Über die Autorin bzw. den Autor

Toni Turner is the President of TrendStar Group, Inc., and the bestselling author of "A Beginner's Guide to Day Trading Online," "A Beginner's Guide to Short-Term Trading," and "Short-Term Trading in the New Stock Market."

Gordon Scott, CMT, is a Chartered Market Technician (CMT) who has coached hundreds of students on methods designed to improve their trading and investing activities.

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Invest to Win

McGraw-Hill Companies, Inc.

Contents

Chapter One

—Toni—

Chances are you're a reasonably bright person, possibly between the ages of 25 and 80. You've probably worked at one job or another for most of your life. And, through good sense or good fortune, you have gathered enough money to fund an investment account.

You may have a stockbroker you like and trust, but you want to understand how the stock market maneuvers, for your own peace of mind. Or, maybe you have been investing on your own for a few years, but would like to take a more hands-on approach and drive your capital gains to a higher level. Finally, perhaps you are brand new to the stock market, a bit overwhelmed by the size of it all, and want a guiding hand to help lead you on the world's most exciting street, Wall Street.

So ... where do you start? How do you choose the right stocks, in the right sectors, at the right time? When do you buy? How do you manage the position so you don't lose your shirt or blouse? More important, how do you know when to sell, either to protect your capital or to take profits off the table?

That, of course, is what this entire book is about. Gordon and I have been engineering our way through this challenge for years now. Separately and as a team, we've taught thousands of stock market traders and investors how to take profits from the market.

First, we've noted that the technology advances of the last two decades have empowered individual investors like never before. In the "old days," let's say before the early 1990s, information about publicly-held companies that issued common shares to their stock holders, was held (it seemed) in sacred vaults by stiffly-suited vault keepers known as stockbrokers. These bespectacled men and women sat in their mahogany offices and pushed thick reports with shiny covers across their desks to us—their clients.

"Take this quarterly report home and read it," the broker would say, peering at us down his nose through his bifocals. "If you like the numbers, we'll purchase three hundred (or three thousand, depending on our account size) shares for your account."

"Very impressive," we murmur, staring at the shiny cover and leafing through the binder. Once home, we open the report and scan through the first two pages. Sleek. The pictures of the company's stalwart headquarters and dignified CEO look reassuring. After that, though, the printed paragraphs morph into convoluted financial jargon, punctuated with long rows of mind-numbing numbers. Good grief. Good cure for insomnia, we think. We slap the binder closed and place it on our desk, making a mental note to read it thoroughly ... soon.

A few days later, our broker calls. "How about that company we talked about? Riveting quarterly report, wasn't it? What do you say? Shall we add three hundred shares to your portfolio?"

"Uh, looks like a great company," we agree lamely, eyeing the unread report on our desk. "Sure. OK. Let's go for it."

A couple of days later, the stock-purchase confirmation arrives in the mail. We note with some satisfaction that we own three-hundred shares of the shiny stock. Then our gaze drifts to the commission—$252.00. Geez. That comes to about two percent of the purchase price! We file the statement in a desk drawer, blow out a breath, and walk away. The doggoned stock better move higher.

Those days are over. Freed from the once-hallowed halls of doughty stock brokerage firms and their hefty commissions, investors have been liberated by computers and the ever-present, content-rich Internet. We are the "vault keepers" now, and we have quarterly reports (should we ever really want to read them) as close as our keyboards.

Since by law, stock transactions have to be executed through a registered broker, we can't ignore stockbrokers completely. (The truth is, most of them are knowledgeable professionals who give good advice.) But by now, most of us have opened investing accounts at an online discount broker.

Many of you make your own investing decisions. You rely on your own research, and your own opinions. And, you hold the power to buy and sell stocks via computer or wireless device, with a keystroke, at your convenience, and often paying only single-digit commissions.

You Hold the Power

Say you've got a particular stock you want to research. Go online to your broker's website—or one of any number of other financial sites—and you can journey through the company's fundamentals, such as P/E (price-to-earnings) ratio, earnings per share, graphs of quarterly earnings growth, annual dividend (if paid), and fundamental comparisons to competing companies. (If those terms make you scratch your head, don't worry. They're simpler than they sound, and you'll soon understand them.)

You can also spend a few moments scanning information on the sector where your stock resides. Along with the information provided in later chapters, you can decide if this is—or is not—a good time to enter that arena.

Best of all, once online, you can access historical price charts of your target stock. In the same way that "If you know where a person's been, you can tell where he or she is going," price charts show, at a single glance, the past performance of the stock as relates to price. And, that performance, past and present, can broadcast signals as to the stock's price strength.

News in a New York Minute

Of course, whether we're active investors or not, the most prominent material we receive via satellite every single minute of every day is the news. The evolution of wireless networks and social media has accelerated news delivery to near-lightning speed. On a global basis, news arrives as happens, or seconds afterwards. We are instantly informed about uprisings and wars, storms, geopolitical events, and financial troubles the world over. To a greater or lesser degree, all of these events can affect the prices of stocks.

Does that mean we panic and dump all our portfolio's positions the same day a chunk of disruptive news blindsides us? Absolutely not. But as wise investors, we can learn and apply techniques that guide us to take prudent actions. Then, we know which news to let pass ... and which news to investigate. We know when to hold our positions ... and when to take action.

The Global Financial Markets: A Community Affair

From Sydney to Shanghai, from Berlin, to London, to New York, each weekday the sun rises and sets on our global community of financial markets.

Every trading day, the world over, traders and investors partake of the sumptuous buffet offered by the global markets. Indeed, we could say the smorgasbords of stocks, bonds, and other financial assets on display offer the most appealing—and exciting—goods in the world.

Why are they so attractive? Because it is in these settings that you can trade your dollars for shares (units of ownership) of the largest, most dynamic companies on earth. As these companies expand their businesses and become worth more, your shares of ownership increase in worth.

Want to sell your shares? If your stock has risen in value since you first purchased it, you...