Customer Reviews

Big Trends in Trading: Strategies to Master Major Market Moves (A Marketplace Book)

5 star:		(10)
4 star:		(3)
3 star:		(1)
2 star:		(1)
1 star:		(4)

 

 

Price Headley, the founder of BigTrends.com, has shared many of his best market indicators with readers. I've seen Headley speak at a few Investor Expos and he not only knows his stuff, but he presents it clearly without going over the heads of the audience. He has taken the same approach with his book. I found the indicators that he reviews to be very useful in providing insight into them market direction. I have personally used a number of them myself over the years.

Not only does Headley provide the indicators, but he also includes the EasyLanguage Code for Tradestation platform users so that they can easily input his indicators on their PCs. Headley could have kept the settings of his indicators proprietary, but he chooses the high rode and shared them with his readers.

Now to the review of this book. Chapter 1 focuses on Headley's favorite contrary sentiment indicator -- CBOE Equity Put/Call Ratio. Readings below 0.4 are considered bullish and above 0.8 bearish. He also draws standard Bollinger Bands (BB) on the ratio to add another dimension to determining extreme ratio readings. He also covers the weekly ratio, as well as intra-day readings. Moreover, he explains the Total Put/Call ratio (Equity and Index Options) and how to use it to determine fear or greed in the market. Throughout the chapter Headley shows the performance statistics of each indicator over specific timeframes with complete profit and loss statistics. He uses this approach throughout the book so you can see for yourself, which of the strategies have the most bang for the buck.

Chapter 2 covers the fund flows in and out of three Rydex Funds -- Nova, OTC and Ursa. Nova provides 1.5 times the performance of the S&P 500 Index. OTC mirrors the performance of the NASDAQ 100, and URSA is inverse the S&P 500
(short fund). Headley obtains the daily funds flow data for each fund directly from Rydex and then plugs the data into a formula : (Nova+OTC)/URSA. He found that the lower this ratio the lower was investor confidence in the market. This is a contrary indicator and a buy signal. The reverse is a sell signal.

Chapter 3 introduces the CBOE Volatility Index known as VIX. It is a measure of the expected volatility of stocks based on pricing of the S&P 100 (or OEX) options. VIX is also used as a contrary indicator with high readings bullish (40) and low readings (18) bearish.

Chapter 4 focuses on volume indicators. He uses the daily QQQ, NASDAQ Composite and Spyders with their respective volumes. He graphs the prices of these items with BBs on the data to identify overbought and oversold conditions.

Chapter 5 covers surveys used to gauge fear and greed in the markets. Headley recommends taking a contrary position to the survey results when they reach extreme readings. Surveys he reviews include the Investors Intelligence Bull and Bear Index, Consensus, Inc., AAII weekly poll, and Market Vane. Performance data using these surveys is also provided.

Chapter 6 reviews Headley's favorite classic trend indicators. These include weekly and daily moving averages, MACD, support and resistance, average true range, and ADX. He briefly mentions candlestick charts using one example, and covers a few points on system testing.

Chapter 7 introduces the "acceleration band" indicator developed by Headley. He provides an explanation of the logic behind it, the EasyLanguage Code and numerous chart examples. Headley is basically taking the directional movement each day (high-low) and dividing it by the average stock price (high+low divided by 2) to obtain the directional movement of the stock or index. Also included is a discussion of moving average envelopes (similar to BBs) and illustrations of their use.

Chapter 8 covers the concept of momentum divergences. Headley uses the MACD indicator to determine his key entry and exit points, then he introduces his unique Momentum Divergence Indicator with chart examples and TradeStation code. He then combines the momentum divergence with moving average envelopes to provide his buy and sell signals. He provides charts of 10 popular stocks and their performance using these indicators.

Chapter 9 focuses on the relative strength of stocks to its comparative market index. This has nothing to do with the RSI indicator although they have similar names. Headley recommends using an RS line with 5, 10, 20 and 50-day moving averages. He provides 6 chart examples with this data and a detailed explanation.

Chapter 10 and 11 cover the basic principles of trading options. Headley provides four simple option-trading rules. He then explains option strategies in different market conditions.

