Hopscotch...or why children are the better day traders
SECOND EDITION - Now Including Futures & Options

by Matthias Thoma

188 pages; perfect bound; catalogue #03-0620; ISBN 1-4120-0251-6; US$17.95 (Can$19.95)

Hopscotch... or why children are better day traders

- stock trading can be as simple as playing hopscotch in the driveway-or is it? -

Sample Excerpts or Table of Contents Index Prologue Chapters: I How could so many people lose money? II Why are professionals more successful? III Why did the individual traders return to their home offices and how are they doing now? IV Why did the bubble burst? V The day trading industry today VI Is there a Holy Grail of day trading? VII Is day trading something I can do? VIII What kind of trading styles are there? IX Different trading strategies X The most important rules to become a successful trader XI The Hopscotch Strategy Final Thoughts Appendix 1. Technical Analysis 2. Glossary From Chapter one: Obviously the brokers and the electronic exchanges did not complain. But if so many people lost money; why did they lose? How come no one found out about it for several years? And why did these people not simply stop trading before it was too late? There are several explanations. Any profession, plumbing, accounting or brokerage is subject to the same equation. When starting out as a new business 75%+ of these first time entrepreneurs fail in the first twelve months and have to fold their business. These numbers apply to professionals, now imagine what happens if hundreds of untrained people attempt to pursue a new business. Just by these standards most individuals were doomed to lose most or all of their funds in the attempt to become rich as a day trader. From Chapter two: Why are the professionals more successful? Daa...They are professionals. Just like we expect top athletes in Basketball or Football to outperform weekend players we should not be surprised to find that Wall Street professionals are at the top of the pile when it comes to extracting profits from the stock market. Professionals enjoy many advantages over individual day traders. First of all they receive a proper education before they are allowed anywhere near a trading post. For starters there are the SEC licenses every professional trader is required to pass. The reading material to acquire these licenses already provides a good basic understanding of the industry terminology and the meaning of these terms. In addition many of the new professionals have attended industry related post grad education in business and or management studies. Now all of the above are things that you as an individual are able to obtain yourself. The course material for the SEC tests is widely available. In case you did not enjoy any business studies, you can purchase specific books about economy, market or stock analysis. With some hard work you are able to level the playing field up to this point, but from... From Chapter 4: Another now well documented scheme was the rigging of IPOs. In the late 90s everyone was desperate to get in on the action. But there were only so many shares to go around for an IPO. In addition the firms entrusted with placing the IPO wanted to ensure that it will be a success, which in return would bring new companies to the table and with it taking those public for a hefty commission. These two facts made a terrible combination. The underwriters would offer certain clients preferred treatment when it came to allocation of IPO shares without any lock-up period. In return these clients had to promise to buy deeper into the stock if it hit a predetermined price within a specified time period. Of course right after fulfilling this commitment the clients were free to dump all of their shares at any time. LetÕs say Newco was scheduled to be underwritten at 10$ and of course the book was over signed by 20 to 1 for example. The underwriter already knew, that NewcoÕs opening price would be probably closer to 40$ once free trading starts. So he offers his larger clients a deal. ÒYou get a larger portion of shares for the pre-opening price of 10$ each, but in return you have to promise to purchase X thousand shares once the stock crossed 20, then 30, then 40, then 50$. After that you are free to sell all of your shares at any time.Ó Of course for these clients it was a fire-sure winner. While they might have taken a slight hit on the last thousand shares they bought over 50$, they obviously made a humungous profit on the initial partition of IPO shares. So they agreed and with each agreement they ensured that they will be cut in when the next IPO comes along. The average investor who was not this lucky had to get in on the open market for what we now know was oftentimes an artificially inflated, rigged price. Eventually of course somebody blew the whistle. And since the market is on its steady way down, IPOs are few and far between anyways. From Chapter eleven: After utilizing most of the strategies mentioned in this book, I noticed that most of them require either a specific talent or that the strategies can only be applied successfully during very specific market conditions. This was a problem. I needed a strategy that would be easy to apply every day and offer plenty of trading opportunities at the same time. After all, this is my profession and I need to have at least a realistic chance of bringing home the bacon. You will find that the Hopscotch strategy incorporates various aspects of other more complex strategies while maintaining simplicity and avoiding contradictions that usually occur between the different strategies. I want to point out however that I can not claim the genius of inventing the basic outlines for this strategy. I merely tweaked some of the rules so they would be more applicable to the average individual trader. The praise for actual strategy belongs to the professional traders and institutions who have utilized similar techniques successfully for many years now, only on a much larger scale. Catalogue Information
National Library of Canada Cataloguing in Publication Thoma, Matthias, 1968- Hopscotch-- or why children are the better day traders / Matthias Thoma. ISBN 1-4120-0251-6 1. Investments. 2. Finance, Personal. I. Title HG4521.T46 2003 332.024'01 C2003-902176-9