Stop and Make Money

Richard Arms is one of the world’s most respected stock market technicians. His expertise in this field is unparalleled, and now, with Stop and Make Money, he reveals how to profit from short-term price movements in the stock market—whether you’re buying or selling short—by accurately interpreting price/volume information and effectively employing stop orders to enter and exit positions. With this book as your guide, you’ll quickly discover how to anticipate short-term stock market moves and improve your overall trading activities.

Acknowledgments ix

About the Author xi

Introduction The Great Opportunity 1

Chapter 1 Let’s Get Started 7

Chapter 2 A Pair of Shorts 19

Chapter 3 Why Technical Analysis? 27

Chapter 4 The Market Is Always Right 33

Chapter 5 Equivolume Charts 39

Chapter 6 Getting Ready to Trade 47

Chapter 7 Choosing Your Route 53

Chapter 8 Power Boxes 67

Chapter 9 Okay, Let’s Buy 77

Chapter 10 Stop Orders for Getting In 87

Chapter 11 Stop Orders for Getting Out 95

Chapter 12 A Play, Not a Position 103

Chapter 13 Minding the Gaps 109

Chapter 14 Tops and Bottoms 115

Chapter 15 Flags, Pennants, and Rectangles 121

Chapter 16 Support and Resistance 133

Chapter 17 Trends and Channels 139

Chapter 18 Targets 145

Chapter 19 Ease of Movement and Volume-Adjusted Moving Averages 151

Chapter 20 Is the Market Going to Go Up or Down? 159

Chapter 21 The Arms Index 165

Chapter 22 Market Tops and Bottoms 173

Chapter 23 In Conclusion 179

About the CD-ROM 183

Index 187

"... a valuable addition to the limited literature available... essential reading for any trader who uses candles on a regular basis." (The Technical Analyst June 2008)

"Richard Arms' 'equivolume' charts provide the clearest depiction of how price and volume interact." (Investors Chronicle, March 27th 2009)

RICHARD ARMS, a financial consultant to institutional investors and a private portfolio manager, is a noted expert in the field of technical and market analysis. Arms has created key technical tools for understanding market price movement, which are listed daily in the Wall Street Journal and included in a variety of market analysis software programs. His Equivolume charting system is now part of the most popular stock and futures software, and his Arms Index—also known as the Short-Term Trading Index or TRIN—has become one of the most important technical tools on Wall Street. Arms received the prestigious Market Technicians Award in 1995.

Richard Arms is one of the world’s most respected stock market technicians. His expertise in this field is unparalleled, and his groundbreaking theories in volume analysis and market forecasting have forever changed the way traders perceive markets. Now, in Stop and Make Money, Arms presents a short-term approach to trading using the technical methods he has pioneered—as well as other established technical tools—over the course of his successful forty-year career.

In a straightforward and accessible style, Arms reveals how to profit from short-term price movements in the stock market—whether you’re buying or selling short—by accurately interpreting price/volume information and effectively employing stop orders to enter and exit positions.

Before getting down to details, Arms briefly explores some essential trading examples and explains the advantages of technical analysis. He also prepares you for the journey ahead by offering insights and advice on what you might need to achieve your goals, including charting services, quotations services, a brokerage account, and more. Then, in the chapters that follow, Arms skillfully illustrates the self-developed techniques that have allowed him to manage trades for maximum profits during his many years in the market. Topics discussed include everything from the Equivolume charting system and the Arms Index—also known as TRIN—to Volume Adjusted Moving Averages and Ease of Movement. Along the way, you’ll also become familiar with conventional technical tools, such as support and resistance, trendlines, and channels, which fit into Arms’s strategy.

To enhance your understanding of this proven trading method, a companion website offers a free thirty-day subscription to MetaStock^™ End-of-Day data and software. Taking advantage of the free MetaStock charting systems provided—at least during your learning phase—is highly recommended, since they closely conform to the examples used throughout the book.

While many of the drawbacks to successful trading have been largely eliminated, it still takes knowledge, discipline, and hard work to capture considerable profits. Nobody knows this better than Richard Arms. And with Stop and Make Money, Arms will show you how to observe and anticipate short-term stock market moves in order to improve your overall trading activities.