J. Christoph Amberger's Hot Trading Secrets: How to Get In and Out of the Market with Huge Gains in Any Climate

by J. Christoph Amberger

Overview

Master the market for maximum profits with HOT TRADING SECRETS

Playing the trading game takes audacious confidence, but winning takes more. It's about making chances instead of taking chances. As founder of the remarkably successful Taipan Group-a team of independent financial analysts-author J. Christoph Amberger knows: "There is always an opportunity to make exceptional stock market profits . . . as long as you know how to read the signs."

In Hot Trading Secrets, Amberger gives you a blueprint for making big money in any financial climate. He will teach you:

• How to trade on "insider information" legally and profitably
• The secret strategies of CBOE floor traders
• How to profit from the "Red Zones"
• How to become a stone-cold profit predator

In a simple step-by-step presentation, Amberger will liberate you from restrictive conventional fallacies. Using Hot Trading Secrets as your guide, you will learn to exploit volatile market events to achieve consistent profits-whether the market is up or down.

Product Details

ISBN-13:	9780471738725
Publisher:	Wiley
Publication date:	12/16/2005
Pages:	320
Product dimensions:	6.27(w) x 9.11(h) x 1.11(d)

About the Author

J. CHRISTOPH AMBERGER was educated at the Freie Universität Berlin, the University of Aberdeen in Scotland, and the Georg-August-Universität Göttingen. He obtained his master of arts at St. John's Graduate Institute in Annapolis, Maryland. As Executive Publisher of the Taipan Group, he has put together one of the world's leading teams of independent financial analysts, famed for its remarkable success. A frequent speaker at international conferences, he is the author of scores of articles and special reports on financial issues, and his daily e-newsletter, 247profits e-Dispatch, is one of the most popular financial dailies in the world.

Read an Excerpt

J. Christop Amberger's Hot Trading Systems

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By J. Christoph Amberger

John Wiley & Sons

ISBN: 0-471-73872-7

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Chapter One

MARKETS RISE, MARKETS FALL-IT MATTERS NOT

(As Long As You Are Making a Profit)

A ruler placed on a globe will give one answer; the same ruler applied to every indentation as one traverses the coast will give a vastly different one. -Robert R. Prechter, Jr., The Wave Principle of Human Social Behavior and the New Science of Socionomics (2002)

"Bulls make money, bears make money, pigs get slaughtered."

The idea at the core of this old chestnut of a trading rule is simple: If you pick an investment strategy and stick with it long enough, you're bound to make money at least half the time. Only the greedy pig-the one who chases profits without any strategy-loses money all the time. Likewise, the nervous chicken-one who flees the market even with a well-formed strategy as soon as it ticks downward-cannot expect to profit. The concept, at least, that you can profit at least half the time, is fine ... assuming that you are satisfied with just beating 50-50.

Unfortunately, that concept has one major weakness. It would have you accept that you lose money half the time. That's something I find both distasteful and unnecessary. Besides, what's wrong with a bit of greed? Hunger, when properly controlled and channeled, is a fine motivator. So after the bull, the bear, the pig, and the chicken, I would like to introduce a fifth investment creature to our little menagerie: the wolf, Canis lupus, a predator equally competent at catching mice or elk, an animal that will dine with equal fervor on bears, bulls, pigs, and chickens.

To become this kind of market wolf, the first thing you need to do is stop caring-at least morally-whether it's a bull or a bear market. To the predator and trader alike, it's a near-meaningless distinction: Every market has wheels within wheels, upstrokes and downstrokes that offer profit opportunities to the quick and the strong of heart-and to the strong of stomach. This is the principal insight of our Dynamic Market Theory.

After all, who needs a bull market anyway when there's plenty of opportunity to make money all over the world?

GOLDEN JONQUILS

Just a few days prior to the terrorist attacks of September 11, the Dow Jones Industrial Average dropped 200-plus stomach-churning points in only three hours. The Nasdaq, long off its 2000 bubble-market highs, was heading into numbers woefully reminiscent of the early settlement dates of the American continent. Sitting at my desk and following the market carnage on my computer monitor, I leaned back and thought of golden jonquils.

