New Investor's Toolbox
Using the Right Tools to Fine Tune Your Financial Future

By Henry Harington & Alexander Hoar
Pearson Education / Financial Times
January 2004
ISBN: 0-273-66308-9
264 Pages, Illustrated, 6 ¼" x 9 ¼"
$55.00 paper original


As a private investor, mistimed or misplaced usage of financial instruments, or reliance on just a couple of financial tools can mean that you're not equipped to cope with the bear as well as the bull markets. The professionals use a whole range of financial instruments to tune their portfolios to the markets. There is no reason why private investors can't do the same. This book helps you to use these tools to tailor your portfolio, by identifying your risk and vulnerabilities and knowing where to go from there. The emphasis of the book is on equipping the investor with enough knowledge of the different tools at your disposal to be able to use the right ones at the right time to minimize losses and maximize gains. Aimed at retail investors, this text gives access to the strategies used by city professionals enabling them to protect and grow their wealth successfully.

Contents
What the book is going to achieve Why it is important to have a New Financial Toolbox The future and potential dangers of investing in the new century

Chapter 1 - The Foundations ~ The Secrets – Of Successful Trading Common sense Risk/Reward combined with probabilities Understand what you’re doing, how you will achieve it and then doing it

Chapter 2 - Risk Control - Why It Pays To Lose Less Understanding Risk & Reward The Risk/Reward ratio – Where do you want to be located The hidden damage of losses Treat your trading like a business Is losing is OK? Risk is ultimately more important than reward How do the professionals play the risk/reward ratio Start with your risk and then reward How to correctly set up a trade When are tips good – Be humble and realistic

Chapter 3 - Simple & Effective Charting Analysis – Keep It Simple, Keep It Quick The use of computers What you don’t know can’t harm you The best charting is the simple kind A closer look at charts – What types are best Look across different timeframes Flowing markets Trading ranges Support/resistance levels and how to use them 10 second chart analsisy Technical indicators – Good or bad Context – It’s all important Using charts as a safeguard – Back to risk Use charts to quickly understand any market or stock Sector relationships using charts Use charts to define probabilities and risk/reward calculations Cost effective ways to simply and effectively chart the stock market

Chapter 4 – Stop Losses – Critical, Critical, Critical What is a stop loss How does a stop work Why use stops – It’s important to know your loss Keeping risk constant letting risk vary – Trade like the professionals Types of stop loss orders Use them to protect profits Problems with using stop losses Brokers and stop loss orders Golden rules to use when setting stop losses Where should stop losses be placed Stop losses and the risk/reward ratio – Now you’ve got something very powerful

Chapter 5 - Short Selling – Great Flexibility What is short selling How is short selling handled in today’s markets Short selling gets a bad name Is it that dangerous in today’s markets Short selling – adding more flexibility to your toolbox Simple and effective rules for successful short selling

Chapter 6 - CFDs – Yet more Flexibility What are CFDs Why were they developed How they work Advantages & disadvantages Shorting stock – A new addition to your toolbox Pairs trading – What is it How to trade pairs

Chapter 7 - Traded Options – Total Flexibility What are options Why were they developed Who uses options Option terminology How are options priced Volatility – What nobody really speaks about What option strikes to buy/sell What months to buy/sell How to use option volatility Buying options – Pros & cons Selling options short – Pros & cons Option strategies – The best way forward Speculation and options Hedging and options – You insure your car and house, why not your portfolio Income enhancement and options Advantages and disadvantages of using options Good rules for successful trading of options

Chapter 8 - How To Effectively Build Options Into Your Portfolio Why do you want to use options? To make money is not a good enough answer! Watch those spreads – How to get inside the bid/offer Play the game on your terms – Not the market makers or the brokers When best to buy options When best to sell options Using options for income enhancement How to buy stock at less than today’s price using options Guaranteed ‘free’ stop losses using options Spike trading on stocks using options More option strategies

Chapter 9 - Futures – Only For The Dedicated What are futures Why were they developed How they work Using futures within your portfolio Simple rules to keep you out of trouble

Chapter 10 - Spread Betting – Tax Free Has It’s Advantages Tax free, yes – Advantage, maybe? Why where they developed How do they work Why Spread betting should be part of your financial toolbox When you should use spread bets When you should not use them Simple rules to keep you out of trouble

Chapter 11 - Sector Funds – ETFs The New Stockmarket Trading Vehicles? How sector relationships can help your trading It’s all about momentum What are ETFs Why they were developed What ETFs are traded How to buy and sell ETFs Future trading with ETFs – Time to get clever

Chapter 12 - Hedge Funds – Do They Really Hedge? What are they Why were they developed Should you invest in them How to find a good Hedge Fund On balance small funds are better

Chapter 13 - Foreign Shares – Don’t Overlook Them – Returns Are Returns This is a global market Dollars, €uros, it’s all profit This is where charts are so useful Information is plentiful How to trade Foreign shares

Chapter 14 - Information – There’s Too Much – You’ve Got To Sort It The information age is truly upon us Too much information dilutes its use Where to find the best information Working the web Don’t overload Again, what you don’t know often can’t hurt you Brokers reports – The tooth fairy visits What recent history has taught us about market commentators Use information as a contrary indicator

Chapter 15 - Future Market Scenarios – Can Your Investments Handle The Uncertain Future? What can go wrong - There’s almost too much The damage that disasters can have on your portfolio How to combat this problem What if nothing happens? – It’s a win-win Preparing for the worst

Chapter 16 – Conclusions

Glossary As long as is necessary – At InvestorProfit we’ve got over 4000 financial words and phrases we can use.

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