The book's last chapter (40 pages) reviews the key tenets of trading psychology and money management. Topics include: building a customized trading plan, psychological issues to be aware of, and effective money management rules. Headley provides not only 10 key questions to consider about your trading plan, but also reviews the answers to each question. To help the reader, Headley provides his only personal trading rules and suggestion and his daily trading process.

The bibliography contains about reference books on all aspects of investing and trading. There is a 9-page glossary of terms, and a list of 15 websites.

In conclusion, Headley does a masterful job of providing traders with time-tested indicators, including two self-developed ones that he shares with readers. Readers of this book should be able to incorporate Headley's indicators into their trading strategies and come out way ahead of the crowd.

After reading my fair share of investment and trading books, I have to say that this one stands out - Headley offers a lot of practical, detailed ways to trade successfully in various market environments. I'm not the only one who learned since 1999 that simply buying and holding stocks can actually be quite risky - the point of the book is to show the way that bullish and bearish market and sector cycles have accelerated tremendously. As a result, you can either get punished during the rough stretches or take some steps to take advantage of the market's directional moves along the way. Best of all, the book takes some traditional ways of spotting big trends in stocks and updates them with new methods I've never seen before.

A couple of areas really stand out: The well-researched explanation of conventional technical and relative strength indicators used by William O'Neil, John Murphy et al. with new tools like Headley's Acceleration Bands and Momentum Divergence signals. These are things I was able to use immediately, thanks to the indicator formulas he provides. I've been able to enter and exit positions profitably overall without being badly affected by big market swings. I think that's the big difference here. Too many other investing guides simply rehash existing knowledge (or advertise someone's service) without helping you be a smarter investor. The book also opened my eyes to several key option strategies to help generate income or protect profits in difficult markets. I recommend this book to anyone who wants to expand their trading knowledge and apply the concepts to real-world trading.

This represents an 'interim' review. I've read the book, but plan to make a second pass at a much slower pace. I may bounce the rating up to 5 when I get done. For now, the book gets a 4.

I like the book a great deal. In particular, I really like Headley's highlighting of sentiment indicators. At the end of the book, he shares a summation of his trading discipline. Much of it is a quick summary 'The Disciplined Trader' by Mark Douglas. The readers would be well advised to read Douglas directly, but if the material is new, it ought to be worth the price of the book by itself. For me, I enjoyed the insight into Headley's life style.

Headley's writing style strikes me as somewhat 'stream of consciousness', though. For example, while discussing his use of the Put/Call ratio, he states: "The next put/call signal occurs on February 16th, when the put/call ratio crossed back below the upper band to register a 49 percent reading on February 16th, after a 55 percent number occurred the prior day (February 15th). What you notice in this example is that the put/call ratio then has another surge above the upper band two days later, on February 18th at 63 percent. What should be done in these situations? Since a bullish position is already established, you should seek to follow the indicator and stay with the signal until it is either reversed by a sell signal (which would only occur at the other extreme, below the lower band, usually after a rally) or if the time is up for the trade (in the bullish case, after 15 trading days). As you can see in this case, ...."

Along side these blow by blow trading commentaries, Headley presents the TradeStation EasyLanguage code for mechanically trading the QQQ based on sentiment readings.

Why go into these daily details if he is just following a set of rules? Rather than spend time on the day by day commentary, I wish Headley had discussed the process of picking parameters for his trading system. Why 15 days for the long position but only 2 for the short? Additionally, without going through the day by day commentary with a fine tooth comb, I'm not sure he isn't bringing in extra considerations outside those in his mechanical trading system.

Ditto for the divergence discussion.

If you happen to be a TradeStation user, the code provided in the book won't run on the current version (TS 6). It's not that hard to up date, but don't expect to type the code into TS 6 and expect it to run. Also, the TradeStation datafeed doesn't offer the CBOE put/call ratio, nor convenient means of getting into the system, so it is a bit hard to try put/call ratio ideas out.

Big Trends in Trading really helps you understand what makes the markets tick. Headley gets right to the bottom line, which is helping investors make more money with a better understanding of the best ways to put your money to work. Headley highlights some key indicators that look beyond the news headlines to gauges of investor sentiment and key sentiment indicators that help you see where the markets are heading over different time frames. And in my experience, that can make a big, big difference in your portfolio. What's more, he also offers some very specific ways to spot the best stock opportunities, as well as stock and option strategies designed to help make money in different market conditions. He definitely doesn't "dumb it down" - the material is detailed, with complete information on results from the various trading strategies spelled out.

