Book suggestions please?

If you don't know where to start, start here! Don't be afraid to ask questions.

Moderator: moderators

User avatar
newschool
rank: 150+ posts
rank: 150+ posts
Posts: 489
Joined: Fri Aug 21, 2009 2:26 am
Reputation: 0
Gender: Male

Postby newschool » Thu Dec 24, 2009 3:04 am

Hey PTG,
I'm reading the P.O.P at the moment, it is very interesting and seems to offer a more advanced and deep point-of-view.
In fact it coincide with my present thoughts after many mistakes as a trader. I was already leaning towards the First Rule for example, with my "breakeven" strategy. I also believe in the goodness of momentum, to get away fast from the red trade.

Please add www.kreslik.com to your ad blocker white list.
Thank you for your support.

User avatar
TheRumpledOne
rank: 10000+ posts
rank: 10000+ posts
Posts: 11404
Joined: Sun May 14, 2006 9:31 pm
Reputation: 45
Location: Oregon
Real name: Avery T. Horton, Jr.
Gender: None specified
Contact:

Postby TheRumpledOne » Fri Dec 25, 2009 5:17 am

noone22 wrote:To understand something important from "Trading in the zone"
(I mean - really understand) might take a while.
I've tried to read this book myself twice & still cannot finish.

"Market wizards" and
"New market wizards"
by J Schwager

could suit someone better,
because they have some very good & clear
understandable examples & conclusions.



This is an excerpt from Trading in the Zone by top trading pyschologist, Mark Schwager, who's one of the best in the business. Most traders might be skeptical about market pyschologists by I still believe they have lots to contribute in the trading pyschology realm. Here are his views:



MARKETS MOST FUNDAMENTAL

CHARACTERISTIC

(IT CAN EXPRESS ITSELF IN AN ALMOST INFINITE

COMBINATION OF WAYS )

The market can do virtually anything at any time. This seems obvious

enough, especially for anybody who has experienced a market that

has displayed erratic and volatile price swings. The problem is that all

of us have the tendency to take this characteristic for granted, in ways

that cause us to make the most fundamental trading errors over and

over again. The fact is that if traders really believed that anything

could happen at any time, there would be considerably fewer losers

and more consistent winners.

How do we know that virtually anything can happen? This fact

is easy to establish. All we have to do is dissect the market into its

component parts and look at how the parts operate. The most fundamental

component of any market is its traders. Individual traders act

as a force on prices, making them move by either bidding a price up

or offering it lower.

Why do traders bid a price up or offer it lower? To answer this

question we have to establish the reasons why people trade. There

are many reasons and purposes behind a person s motivation to trade

in any given market. However, for the purposes of this illustration, we

don't have to know all the underlying reasons that compel any individual

trader to act because ultimately they all boil down to one reason

and one purpose: to make money.

We know this because there are only two things a trader can do (buy and sell) and there are only two possible outcomes for every trade (profit or loss).

Therefore, I think we can safely assume that regardless of one's

reasons for trading, the bottom line is that everyone is looking for the

same outcome: Profits. And there are only two ways to create those

profits: Either buy low and sell high, or sell high and buy low.

If we

assume that everyone wants to make money, then there's only one

reason why any trader would bid a price up to the next highest level:

because he believes he can sell whatever he's buying at a higher price

at some point in the future. The same is true for the trader who's willing

to sell something at a price that is less than the last posted price

(offer a market lower). He does it because he believes he can buy

back whatever he's selling at a lower price at some point in the future.

The underlying dynamics of market behavior are quite simple.

Only three primary forces exist in any market: traders who believe

the price is low, traders who believe the price is high, and traders who

are watching and waiting to make up their minds about whether the

price is low or high.

Technically, the third group constitutes a potential

force. The reasons that support any given traders belief that

something is high or low are usually irrelevant, because most people

who trade act in an undisciplined, unorganized, haphazard, and ran-dom manner. So, their reasons wouldn't necessarily help anyone gain

a better understanding of what is going on.

But, understanding what's going on isn't that difficult, if you

remember that all price movement or lack of movement is a function

of the relative balance or imbalance between two primary forces:

traders who believe the price is going up, and traders who believe the

price is going down. If there's balance between the two groups, prices

will stagnate, because each side will absorb the force of the other

side's actions. If there is an imbalance, prices will move in the direction

of the greater force, or the traders who have the stronger convictions

in their beliefs about in what direction the price is going.

Now, I want you to ask yourself, what's going to stop virtually

anything from happening at any time, other than exchange-imposed

limits on price movement. There's nothing to stop the price of an

issue from going as high or low as whatever some trader in the world

believes is possible?if, of course, the trader is willing to act on that

belief. So the range of the market's behavior in its collective form is

limited only by the most extreme beliefs about what is high and what

is low held by any given individual participating in that market. I

think the implications are self-evident: There can be an extreme

diversity of beliefs present in any given market in any given moment,

making virtually anything possible.

When we look at the market from this perspective, it's easy to

see that every potential trader who is willing to express his belief

about the future becomes a market variable. On a more personal

level, this means that it only takes one other trader, anywhere in the

world, to negate the positive potential of your trade. Put another way,

it takes only one other trader to negate what you believe about what

is high or what is low. That's all, only one!

