Trend Trading: Timing Market Tides (Wiley Trading) [Hardcover]

Kedrick Brown (Author)

Book Description

Publication Date: October 6, 2006 | ISBN-10: 0471980218 | ISBN-13: 978-0471980216 | Edition: 1

Written in a straightforward and accessible style, Trend Trading teaches you how to trade equity trends with sound money management discipline, from the individual stock level to the whole portfolio level. Tailored to investors who want to use elements of trend following strategies in their equity portfolios, Trend Trading presents unique investment tools and advanced technical analysis methods in simple, commonsense terms.

Editorial Reviews

From the Inside Flap

Trend following has proven itself to be an extremely profitable long-term trading strategy in the futures markets. This book will show you how to adapt select characteristics of this powerful trading style to successfully trade equity trends.

As a private investor with more than eight years of professional equity trading experience, author Kedrick Brown knows what it takes to succeed in today's highly volatile markets. And now, with Trend Trading: Timing Market Tides, he shares his considerable market experience with you—by explaining in detail how to trade equity trends in the real world.

Written in a straightforward and accessible style, Trend Trading teaches you how to trade equity trends with sound money management discipline, from the individual stock level to the whole portfolio level. Tailored to investors who want to use elements of trend following strategies in their equity portfolios—without spending a fortune on the expensive research systems used by large firms—Trend Trading presents unique investment tools and advanced technical analysis methods in simple, commonsense terms.

Divided into two comprehensive parts, this valuable resource contains:

• Methods for timing trades in individual stocks based on the price action of external indices or stocks
• Unique technical analysis methods like stochastic averaging—which enables you to analyze the trending behavior of a group of stocks
• Information on specialized ways to apply trend following techniques—such as using them to rotate from an investment in one financial instrument to another
• Powerful position sizing tools that you can apply to individual or multiple stocks
• Detailed discussions of the elements necessary to succeed as a trend trader

By following the concepts outlined in this book, you'll greatly increase your understanding of exit timing, position sizing, and the entire trade planning process, freeing up more time to maximize your trading edge by focusing on instrument selection and entry timing.

Filled with in-depth insights, expert advice, and real-world examples, Trend Trading provides you with easy to apply ideas about how to take more control over the investment process and better manage your risks when trading. With this book as your guide, you'll be ready to enter the markets with confidence and exit with profits.

From the Back Cover

Praise for TREND TRADING

"Trend Trading provides a bedrock foundation for anyone who would seek to build wealth in the stock market. The author carefully explains his disciplined and methodical approach in terms that even a complete novice can understand. But the book is not just for beginners, and I would have no qualms about handing over my savings to a money manager who practices the techniques that it so meticulously describes. For that reason, I recommend it not just for fledgling investors but to any money manager or financial advisor who is looking to improve his or her performance."
—Rick Ackerman, Editor, Rick's Picks

"Most learn to trade stocks through trial and error. The only way to hasten the learning curve is to learn from the real-life experiences and knowledge of successful traders who've traveled down the same road. This book provides that opportunity!"
—Charles E. Kirk, The Kirk Report

"Kedrick Brown is a true Wall Street professional who has done battle in the trenches during some of the most turbulent times the market has ever seen. This book gives unique access into the thought process and mindset of how a market insider approaches the game. It applies the proven concept of 'trend following' to the equity markets in a simple and straightforward manner easily understood by investors of all levels of sophistication."
—Neal Berger, President, Apogee Asset Management, LLC

"A must-read for anyone who is serious about trading financial markets."
—Justin Evans, Founding Partner, Evans Capital Management

"Trend Trading is an insightful tool that can be used by all investors regardless of your individual strategy. No matter what the philosophy, if there is not a trend after you buy, then you will not be able to sell at a higher price."
—Calvin R. Stamps, Managing Partner and Portfolio Manager Bretwood Capital Partners, LLC

See all Editorial Reviews

Product Details

• Hardcover: 219 pages
• Publisher: Wiley; 1 edition (October 6, 2006)
• Language: English
• ISBN-10: 0471980218
• ISBN-13: 978-0471980216
• Product Dimensions: 6.4 x 0.9 x 9.1 inches
• Shipping Weight: 15.2 ounces (View shipping rates and policies)
• Average Customer Review: 3.9 out of 5 stars  See all reviews (10 customer reviews)
• Amazon Best Sellers Rank: #1,085,674 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews

56 of 58 people found the following review helpful:

5.0 out of 5 stars Specific ideas for beginners and serious traders, November 23, 2006

By 

Mike Carr, CMT (Cheyenne WY) - See all my reviews

This review is from: Trend Trading: Timing Market Tides (Wiley Trading) (Hardcover)

Systems traders have long been known to employ profitable trend following strategies in the futures markets. Applying those concepts to stock trading has proven to be difficult, although the idea of trend following in stock markets dates back at least the days of Charles Dow. In a new

book, Kedrick Brown, a former vice president at Knight Equity Markets, LP, redefines trend trading and offers readers a lot to think about, and readers of this book will find a large number of testable ideas.

