Index

Accounts payable days, 27

Accounts receivable days, 26–27

Acid test. See Quick ratio

ADRs. See American depository receipts

Advance-decline line, 18

Agency trading, 108

American depository receipts (ADRs), 124

Bar chart, 49–50

Bargain hunting, 35

Bearish and bullish volume accumulations, 17

The Beige Book, 40

Call option, 107

Candles, 52–53

Candlestick chart, 47

Cash flow per share (CFPS), 96–97

CFDs. See Contract for differences

CFPS. See Cash flow per share

Channels, 58

Chart patterns, 70

Chicago Board Options Exchange (CBOE) volatility index, 83

Contract for differences (CFDs)

definition of, 109

risks involved with trading, 110–111

trader advantages, 109–110

Core trading, 133–134

Correlation analysis

basics of, 40–41

traders’ optimum combination, 41–42

Current asset ratio, 23

Day trading, 8–9

Debt:equity (gearing), 27–28

Defensive interval ratio, 24

Delayed line calculation, 87

Derivatives, 105–106

Discretionary trading, 135–136

Dividend cover, 30

Dividend per share (DPS), 29

Dividend yield (DY), 30

Double tops and bottom patterns, 66–67

DPS. See Dividend per share

DY. See Dividend yield

Earnings growth, 20

Earnings per share (EPS), 29, 137

Earnings yield (EY), 30

Elliot wave theory, 37–38

EMAs. See Exponential moving averages

Embarrassment of novice, 11–12

EPS. See Earnings per share

Exchange volume, 62

Exit strategies, 90

Exponential moving averages (EMAs), 59

EY. See Earnings yield

Falling wedges, 69

Fibonacci triggers, 38–39

Filter system

aim of filters, 14–15

embarrassment of novice, 11–12

growth sectors, 16–18

First preceding line calculation, 87

Forex trading principles, 113–116

Forming base, 35

Forwards, 106

Foundation of wealth, 3–6

Futures, 106–107

Gearing ratios, 27–29

Global market

guidelines of, 42–43

leading vs. lagging indicators, 43–44

share price analysis, 44–46

Global market sentiment, 83

Global stock markets

Hong Kong Stock Exchange, 127

London Stock Exchange, 126

NASDAQ, 126

New York Stock Exchange, 126

Tokyo Stock Exchange, 127

U.S. stock exchanges, 126

Globe trader, 120–121

Gross cash flow to total debt ratio, 29

Head and shoulder pattern, 64–66

Hedging, 110

Hong Kong Stock Exchange, 127

Ichimoku Kinko Hyo (IKH) indicator, 86

Index volume, 62

Interest cover, 28–29

Investment cycles, 34–40

Investment performance ratios, 29–31

Investment tools

listening doomsayers, 94–95

market madness, 93–94

trading signals, 92–93

JSE vs. Dow Jones, 122–124

Jungle Tactics (Heinemann), 35

Lagging indicators, 44

Leading indicators, 44

Leading vs. lagging indicators, 43–44

Line chart, 48–49

Liquidity, 20

Liquidity measuring, 95–96

London Stock Exchange (LSE), 126

Long-term debt to capital employed, 28

Long-term traders, 89

LSE. See London Stock Exchange

MACD. See Moving average convergence divergence

Macro-economic conditions, 13

Magliolo’s detection strategies, 70–71

Margin trading, 110

Market cap, 19

Market maker, 125

Market sentiment, 81–83

Market volatility testing, 31–32

Micro-economic conditions, 13

Momentum

MACD, 73–75

volume, 75

Money flow identifier, 16–17

Moving average

merging, 99–102

types, 58–60

Moving average convergence divergence (MACD), 73–75

NASDAQ. See National Association of Securities Dealers Automated Quotation

National Association of Securities Dealers Automated Quotation (NASDAQ), 126

New York Stock Exchange (NYSE), 126

NYSE. See New York Stock Exchange

Options, 107

Ordinary shareholders’ interest, 28

Overbought, 77, 101

Oversold, 77, 101

Patience, 97–98

Patriot Act, 119

Pennants, 70

PIP, 116

Portfolios

day trading to ultra wealth, 8–9

foundation of wealth, 3–6

trade market anomalies, 6–8

Position trading, 135

Potential loss determination, 41

Potential return determination, 42

Price, derivative, 108

Price:earnings ratio (P:E), 30–31

Principal trading, 108

Profit margins, 24

Proportional debt ratio, 28

Put option, 107

Quick ratio, 23

Real patterns

chart patterns, 70

double tops and bottoms, 66–67

head and shoulders, 64–66

pennants, 70

triangles and rectangles, 67–68

wedges, 68–69

Relative strength index (RSI), 75–77

Return on capital employed (ROCE), 25

Return on net assets (RONA), 25

Return on shareholders’ equity (ROSE), 25

Rising wedges, 68–69

Risks, associated, 107–108

ROCE. See Return on capital employed

RONA. See Return on net assets

ROSE. See Return on shareholders’ equity

RSI. See Relative strength index

Scalping strategy, 130–132

Second preceding line calculation, 87

Sentiment-based system, 82–83

Share price, 19

Share price analysis, 44–46

Sharing filters

earnings growth, 20

liquidity/tradability, 20

market cap, 19

share price, 19

Short-term trades, 89

Simple moving average (SMA), 58–59

SMA. See Simple moving average

Standard line calculation, 87

Stock to working capital ratio, 23

Stock turn ratio, 25–26

Stock volume, 62

Support and resistance levels, 54–57

Swaps, 106

Swing trading, 133

System risk, 108

System trading, 136

3-2-1 method, 89

Timing trades

future price strength, 86–89

strength of share, 85–86

trend determination, 86

Tokyo Stock Exchange, 127

Tradability, 20

Trade market anomalies, 6–8

Trader’s trigger, 37, 43–44

Trading swings, 110

Trading trends

benefit of, 130

candles, 52–53

channels, 58

core trading, 133–134

disadvantages, 130

discretionary trading, 135–136

exist of trends, 53–54

moving average, 58–60

position trading, 135

scalping strategy, 130–132

support and resistance levels, 54–57

swing trading, 133

system trading, 136

volume, 61–62

Triangles and rectangles pattern, 67–68

Turning point calculation, 87

Underlying market. See Contract for differences (CFDs)

Upside-Downside volume ratio, 18

U.S. stock exchanges, 126

Volatile shares, 141

Volume

exchange, 62

importance of, 61–62

index, 62

stock, 62

Volume-based technical analysis

money flow identifier, 16–17

volume of net trades, 17

volume surge identifier, 17

Volume of net trades, 17

Volume surge identifier, 17

Wedges, 68–69

Williams %R indicator, 100–102