial Freedom by Van K. Tharp (1999)
6. The Battle for Investment Survival by Gerald M. Loeb (1935)
7. Martin Zweig’s Winning on Wall Street by Martin Zweig (1986)
8. How to Trade in Stocks by Jesse Livermore (1940)
9. Market Wizards: Interviews with Top Traders by Jack D. Schwager (1988)
10. When to Sell: Inside Strategies for Stock-Market Profits by Justin Mamis (1994)

**Original copyright dates are listed even though many of the books linked are later editions**

System Development and Market Psychology:

Great All-around Reads:

Others:

System Development and Market Psychology:

Great All-around Reads:

All Others:

I am very pleased to announce that Dr. Brett Steenbarger’s new book can be ordered through Amazon. What makes this book even more interesting than most is that fact that I helped contribute to Chapter Nine, along with 17 other online professionals (bloggers I have followed and known for some time). Clearly, I consider the other 17 contributors more professional than me but I can’t discount what I have learned and have shared over the years.

I’ve been very quiet on the blog but that’s because my basic trading philosophy is buying long (stocks making new highs) which isn’t such a great idea right now and the fact that my baby is due to arrive in less than 6 weeks (priorities change). I hope to jump back in and get this blog going again when my screens show breakouts and positive risk/ reward setups. Until then, I’ll sit tight and be patient!

Remember:

• “But careful timing is essential…impatience is costly” – Jesse Livermore, 1940
• “Whenever I have had the patience to wait for the market to arrive at what I call a “Pivotal Point” before I started to trade; I have always made money in my operations” – Jesse Livermore, 1940
• “The big money is made in the first one or two years of a normal bull market cycle” – William O’Neil

Back to the book, I highly recommend it, as well as Brett’s past books; he’s such a great contributor to the trading world and an even more important fixture and influential contributor to the online investing community.

Brett’s TraderFeed Blog

From the Inside Flap:

Every trader is an entrepreneur. And just as a new business must capitalize upon the strengths of its founders, a career in the markets crucially hinges upon the assets—personal and monetary—of the trader. As an active trader and a coach of traders in hedge funds, proprietary trading groups, and investment bank settings, author Brett Steenbarger has helped others see the personal assets they have possessed all along: those that can pay a lifetime of dividends. In The Daily Trading Coach, he provides the tools to help you prioritize both your trading goals and your life—and become your own trading psychologist.

There are 101 lessons in The Daily Trading Coach, each averaging several pages in length. Each lesson follows the same general format: identifying an everyday challenge that traders face, an approach to meeting that challenge, and a specific suggestion for implementing that approach. The lessons cover a range of topics relevant to trading psychology and trading performance, including detailed instruction for utilizing psychodynamic, cognitive, and behavioral brief therapy methods to change problematic behavior patterns and instill new, positive ones. The chapters are independent of one another, so that you can read them in order or you can use the Table of Contents or Index to read, each day, the lesson that most applies to your current trading. In addition, the book includes insightful self-coaching perspectives from eighteen successful trading professionals who share their work online.

While the aim of the book is to help you become your own trading coach, its broader purpose is to help you coach yourself through life. The challenges and uncertainties you face in trading—the pursuit of rewards in the face of risks—are just as present in careers and relationships as in markets. The Daily Trading Coach provides a road map, and a practical set of insights and tools, for discovering and implementing the best within you.

Click here for a complete linkable list of Contributors to The Daily Trading Coach

Thank you Dr. Brett!

• The Bonfire of the Vanities by Tom Wolfe
• When Genius Failed: The Rise and Fall of Long-Term Capital Management by Roger Lowenstein
• Den of Thieves by James B. Stewart
• Liar’s Poker: Rising Through the Wreckage on Wall Street by Michael Lewis
• Reminiscences of a Stock Operator by Edwin Lefèvre
• Baruch My Own Story by Bernard M. Baruch
• Barbarians at the Gate: The Fall of RJR Nabisco by Bryan Burrough, John Helyar
• Moneyball: The Art of Winning an Unfair Game by Michael Lewis

The book starts with a chapter on technical analysis which I recently listed as one of the 10 steps to profitable trading. I agree with Brian 100% that any person that wishes to become a successful trader must learn and start to master some aspect of technical analysis. He clearly identifies that technical analysis is not about memorizing chart patterns or funky images but about understanding the motivations of participants which may help in anticipating future moves. This is a game of anticipation more so than speculation if you play by a set of rules and attempt to do it professionally. Overall, Brain nails the point that technical analysis allows a trader to view the market with some type of clarity (this may differ from one person to another – especially in multiple time frames).

He says: “price is the only thing that pays”. Very simple but true. All the tools and gadgets in the world can’t and won’t help you trade more efficiently than using simple price action which can be monitored through charts or technical analysis. He says, in other words of course, that technical analysis is not an exact science and will not predict every move but it should allow an experienced trader make sense of the movement(s) they are viewing.

I loved the first chapter because I felt I was reading my own thoughts (almost word for word).

The next four chapters focus on the four stages of a stock’s cycle or movement (in Brian’s opinion and I don’t disagree):

• Accumulation
• Markup
• Distribution
• Decline

This portion of the book reminded me of the analysis done by Stan Weinstein in his book, Secrets For Profiting in Bull and Bear Markets. There were some differences in explanation but I agree when Brian states that these four stages appear in every timeframe of every stock. Later on in the book, he talks about how and when to buy with focus on stage two and four stocks for trend traders (that would include me). Within these chapters, Brian says:

“Successful trading is all about finding an edge and exploiting it for your gain. If we cannot find such an advantage, there is no reason to be involved”.

