The Insider Edge: How to Follow the Insiders for Windfall Profits

Praise for The Insider Edge

"Guy Cohen′s work confirms that the observation of price and volume action alone is all that is necessary for investment success. Here he creatively expands on this essential investment principle by seeking an edge through the incorporation of price and volume information inherent in options transaction data, namely trading volume and open interest, in conjunction with favorable technical patterns and trends that are identifiable in the underlying stocks. The end result is an inspiring, concrete, and elegant system that investors can both learn from and readily employ in their own trading."
GIL MORALES, coauthor of Trade Like an O′Neil Disciple: How We Made 18,000% in the Stock Market and co–managing director of VirtueofSelfishInvesting.com

"The Insider Edge is a new twist to discovering price activity that avid traders are sure to enjoy."
LARRY WILLIAMS, trader

"Guy Cohen developed the proprietary Options Volatility Indicator (OVI) to help confirm chart pattern setups. The Insider Edge explores that marriage of indicator and patterns with numerous examples followed by trading plans to manage those trades. If you are having problems getting chart patterns to work, perhaps the OVI can help."
THOMAS BULKOWSKI, author of the bestselling Encyclopedia of Chart Patterns, Second Edition, and owner of ThePatternSite.com

Preface vii

Acknowledgments xiii

Introduction 1

March 8, 2008 3

March 2008 5

March 2009 6

April 26, 2010 7

March 2011 8

Summer 2011 9

September 7, 2011 10

Informed Trading and the OVI 11

The Insider s Rationale 12

Trading Breakouts 13

CHAPTER 1 The Most Popular Chart Patterns: Why Chart Patterns Are So Important 15

Price Bars 16

Support and Resistance 20

Trends 30

Flag Patterns and Consolidations 33

Head and Shoulders 43

Indicators 48

Learning Points 51

CHAPTER 2 The OVI: Guide to the Insiders:

Introduction to the OVI 53

What Is the OVI? 59

When to Use the OVI and When Not to Use It 64

The OVI with Stocks 78

Learning Points 105

CHAPTER 3 Flags and Channel Breakouts in

Detail: Focusing on the Patterns

That Work Best with the OVI 109

Bull Flags 110

Bear Flags 118

Flags with a Strong OVI Signal 127

Channel Breakouts 128

Setting the First Profit Target 134

Learning Points 146

CHAPTER 4 The Trading Plan: The Complete

Trading Plan 151

Order Types 153

The Trading Plan 155

Learning Points 214

CHAPTER 5 Putting It All Together 217

Summary of the OVI Trading Method 219

A Few More Examples 221

Action Steps 226

Summary of Tools for You to Use 239

Take the Next Step Now! 240

About the Author 241

Index 243

An innovator in financial trading, Guy Cohen is the creator and originator of the unique OVI Indicator, FlagTrader, and OptionEasy, among other trading tools. Guy is also an established bestselling author, commentator, and entertaining speaker on trading and the financial markets.

Guy specializes in trading stocks and options, with his hallmark user–friendly approach and liberal use of illustrations. His published work is complemented by pioneering breakthroughs in the areas of trading and technical indicators, especially the OVI. With Guy′s market–tested innovations, you will find proven techniques to succeed, complemented by industry–leading customer service.

Guy earned an MBA in finance from Cass Business School, City University London.