Wednesday, July 27, 2011

Book Review: 40 Actionable Trade Setups From Real Market Pros- The StockTwits Edge



This is an unusual book: in a true Twitter spirit, it is crowdsourced from various Twitter/StockTwits members. This "portfolio" approach is both a strength and a weakness: while there is a good variety of approaches described, some of the authors are not natural writers. On the positive side, the chapters are relatively short and any one that is a drag can be skipped over.

After reading the intro, I thought that the book would be a bit more balanced between various investing methods: it is not. Various momentum trading strategies (broadly speaking) are over-represented (probably more than half of the book) while others (options trading, value) get some space but it is pretty far from even. The final part of the book, The Art of Trading, is a catch-all for a few non-specific essays, some of which I found very interesting. Also of note, some chapters are parsimonious with their insights but very generous with pushing certain subscription products; other authors spent a bit too much time discussing their personal backgrounds. Finally, I was very surprised to see that Joe Fahmy was not in the book.

The sections within the book are: trend following, value, day trading, swing trading (longest), options, forex (shortest) and "the art of". I think an "average" investors would benefit from how various market participants think and act, while an "average" trader would find a good number (less than the promised 40) of set-ups for different markets and timeframes.

My favorite chapters- without giving away the store- were:
Value: Michael Bigger looking at CROX/fallen angels; Eddy Elfenbein looking at Aflac/quality
Swing: "ChessNWine" on trading break-outs from bases; Ivanhoff/Stocktwits50 has a thoughtful chapter on momentum
Options: Joe Kunkle has a good multi-factor approach (market sentiment, technicals, fundamentals) combined with spotting unusual options activity
The Art Of: well-known bloggers Greg McDonald and Josh Brown have good pieces, while Charles Kirk has three pages on insights from years of mentoring traders (might well be extended to "long term" investors, many similar issues pop up).

Net-net, there is something for everyone in this book but the slant is towards momentum traders. This is a natural offshoot of Twitter (and the smaller group, StockTwits, which sourced the book) being very trading oriented. May be the next book can be targeted towards "long form" investors.

Full disclosure: I received a free copy of the book from Ivanhoff, one of the editors and authors

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