Trading Against the Crowd: Profiting from Fear and Greed in Stock, Futures and Options Markets
John F. Summa
March 25, 2005
Efficient market theorists contend that markets are random and thus not predictable. With the publication of Trading Against the Crowd, however, noted author, economist, and professional trader John Summa convincingly shows that investor sentiment can be incorporated into profitable stock and stock market trading systems. In this ground-breaking book, Summa explains how to use popular gauges of crowd psychology, such as put/call ratios, option-implied volatility, short sales, investor surveys, and advisory opinion to trade against, or contrary to, prevailing market sentiment.
He also makes compelling arguments against the efficient markets hypothesis with the presentation of his own quantitative weekly bear and bull news-flow intensity indices, which he builds from news scans. This data series, and other popular measures of crowd psychology, are processed through custom indicators that are programmed into profitable trading systems, such as Squeeze Play I & II, Tsunami Sentiment Wave, and the Fourth Estate. Trading Against the Crowd is the first book to provide a comprehensive assessment of investor crowd psychology, offering valuable market timing tools and trading techniques. Many of today's professional money managers rely on investor sentiment for improved market timing. They know that at extremes of market sentiment, markets tend to be the most predictable.
Trading Against the Crowd shows how you can begin to profit from these short- to- medium-term sentiment waves generated by the actions of the speculative crowd. Put into practice powerful sentiment data using thoroughly back-tested trading systems, and rise above the herd mentality of the investor crowd, where potentially large profits await.
JOHN F. SUMMA operates his own commodity pool and managed account program. He is an NFA-registered commodity trading advisor (CTA) and licensed, series-3 options broker. In 1997, John founded one of the first option advisory Web sites, OptionsNerd.com. More recently he established a new trading advisory site, TradingAgainstTheCrowd.com. He is the coauthor of Options on Futures: New Trading Strategies and Options on Futures Workbook, both published by Wiley. John regularly writes for Investopedia.com and has published his trading ideas in Technical Analysis of Stocks & Commodities magazine and Futures magazine. A former professional skier, John also holds a master�s degree in economics from the prestigious Graduate Faculty at New School University in New York City.