I loved this book! From the contrarian aspect of going against the crowd in the early chapters to the part I found most invaluable, the "Trading Psychology and Money Management" section at the end the book was very informative. Mr. Headley takes you into the mind of what it means to be a trader and to be successful in the markets. He may be a CFA and a Market Techniciaon MTA, but he should be given a PhD in trading psychology. The last chapter on this is worth twice the price of the book. Of the books I've read on trading in recent years, this one is one of my favorites. I've had the privilege of reading Trading for a Living by Dr. Elder, and Pit Bull by Martin Schwartz, (two of my favorites I'll list) and've now been given a new and fresh angle on trading, while holding true to some of the basic disciplines of what it means to be a trader. I found Mr. Headley's "crowd sentiment" indicators to be impressive, while the last chapter on psychology will be referenced many times over to be sure. Of the tens of books I've read on trading, this one has been given a forceful shove into my top three, which I'm sure I'll read over and over.

After reading this book you might go check out their website and you'll see that they offer a few advisory services. Don't be fooled by the track records they email you, I lost thousands of dollars being SUCKERED into a non-refundable yearly membership fee to one of their services only to lose a lot more following their advisory emails. I quit following their stock pick recommendations about 3 months into the service with 9 more months left and watched their picks for almost a year. THEY DID SO HORRIBLE, I WOULD LITERALY DO BETTER PICKING STOCKS OUT OF A HAT, not to mention the horrible customer service. They did not respond my emails when I had questions or concerns about what is going on with these recommendations.

The average investor is not made to be a daytrader. There money is not large enough to succeed, and when they use leverage to compensate they compound their problem by overleveraging. Mr. Headley points out all of these issues in his book. This book ... paves the way for a new generation of futures traders and stock traders.

The only drawback is this book doesn't discuss the new security futures. Other than that it is a fine primer and reference book for years to come.

For everyone who reads this highly original book, there will probabably be a chapter or two that will be most significant that can add to ones bottom line. For me, it was the discussion of managing a straight put or call position once entered and how to exit that position. Exiting markets is critical to success...as those who have suffered through the 1999-2002 meltdown in the stock market now know. Hadley's ideas on trade management and exiting strategies have already made me money and helped solidify my approach to this important aspect of the market. I have had excellent entry point strategies, but just was really struggling with how to exit in a way that made sense to me. Hadley provided the missing piece.

Of course as already noted, there is some very highly original research on using VIX, put/call ratios, etc. to help time the stock market.

In short, this book is packed with outstanding information that will help any stock market trader turbocharge his/her trading results.

As a trader who had read tens of trading books, I still found this one interesting and helpful. I like its variety of content (that the author introduced a lot sentiment indicators like CBOE Put/Call Parity + Volatility Index, RYDEX Mutual Fund Flows, Volume indicators for QQQ and S&P 500 Depository Receipts), plus the author's writing style and integrity (the author did quoted frequently from other writers). Some technical tools like MACD, ADX were discussed, but only briefly. In fact, I like Chapter 12 about trading psychology and money management, Appendix D favorite quotes the most.

To conclude, if you want to read an intermediate to advanced level trading book, and that you are appreciative of logical and contrarian trading, this one is for you.

p.s. I like Mark Douglas, Bernard Baruch and Jesse Livermore very much. As the author does appreciate these "gurus", I admit that my positive comment may be a little bit biased.

Price Headley successfully combines his obviously well-tested market analysis and trading theory with practical step-by-step guidelines in this compact, yet amazingly complete trading treatise. There are so many real gems contained in this small book I can only urge beginning and advanced traders alike to grab a copy and read it...several times over.

Headley introduces a few unique and intuitively appealing indicators for determining market trends, stock selection and entry-exit techniques, as well as his considerable insights on working with more well-known indcators like the VIX, Rydex and put/call ratios.

I was particularly impressed with his work on directional options trading and his superb treatment of the type of money management and psychology that is absolutely critical if one is to develop consistent success at trading. I suspect that even long-term professional traders will find much that is new, or at least refreshing and useful, in these pages and I certainly won't be surprised to see "Big Trends in Trading" join the short list of must read classics in the years to come.