Chapter 1. Basic Concepts

The Case for Short-Term Trading

This book is a product of one of the most challenging times in world financial history. Stated bluntly, the world’s financial markets have become a gambling casino where equity, bond, commodity, and currency prices have virtually no predictable direction. Stock prices have become particularly unstable in the sense that they have virtually no relationship to the underlying performance of the company they represent. In the very week these words were written, the Dow fell 330 points on Tuesday, rallied 280 points on Wednesday, and fell another 250 points just after the open on Thursday morning. Worse still, the collapse on Tuesday was caused by a sell-off in financial stocks—the very ...

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