For instance, the Schwager book on Technical Analysis... it's a joke (especially compared to Brooks). A bunch of vague suggestions.
As for Lefevre (Livermore)... great book, but every loser reads it and quotes from it. Great for some trading principles, but nothing specific for new traders that would help them to learn to think about price action.
Larry Williams... now there's a SUPERMAN. Stellar performance in trading contests. At least until they found out he had huge losses in his other account (what he was likely doing is hedging one system against another, and then promoting the one that made large profits).
So yah, junk.
"...the degree to which you think you know, assume you know, or in any way need to know what is going to happen next, is equal to the degree to which you will fail as a trader." - Mark Douglas
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I would add to the choir about Al Brooks. Consider it a 101 course in price action trading and required reading if you imagine a school curriculum in learning to trade. However getting to Al's level trading exactly the way he describes is another story only a few claim to reach. If you want to see how Al trades live, consider joining his live webinar for day or two during a last week of a month. It's pro-rated so you'd only have to pay $5 per # of days to the end of the month.
I'm not so sure about books about Livermore. Do they really describe how he traded? He lost most of his 2 billion (today's dollars) fortune by the time of his demise.
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I've never understood why people give advice if they don't make money themselves. It's pretty pointless to read Brooks if one is going to trade off charts. If one chooses to trade off charts, then it's much better to read charts than b(r)ooks. The false truths of others may lead to ruin...
The only books one needs to read are textbooks on market mechanics, financial theory and statistical methods. Figuring out how to make money is a problem solving exercise that is best left to one's own intellect.
Anyone who doesn't enjoy reading Livemore is not suited for speculation!
Last edited by Lornz; April 22nd, 2012 at 07:22 AM.
Reason: I am, but only sporadically, grammatically deficient
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I fully subscribe to this statement. There is a whole lot of so-called experts spreading their wisdom and selling a lot of advice, including - just naming the good ones
-> Gerald Appel
-> Linda Bradford-Raschke
-> Jake Bernstein
-> Al Brooks
-> Constance Brown
-> John Carter
-> Michael Covel
-> Tom DeMark
-> Dr. Alexander Elder
-> Daryl Guppy
-> Robert C.Miner
-> John Person
-> Larry Pesavento
-> Van K. Tharp
-> Oliver Velez
-> Larry Williams
-> Tom Williams
I have read their books, all of it is relatively easy to digest, gets you acquainted with the language of technical analysis and sounds reasonable.
If something sounds reasonable, it will likely not work ...
Unfortunately, anything that sound reasonable in trading does not work. If a trade feels good, the probability is high that it will become a loser. A trader walks through a forest of Fata Morganas, and the only thing that can save you is either
-> 10,000 hours in front of your trading screen guided by a mentor(you are now a heuristic trader and your brain may have adapted to the task, such as a violin player has retrained a huge area in his brain for moving his fingers)
-> or alternatively a rule-based system with a proven edge
Did I say proven? To prove the edge, you need to be able to evaluate it with statistical methods. To apply the edge, you need tools and - in case that your are not letting run your system automatically - the mindset of a trader.
Focus on Market Mechanisms, Statistics and Psychology
I would not focus on the easy-to-read trading books listed above - you can always use them as a distraction or a motivational read , but look for a thorough knowledge on
-> market mechanisms (start with Barry Johnson: Algorithmic Trading and DMA)
-> statistics (yes, you should work through an undergraduate statistics course)
-> basics about futures (try Schwager on Futures, then John C. Hull on Options, Futures and Other Derivatives)
-> trading psychology (start with one of the books by Brett Steenbarger, such as the Daily Trading Coach or Enhancing Trader Performance)
-> intermarket relationships (John Murphy is an easy read)
You could also subscribe to some of the trading magazines, such as Technical Analysis of Stocks and Commodities or Active Trader.
I am reading them, although at least half of the stuff is just the latest fad and is only printed to lure more people into the trading machine that feeds the professionals.
Yes, motivation is as important as anything else. Here are some more fun reads:
-> Rob Booker: Adventures of a Currency Trader
-> Nicolas Darvas: How I made $ 2,000,000 in the stock market
-> Satyajit Das: Traders, Guns and Money
-> William Falloon: Charlie D.
-> Roger Lowenstein: When Genius failed
-> Charles Mackay: Extraordinary Popular Delusions
-> Sebastian Mallaby: More Money than God
-> Jack Schwager: Market Wizards, New Market Wizards
-> Martin Schwartz : Pit Bull
-> Jillian Tett: Fool's Gold
Just to know what happened to others, who wanted to be traders.
Last edited by Fat Tails; April 22nd, 2012 at 08:21 AM.
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