In the Ozarks, hopeful homesteaders used to plant golden jonquil bulbs by their front doors. A century or more after they were planted, some of these flowers still keep appearing each spring. Often, they rise around bare foundation stones deep in a deserted stretch of sky-high oak woods-symbols of peace and hoped-for prosperity that "bloom sunshine yellow against a sea of green."

In Country Living Is Risky Business, author, fencing master, and gentleman farmer Nick Evangelista muses about the shattered dreams and ambitions that are evidenced by these empty, deserted farmsteads deep in the Ozark Mountains:

Where did these people go? Where did their dreams disappear to? What sent them spiraling down to disaster and abandonment? When does a shout of assurance become a hollow cry of enough is enough?

I looked at the Nasdaq back then and I felt an inkling of that pain. Even today, as most U.S. equity indexes are trading well above their post-September 11, 2001, lows, or are even approaching their bubble boom highs, the memory of financial hardships is still evident.

More than four years have passed since the sociopathic attacks on New York City and Washington, D.C., but the economic fallout is still as real as falling concrete, less damaging to human life but just as lethal to perceptions of value.

But mark my words: Even back in 2001, you didn't have to lose money. You didn't even have to give up on high returns. All you needed to know is what to buy, what to sell, and when to take profits.

In September of 2001, the market was providing amazing ultra-short-term profit opportunities. (No one can tell me that you can't make money on 3 percent drops and 2 percent recoveries, even if the indexes end down overall.) With the emphasis shifted to ultra-short-term, this market was a day trader's nirvana. One buying opportunity chased the next. It was as if a scatterbrained store clerk had inadvertently put up the discount sale signs for the dollar store instead of those meant for Bloomingdale's.

But unless you were ready and able to rapidly jump on buying-and profit-taking-opportunities, you might have been better served by watching from the sidelines.

So why do some win where most others lose?

Because those who lose in the market have no idea how the investment world really works. They're still trapped in the nice, cozy idea that markets are about logic, rationality, and analysis.

But think about what the market is telling us right now. The investment world doesn't follow formulas. And it is not for amateurs. In fact, if investing were easy, it wouldn't be fun. There would be no challenge. No excitement.

And no big profits.

The fact is that real investment-the kind that yields profits worth mentioning-can be as unpredictable as a day on the battle- field. The way General George Patton saw it, "War is won by blood and guts alone."

I think Patton would have made a shrewd investor, because playing to win is all about guts. Competitiveness. The timing and nerve to go for the jugular. It's also about hunger ... the hunger to be rich and beat all the other bastards out there-because if you don't, they'll beat you first!

Let me be blunt: Those who are made nervous by crisis and upheaval shouldn't be in the market. Successful investing isn't always pretty. If you win and you make money, it's because the other guy lost. And if he wins, you lose. The rules change fast. But the plunder-the spoils of the investing war-can be huge.

Many American investors have turned their backs on the equity markets, liquidating their portfolios and reinvesting in real estate. (Germany, which had seen the number of households owning stock more than double from 8 percent to almost 19 percent between 1995 and 2001, saw almost all those new investors being shaken out of the market by the end of 2001.) The great majority of U.S. investors still remembers all of the money they've lost, wondering how long it's going to take to make it all back. That's a tall order. Consider that a 25 percent loser requires a 33 percent gainer just to get back to even. And a 50 percent loss demands you double your remaining money to break even. But you can make gains like this with relative ease by putting your money into the right kind of stocks at the right time.

It takes a sturdy disposition not to panic in the face of such prospects. And you may think-rightfully so-that these are the days for dynamic optimism in the face of adversity and a sense of gloom in the market.

THE TRUTH ... VERSUS SMILING LIP SERVICE

To succeed in the fast-moving market, you need to have truth on your side. This is not a mere platitude. My associates and I call ourselves Taipan for a good reason. We don't believe in telling investors what they want to hear, or playing into the way they think things should be. We tell it like it is. That may get a few people hot under those crisp white collars. But let's be serious: a lot of investors lose out because they can't see past the way they want things to be. They need to find-and use-the truth.

Things are rarely what you're told. We're not ashamed to admit that we've always ranked high in insubordination. That's the way things have to be. Realistically, though, you know that all the pessimism and prissy judgments in the world won't help you invest wisely and well.

