In The Trading Cockpit with the O'Neil Disciples: Strategies that Made Us 18,000% in the Stock Market from Wiley
This book is a little to advanced for beginners IMO but what an awesome book.
I recommend the hardcopy book over the eBook because an important part of the learning process in this book is that you look at a blank chart and then mark it up with what you learned in this book. On the next page is the authors' markups and so you can see if you learned how to recognize the pocket pivots and buyable gap ups.
The authors say this about why they created the pocket pivots and buyable gap ups stock trading strategies.
So it was in mid-2005 that we began seeking answers to the basic conundrum dictated by the fact that we were no longer in the smooth, parabolic trending market environments of the 1900s.
Thus began the process of seeking a solution to this conundrum by looking for alternative methods to buying base breakouts in stocks that were becoming obvious to the crowd. Despite the sideways, chopy markets of 2004-2005, what does not kill you can make you stronger, and the pocket pivot and buyable gap-up concepts were born, concepts created by Chis Kacher (a.k.a Dr K) in 2005 as a result of these challenging markets that were rarely seen in the 1990s.
One major advantage of using pocket pivots is that it affords one an early entry point within the base of a potential leading stock before it breaks out and hence helps to lower the average cost as you first begin buying and building an initial position in the stock. The lower cost basis gained as a result of getting an early start in buying the stock also translates into a smaller percentage loss if the stock ends up failing on the actual base breakout.
Praise for In the Trading Cockpit . . .
"Morales and Kacher want you to see an alternative to popular and traditional dead end strategies (i.e., buy and hope). Absorb the insights of In the Trading Cockpit with the O'Neil Disciples and put yourself in position to think differently—and profit."
— Michael W. Covel, Bestselling author of Trend Following and The Complete TurtleTrader; President, Trend Following
Your hands-on guide to mastering powerful trading methods inspired by stock market legend William O'Neil
Written by two former William O'Neil + Co. employees who have spent years building upon the lessons they learned working alongside the master, this book delivers powerful trading techniques based on the O'Neil model that you can put to work in your own portfolio, right away.
The follow-up to their bestselling Trade Like an O'Neil Disciple, In the Trading Cockpit with the O'Neil Disciples goes beyond the descriptive narrative of the former book to provide you with step-by-step guidance and all the practice you need to quickly master those tried-and-true methods and make them an integral part of your trading system.
- Clear, step-by-step explanations of powerful new trading strategies, including techniques for buying pocket pivots and gap-ups
- Hundreds of annotated examples—with charts—of real-life trades from the authors' own experiences with detailed analysis of what worked, what didn't, and why
- Set ups with buy, add, and sell points for both winning and losing scenarios
- Dozens of skill-building exercises that help you quickly master the techniques described
- Tried-and-true stock shorting techniques based on William O'Neil's methods
Written by established experts Gil Morales and Dr. Chris Kacher, In the Trading Cockpit with the O'Neil Disciples is an indispensable guide to mastering proven strategies for trading stocks for record profits in every market environment.
Q & A with Authors Gil Morales and Chris Kacher
The new book is in fact a logical follow-up to the publication of our first book as well as the simultaneous launching of our website back in August 2010. Since then, both the first book and the website have brought us into contact with thousands of investors who, with their equally numerous questions, have provided us with interesting and meaningful insight into how the information and methods we cover in our first book and our website is processed and understood. In other words, these questions have helped us to understand what investors have difficulty understanding, and this new book largely addresses those issues. As well, we delve into the nitty-gritty of utilizing our methods with discussions and introspective quizzes regarding one's trading psychology, detailed trading simulations, and the entire issue of exactly where the "rubber meets the road" when it comes to using our enhanced O'Neil-style trading and investing techniques.What are some of William J. O'Neil's trading techniques and what makes them a timeless ongoing winning strategy?
While the times may change, human psychology does not, and William J. O'Neil built upon the work of his predecessors such as Jesse Livermore, Nicholas Darvas, Richard Wyckoff and others to originate his system of finding and investing in entrepreneurial-oriented growth stocks. The essence of O'Neil-style investing is the search for innovative companies creating new products and services that drive the leading edge of any economic growth phase, such as former and present market leaders like Apple (AAPL) in the New Millennium; America Online (AOL) in the late 1990s; Cisco Systems (CSCO) throughout the 1990s; and Microsoft (MSFT), Walmart (WMT), and Home Depot (HD) in the 1980s.
It is companies like these during their high growth periods that are the de facto lifeblood of the world economy and offer some of the most compelling profit opportunities in the stock market. O'Neil essentially codified the fundamental and technical characteristics of these stocks from a historical perspective that is then utilized as a real-time template for finding similar leaders in the present.How do you incorporate your own trading strategies with those of O'Neil?
Our trading strategies are intended to enhance one's use of the O'Neil method, not replace it. Based on our experience as former portfolio managers for William J. O'Neil + Company and investors who have used his methods for well over two decades, we found that the main difficulty for most investors is not in being able to find a potentially big, winning stock, but in understanding proper entry points and, even more importantly, how to handle a big, winning stock once you have it in your portfolio. By overlaying the O'Neil system with additional buy points like "pocket pivots" and "buyable gap-ups," we arm readers with practical tools that not only identify concrete buy points, both at the outset of a new trend and in the middle of an existing trend in a leading stock, but also provide early and alternative entry/buy points in potential leading stocks in an era where the "crowd" sees obvious technical buy signals such as range or base breakouts.What is the Seven-Week Rule for when to sell?
The Seven-Week Rule is a practical position-management system that identifies the use of the 10-day and 50-day moving averages at appropriate junctures within a leading stock's overall price move, providing concrete stop-loss points along the way that help investors preserve gains. Our studies show that leading stocks will tend to follow either the 10-day or 50-day moving average, and that they can shift from following one to the other at various points during an intermediate-term upside price trend. Using the Seven-Week Rule to determine which moving average is used at which point in combination with pocket pivots and buyable gap-ups provides the investor with a practical system for buying, building, handling and selling positions in big, winning stocks.What key technical signals can be used today to analyze stock movements and predict the price trends of an array of leading stocks?
We use pocket pivots and buyable gap-ups not only as buy signals, but also as a feedback mechanism for assessing the market's health and bull market potential. In strong, constructive market environments, leading stocks will often show a number of such buy points and provide investors with concrete, ready buy signals upon which to act in real-time. In a healthy market environment, upside follow-through will generally be seen following such buy signals. In a weaker and less trending market environment such as we believe we are in today, these buy points will tend to fail more often or show little upside progress after the actual signal. In this case, such a "feedback loop" also serves an extremely useful purpose in telling us that the market environment is a dicey and perhaps dangerous proposition where the odds of upside success are not in our favor.