Brown reviews the basic tenets of Dow Theory, and summarizes the underlying idea as, "Dow Theory thus assumes that it is only worth

owning stocks during confirmed bull markets in the major indices, and that one should be out of stocks otherwise." He also offers a straightforward definition of a trend following trading strategy as, "Any preplanned, rule-based strategy for managing open position P&L in which open profits could hypothetically grow indefi nitely under a limited

set of circumstances, while open losses are limited under all circumstances."

After developing a common base of understanding, Brown develops a relatively simple trend following strategy applying what he calls three dimensional technical analysis. In three dimensional technical analysis, traders need to consider not only price and time in a single stock, but they should expand their focus to similar information in multiple stocks simultaneously. In his book, Brown fully develops a sample strategy to trade any NASDAQ stock, such as MSFT.

This strategy, one of many in the book, relies on an objective method of defi ning a market's trend - the binary trend identification method using

Donchian bands:

1. Filter condition: Take long positions in MSFT only if the NASDAQ Composite is in an uptrend, defined as price having made a new 32-day high more recently than it made a new 32-day low.

2. Buy MSFT if it makes a new 24-day high while the NASDAQ Composite is in an uptrend.

3. Limit your losses by setting an initial fixed stop at the 24-day low at the time of trade entry.

4. If the initial stop is hit, reenter on a new 24-day high if the NASDAQ Composite is still in an uptrend.

5. Exit if the NASDAQ Composite enters a downtrend, defined by the price reaching a new 32-day low.

Buy and sell decisions in this example follow the trend of the general market. The strategy manages open position P&L by limiting losses and allowing profits to run in bull markets.

Interestingly, specific reentry points are precisely defined. This is often challenging for traders to do, and Brown points out that it is important to get back into positions after being stopped out if trend following in equities is going to be rewarding to traders.

Other trading strategies are comprehensively developed in the book, and the reader is always given a complete understanding of the underlying principles. Brown also devotes a large portion of the book to a detailed discussion on position sizing, and provides worksheets that traders can use or adapt for their personal use to develop trading plans. Overall, the book can serve as a complete "how to" manual for the beginning trader, but offers a great deal for more experienced traders.

In an interesting, but brief section, Brown addresses the institutional money manager's need to add alpha by outperforming, on a relative basis, a benchmark. Assuming the benchmark is the S&P 500, Brown notes, "If you hold a proxy for the S&P 500 at all times when not trading, you need only to outperform the proxy during the holding periods of your trades to beat its long term performance (before commissions and taxes)." The discussion and test results of this point are worth considering for all those attempting to outperform a benchmark.

9 of 10 people found the following review helpful:

4.0 out of 5 stars A great book, October 29, 2007

By 

Ahmed Elshelaby "Ahmed R. Al Shalaby" (Egypt) - See all my reviews
(REAL NAME)   

This review is from: Trend Trading: Timing Market Tides (Wiley Trading) (Hardcover)

This book gives you good techniques for trading that you can back-test for your self. The tecnniques mentioned are quite simple but the writer proved it in academic way. moreover, it helps you trust your decision be offering a foundation for why? when? and how. By the end of reading this book, I become able t formulate my own simple strategy, the rest is how much can stick to this strategy.
This book does not help you in selecting the right stock, evaluating it ...etc. The main focus (which is really achieved for me) is to help you design your entry and exit points scientifically with no emotions.

The only challenge I found with this book; it does not give you enough techniques for shorter term trading.

11 of 15 people found the following review helpful:

1.0 out of 5 stars Nothing new. Basic knowledge for long term trading, August 11, 2007

By 

Joe - See all my reviews

This review is from: Trend Trading: Timing Market Tides (Wiley Trading) (Hardcover)

This book shows methods for trend following long term trading.

There is nothing new in it. If you have already read for example "Trade your way to financial freedom" (a much better read by the way), you will learn about nothing in this book.

The style of the book is quite academic but all presented things are extremely simple. Everything is very much detailed with obvious formulas or repeating the same stuff for the short side (exactly symmetric) after having been explained for the long side, perhaps in order to reach the critical number of 200 pages for the book.

I wonder what is the motivation for this book since there is nothing new. A result of the Wiley Trading frenzy to publish?