New Trading Systems and Methods, Fourth Edition

Preface

It's been only six years since the publication of the third edition but the market seems much different, and the experiences of the investors and traders who have used the market have been intense. We've seen the end of an incredible bull market in stocks that had everyone believing that 20% returns were to be expected; we've seen the Nasdaq index lose over 80% of its value. We experienced 9/11, a date not to be forgotten, the invasion of both Afghanistan and Iraq, and born-again terrorism. Everyday life has changed, and it is reflected in the markets.

Add to that the increasing advances in technology, communications that continue to make the world smaller, new trading vehicles—such as index futures, exchange traded funds (ETFs), and sector indices—as well as a bombardment of information through financial networks such as CNBC and Bloomberg. We also have seen a structural change in the way prices move. What used to work may not work now. Individual stocks may now be following the index, instead of creating it. Is it a new paradigm? Perhaps it is.

Now with Equities

Since its first publication, Trading Systems and Methods has focused its attention on futures markets. Most of the well-known systems were created for these markets and migrated to equities. Over the years there has been a shift in this trend so that both futures and stocks now share techniques. Credit must be given to the incredible bull market of the 1990s for attracting large numbers of systematic daytraders ...