From here, the book talks about support and resistance, trends, volume and moving averages; all things I continuously write about here on the blog because I use them and view them everyday on daily and weekly charts (support and resistance on point and figure charts). Once again, I felt I was reading my own thoughts in chapters seven through ten.

Reading along, we get introduced to chapters on How and When to Sell Short, News and Fundamentals and Short Squeezes. These chapters contain solid material but not as strong as the previous chapters or the final chapters on Risk Management, Rules and Insight and Putting it all Together. In my opinion of course.

The final chapters allow the book to close strong with focus on risk management which is one of the most important items on my list of steps to becoming a profitable trader. This chapter explores:

Market risk, time, risk/ reward (entry, stop and profit objective – which I use in every case study on the blog), trade size or position sizing, stops and other exit strategies.

This is one of the best chapters in the book and is a must read for any investor because the material can not be covered enough.

Finally, Brian covers trading tips, rules and truisms to think about and a few pages about putting it all together.

Overall, this is an excellent book, one that I recommend to any trader that is interested in technical analysis. I endorse the book enough so that I have joined the affiliate program and have placed image ads on my blog. I don’t promote too many items on this blog other than books from Amazon but this is surely a product I feel comfortable recommending. Most importantly, the book is not filled with fluff or any unnecessary fat which I believe is its best feature.

Do I have any reservations about the book?
Of course but not many that matter (as far as content is concerened), here is a short list to be fair.

• The idea of trading in such short time frames is not my forte but the point is the same regardless of the timeframe.
• The physical size of the book is larger than I would prefer but this is minor. I am not talking page count or content but actual size is not standard.
• The cover of the book is bland but I come from a design background so I will always have some constructive criticism. I never purchased a book due to its cover but I know many people do. It’s the content that counts, not the cover of the book.
• Finally we come to price. I questioned Brian about the price and he gave me the perfect answer. The book may cost more than others but you pay for what you get. The content is premium, it’s to the point and will help make you a better trader; therefore, can you really put a price on education that should repay you in the future? Personally, I would have started at a lower price point but again, that’s my own opinion.

In any case, I highly recommend the book as it is just as good, if not better than the daily stock videos Brian produces at his excellent blog AlphaTrends. I am a subscriber to his videos which download free into my iTunes program and then upload onto my iTouch every day.

Enjoy!

Bernard Baruch was a stock market speculator who became a millionaire by age 30 in the early 1900’s and eventually a statesman and advisor to multiple Presidents during WWI and WWII.

Wikipedia:

Bernard Baruch was born in Camden, South Carolina to Simon and Belle Baruch. He was the second of four sons. His father Dr. Simon Baruch (1840-1921) was a German immigrant of Jewish ethnicity who came to the United States in 1855. He became a surgeon on the staff of Confederate general Robert E. Lee during the American Civil War and a pioneer in physical therapy. His mother’s Sephardic Jewish ancestors came to New York in the 1800s and were in the shipping business. In 1881 the family moved to New York City, and Bernard Baruch graduated from the City College of New York eight years later. He eventually became a broker and then a partner in the firm of A. Housman and Company. With his earnings and commissions he bought a seat on the New York Stock Exchange for $18,000 (~$458K in 2007 dollars). There he amassed a fortune before the age of thirty via speculation in the sugar market. In 1903 he had his own brokerage firm and had gained the reputation of “The Lone Wolf on Wall Street” because of his refusal to join any other financial house. By 1910, he had become one of Wall Street’s financial leaders.

• A speculator is a man who observes the future, and acts before it occurs.
• If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he is wrong.
• During my eighty-seven years I have witnessed a whole succession of technological revolutions. But none of them has done away with the need for character in the individual or the ability to think.
• Age is only a number, a cipher for the records. A man can’t retire his experience. He must use it. Experience achieves more with less energy and time.
• Do not blame anybody for your mistakes and failures.
• Every man has a right to his opinion, but no man has a right to be wrong in his facts.
• I made my money by selling too soon.
  I never lost money by turning a profit.
• Most of the successful people I’ve known are the ones who do more listening than talking.
• Never pay the slightest attention to what a company president ever says about his stock.
• Whatever failures I have known, whatever errors I have committed, whatever follies I have witnessed in private and public life have been the consequence of action without thought.

Please note that these simplified quotes don’t even scratch the surface of the contents of this book – it may even be an insult to list so few.

System Development and Market Psychology:

Great All-around Reads:

All Others:

1. How do you determine what market to buy or sell at any time?
2. How much of a market should you buy or sell at any time?
3. How do you determine when to enter a market?
4. How do you determine when to exit a losing position?
5. How do you determine when to exit a winning position?

However, I would like to structure these questions specifically to the stock market (for the purpose of this blog audience) and answer them to the best of my abilities while anticipating comments from readers (for your answers):

1. How do you determine what stock to buy or sell at any time?
Hint: Stock Screens & Scans

2. How much of a stock should you buy or sell at any time?
Hint: Position Sizing and Expectancy

3. How do you determine when to enter a stock?
Hint: Risk/ Reward strategies

4. How do you determine when to exit a losing position?
Hint: Sell Strategies

5. How do you determine when to exit a winning position?
Hint: Taking Profits

I will follow up with detailed answers after you give the questions some thought. Hint: Answers to these questions are all over the blog – see categories and the archives for further clues.