We've always encouraged our editors and analysts to develop their own ideas rather than slavishly adhere to the curriculum that forms today's bedrock of mainstream analysis. We admit that our approach makes no claim on being complete or generally accepted. Author James Surowiecki wrote:

Human beings don't have complete information. They have private, limited information. It may be valuable information and it may be accurate (or it may be useless and false), but it is always partial. Human beings aren't perfectly rational, either.

Markets aren't rational, because people aren't rational. Accordingly, much of the information the markets generate is at its core the result of compound irrationalities. An extreme example, the "Tulipomania" that gripped Holland in the seventeenth century, makes this point. Tulip bulbs, the story goes, became the mania among not just speculators, but average men and women as well:

The rage for possessing them soon caught the middle classes of society, and merchants and shopkeepers, even of moderate means, began to vie with each other in the rarity of these flowers and the preposterous prices they paid for them.

Indeed, by 1635 people paid as much as 100,000 florins for a tulip bulb. (To put this in perspective, the value of a suit of clothes was about 80 florins.) When the market for tulip bulbs crashed, no one would buy at any price. In hindsight, the irrationality of Tulipomania was apparent-especially to those who had lost money in that market by sheer greed, and to those who had not participated in the bubble out of a sense of morally righteous indignation or inactivity. Both groups were losers: those who had held on to their bulbs as prices crashed, and those who had stood aside as prices were rising. Even so, many investors today make decisions on the same irrational level, and that itself defines the market for what it is, and for how it operates.

The key to overcoming this "market insanity" is to take a step back with rationality and reassess all information you can possibly lay your hands on. Find fresh angles to old solutions. Reevaluate signals and ratios as to their usefulness as indicators. Identify market myths and avoid falling into those thinking patterns. And finally, cautiously begin to test your own market perceptions by paper trading.

MEN (AND WOMEN) OF ACTION

While the Taipan Group was deeply affected by the human tragedies in Manhattan and Washington back in 2001, we remained pragmatic. In his Nicomachean Ethics, the Greek philosopher Aristotle defines the moral man as the man of action. (And while Aristotle himself might be inclined to argue, we extend that definition to women as well.)

Taking action in the case of the 2001 attacks meant doing what was best for our way of life. Paralysis, grief, and mourning were appropriate and understandable responses. So was compassion. But these sentiments typically enforce passivity where the markets are concerned. Not so here at Taipan. The Taipan Group's editors decided to make "Open for Business" the motto of the hour. But let's get this straight: This was not about making a buck off other people's misery. It was about getting back to the basics of a free market society. Within a day after the collapse of the World Trade Center towers, we had organized our "Open for Business" fund drive for the American Red Cross. Within a month, Taipan members all over the world had contributed $40,000 to this effort.

This "Open for Business" philosophy also translates into investment action. In the days that followed the horrid massacre of September 11, 2001, I asked my editors to come up with some plays that you can use to show the world an indomitable free market spirit, something the terrorists don't understand.

It worked. We closed the year 2001 with an average gain of over 26 percent-and a large percentage of these gains was taken straight from our recommendations to investors: to use the epic Dynamic Market opportunity created by September 11.

NEW PARADIGMS

Successful investing invariably depends on adjusting your short-term strategy and taking advantage of the fastest means of delivery to find critical information in as timely a manner as possible.

In the immediate aftermath of the 2001 attacks, we identified what we considered to be valid buying ranges for a bunch of great investments. Because, terror or not, we're not opposed to buying cheap. Our mission is to enable you to prosper now and in your future.

You see, despite the incredible short-term market fluctuations we have experienced in the past few years, the people making a living commenting on what's going on haven't changed one bit. And while the bulls are still holding back, licking the wounds they sustained back in 2000 and 2001, the bears appear to be on a roll.

Half of the bulletins and editorials I read these days bemoan America's rising levels of personal debt. Others never tire of invoking the Bush administration's "twin deficits." Editors, commentators, and pundits build intricate causal strings based on these economic indexes, foreboding strings that inevitably involve bank runs, the collapse of the dollar, and crashing mutual fund and real estate industries-all, of course, to occur within the next few weeks.

