Master Traders

Master Traders introduces you to an outstanding group of financial experts—from seasoned hedge fund managers to top technical analysts—who discuss the methods they use to tame today’s highly volatile and unpredictable markets. Composed of chapters contributed by leading financial professionals, Master Traders contains a variety of proven strategies and techniques that will give you an edge in the world of stocks, options, and futures.

Foreword by Steve Shobin ix

Preface xi

Acknowledgments xvii

INTRODUCTION: Trader Evolution and the Keys to Success 1
Greg Collins

PART I Technical Analysis

CHAPTER 1 Playing with Fear and Arrogance 13
Jeff deGraaf

CHAPTER 2 Sector Analysis: Tools of the Trade 27
Frank Barbera

CHAPTER 3 Evaluating Probabilities to Improve Profitability 60
Kevin Tuttle

CHAPTER 4 The Secret Science of Price and Volume 87
Tim Ord

PART II Fundamental Analysis

CHAPTER 5 The Keys to Biotech Investing 109
David Miller

CHAPTER 6 Investigative Investing: Themes and Methods for Uncovering Value 122
Kai-Teh Tao

PART III Sentiment

CHAPTER 7 The Secret Messages of Equity and Options Markets 139
Fari Hamzei

CHAPTER 8 Trading Seasonality 158
Phil Erlanger

PART IV Derivatives

CHAPTER 9 Volatility and Its Importance to Option Investors 183
Alex Jacobson

CHAPTER 10 A New Options Game: The Market Taker 205
Jon “Doctor J” Najarian

PART V Trading Size

CHAPTER 11 Making Sense of Market Moves: Using Technical and Fundamental Analysis Together223
Jeffrey Spotts

CHAPTER 12 New World Trading of Old World Markets: European Derivatives 242
Timothy Corliss

CHAPTER 13 Options Applications to Pairs Trading 263
Dennis Leontyev

EPILOGUE: Beyond the Horizon 284
Fari Hamzei

About the Author 292

About the Contributors 293

Index 296

Fari Hamzei is founder of Hamzei Analytics, LLC, which provides cutting-edge proprietary analysis and indicators to institutional and professional traders. He is also group leader of the Los Angeles eSignal/Trade Station/ Real Tick/ Metastock Users' Group and the former vice president of Market Analysts of Southern California. Hamzei is a nationally ranked Market Timer (as ranked by Timer Digest). He holds a BSE degree in financial engineering from Princeton University, and was a director of strategic planning at Northrop Grumman Corp., Aircraft Group. He is frequently quoted by CNBC, Bloomberg, RealMoney, and other financial media outlets.

Praise for Master Traders

"Fari Hamzei has assembled an impressive array of trading authors. Fari's own work on sentiment indicators is definitely worth reading, as usual, as is technical 'master' Phil Erlanger's. Furthermore, there is plenty of useful information on derivatives in the chapters by Alex Jacobson and Jon Najarian."
—Lawrence G. McMillan, The Option Strategist and President, McMillan Analysis Corp.

"Master Traders provides invaluable market education and wisdom from those who have distinguished themselves, not only by their track records in the market, but also for their risk and money management expertise. Strikingly, readers will find that these Masters use the basic understanding of human nature to achieve trading success and know how to achieve simplicity by focusing on the essence of opportunity."
—Mario Alberico, Partner, Financial Services Industry, Accenture, LLP and former senior vice president of electronic trading and market data, Chicago Mercantile Exchange

"Fari Hamzei knows a lot about the markets and so do the traders/analysts he has assembled here. From sector analysis to option strategies, from price and volume to volatility, there is sure to be something of interest in this compilation for every trader."
—John Bollinger, CFA, CMT, BollingerBands.com

"A straightforward, down-to-earth guide to using technical analysis, tips from the master traders, and excellent options information for successful trading. In my opinion, a manual every investor can profit from."
—Ned Bennett, CEO and co-founder, optionsXpress, Inc.