I have to confess, sometimes they're very convincing. In fact, I'd be a believer by now if it were not for one simple fact: I've read the same dire predictions from the same editors since at least 1989, then again in 1992, 1995, 1997, and 2000. And I'm still waiting for the other shoe to drop. I am sure I will be waiting for a while.

Why? Personal and public debt levels really have little to do with how the markets work. If the personal savings of an individual in any given industrial nation were an indicator of that market's profit potential, we'd all be lining up outside the Frankfurt, Zurich, and Tokyo stock exchanges.

Oddly enough, these markets move with the same seeming randomness as the U.S. markets, no matter how solid the personal savings rates or local currencies of the respective countries may seem. In fact, many global markets still take their clues from what's happening on the American exchanges, notwithstanding the twin deficits!

BOOM, DOOM, AND GLOOM

The professional doomsday prophets are getting one thing right.

In a market whose mood swings make postpartum depression seem like an evening of Scrabble with your accountant-when even the Dow can gain and lose more than 200 points within a six-hour spell-investors must come to terms with one simple fact: if you want to come out ahead in this market, you need to be mobile, motivated, and disciplined. Maintain a healthy emotional detachment from the stocks you buy and be ready and willing to get rid of them at the drop of a hat.

After all, every 200-point rise and fall spells a double 200-point profit opportunity for those who know where to look-and who have the guts to take profits whenever they can make them.

The message of this book is quite simple:

There is always an opportunity to make exceptional stock market profits independent of where the domestic indexes are headed-as long as you know how to read the signs.

The key to locating these opportunities is to keep your eye on the money. The opportunity to create wealth does not evaporate. It migrates-from the Nasdaq's Internet bubble into real estate, foreign bonds, or emerging markets and back into U.S. stocks.

You have to be selective in your choices and stay out of the way of the lemmings. Most important of all, you have to find a way to hitch your portfolio to some of the most powerful profit engines around.

Over the past two decades, I've sent out millions of annual investment forecast reports that contain a lot of the advice you'll be reading about in this book. And based on those forecasts, I've watched some subscribers to our various Dynamic Market Theory trading services pile up triple-digit profits, and even quadruple-digit profits in some instances-often in a very short time.

(Continues...)

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Excerpted from J. Christop Amberger's Hot Trading Systems by J. Christoph Amberger Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

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Table of Contents

Foreword by Michael Masterson.

Preface.

Acknowledgments.

Introduction: A Visit from the FBI.

Part I: Dynamic Market Theory.

Chapter 1. Markets Rise, Markets Fall – It Matters Not.

Chapter 2. What Exactly Is Value?

Chapter 3. A Story Is Just a Story … Until there’s a Profit.

Part II: Crisis and Opportunity in the Global Markets of 2006 – 2009.

Chapter 4. The Last Phase of the Bubble Market (2006-2009).

Chapter 5. Stagnation and Decline: The Inevitable Irrelevance of the European Union.

Chapter 6. Dragon Out of Fire.

Part III : The Trading Secrets.

Chapter 7. Trading Secret Number One: How to Profit from Cyclicality.

Chapter 8. Trading Secret Number Two: The Perfect Value Trifecta.

Chapter 9. Trading Secret Number Three: Follow the Money!

Chapter 10. Trading Secret Number Four: "Profits at the Speed of News".

Chapter 11. Trading Secret Number Five: Stone-Cold Profit Predator.

Chapter 12. Trading Secret Number Six: ActionPoint Trading.

Chapter 13. Trading Secret Number Seven: Profits from the Red Zones.

Chapter 14. Trading Secret Number Eight:  Playing the “Flying V” Lockup Indicator.

Chapter 15. Trading Secret Number Nine: The Tri-Directional Indicator.

Chapter 16.  Trading Secret Number Ten: Trading the Money-Flow Matrix.

Chapter 17. Trading Secret Number Eleven: Profiting with the WaveStrength Options Trading System.

Chapter 18. Trading Secret Number Twelve: The secret Strategies of CBOE Floor Traders. 

Chapter 19. Trading Secret Number Thirteen: Bryan Bottarelli’s Six Trading Rules.

Conclusion.

Appendix A: The 55 Rules of Trading by Christian DeHaemer.

Appendix B: Options Trading.

Notes.

Glossary.

Selected Bibliography.

Recommended Readings.

Index.

About the Author.