The point is that from our own individual perspective as

observers of the market, anything can happen, and it takes only one

trader to do it. This is the hard, cold reality of trading that only the very

best traders have embraced and accepted with no internal conflict.

How do I know this? Because only the best traders consistently predefine

their risks before entering a trade. Only the best traders cut

their losses without reservation or hesitation when the market tells

them the trade isn't working. And only the best traders have an organized,

systematic, money-management regimen for taking profits when

the market goes in the direction of their trade.

Not predefining your risk, not cutting your losses, or not systematically

taking profits are three of the most common?and usually the

most costly?trading errors you can make. Only the best traders have

eliminated these errors from their trading. At some point in their

careers, they learned to believe without a shred of doubt that anything

can happen, and to always account for what they don't know, for the

unexpected.

The

typical trader doesn't predefine his risk, cut his losses, or systematically

take profits because the typical trader doesn't believe it's necessary.

The only reason why he would believe it isn't necessary is that

he believes he already knows what's going to happen next, based on

what he perceives is happening in any given "now moment." If he

already knows, then there's really no reason to adhere to these principles.

Believing, assuming, or thinking that "he knows" will be the

cause of virtually eveiy trading error he has the potential to make

(with the exception of those errors that are the result of not believing

that he deserves the money).

What the typical trader doesn't realize is that he needs an inner

mechanism, in the form of some powerful beliefs, that virtually compels

him to perceive the market from a perspective that is always

expanding with greater and greater degrees of clarity, and also compels

him always act appropriately, given the psychological conditions

and the nature of price movement. The most effective and functional

trading belief that he can acquire is "anything can happen."
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!

Please do NOT PM me with trading or coding questions, post them in a thread.

User avatar
TheRumpledOne
rank: 10000+ posts
rank: 10000+ posts
Posts: 11404
Joined: Sun May 14, 2006 9:31 pm
Reputation: 45
Location: Oregon
Real name: Avery T. Horton, Jr.
Gender: None specified
Contact:

Postby TheRumpledOne » Fri Dec 25, 2009 5:46 am

=======================================================================
from THE TRADING ZONE, Mark Douglas

page 121

1) Anything can happen

2) You don't need to know what is going to happen next in order to make money.

3) There is a random distribution between the wins and losses for any given set of variables that define an edge.

4) An edge is nothing more than an indication of a higher probability of one thing happining over another.

5) Every moment in the market is unique.

page 185

I AM A CONSISTENT WINNER BECAUSE:

1) I objectively indentify my edges.

2) I predefine the risk of every trade.

3) I completely accept the risk or I am willing to let go of the trade.

4) I act on my edges without reservation or hesitation.

5) I pay myself as the market makes money available to me.

6) I continually monitor my susceptibility for making errors.

7) I understand the absolute necessity of these principles of consistent success and, therefore, I never violate them.


=====================


"To my knowledge, no trade has a guaranteed outcome; therefore, the possibility of being wrong and losing money is always present."

"While this may sound complicated, it all boils down to learning to believe that: (1) you don't need to know what's going to happen next to make money; (2) anything can happen; and (3) every moment is unique, meaning every edge and outcome is truly a unique experience. The trade either works or it doesn't."

=====================

If you understand that the reason(s) you enter a trade have no effect on the outcome of the trade then you understand the essence of trading.
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!



Please do NOT PM me with trading or coding questions, post them in a thread.

rrobin
rank: 50+ posts
rank: 50+ posts
Posts: 112
Joined: Fri May 19, 2006 11:09 am
Reputation: 0
Location: Cedar Creek Lake, Texas
Gender: Male

Postby rrobin » Fri Dec 25, 2009 12:17 pm

TRO

Thank you for the last two posts and all of your generious deeds.
You are a Santa every day.

rr

User avatar
PTG
rank: 500+ posts
rank: 500+ posts
Posts: 645
Joined: Thu Jan 08, 2009 2:24 pm
Reputation: 2
Gender: Male
Contact:

Postby PTG » Fri Dec 25, 2009 12:22 pm

newschool wrote:Hey PTG,
I'm reading the P.O.P at the moment, it is very interesting and seems to offer a more advanced and deep point-of-view.
In fact it coincide with my present thoughts after many mistakes as a trader. I was already leaning towards the First Rule for example, with my "breakeven" strategy. I also believe in the goodness of momentum, to get away fast from the red trade.


Haven't finished it completely myself however I also find it compatible with TRO's post of Schwager and Douglas above. Understanding this stuff and making it part of yourself by integrating it in the trading plan and executing it to the letter is of utmost importance in order to not be part of the 95% group of traders who bleed themselves dry financially. Good stuff, this.
This is my new signature: "new signature".

Please add www.kreslik.com to your ad blocker white list.
Thank you for your support.

User avatar
noushina
rank: 50+ posts
rank: 50+ posts
Posts: 147
Joined: Fri Sep 25, 2009 10:50 pm
Reputation: 0
Location: Fukushima Japan
Gender: None specified

Postby noushina » Fri Dec 25, 2009 5:14 pm

Thanks. Now printed and taped on the wall above the monitor. Book now in my kindle.

TheRumpledOne wrote:=======================================================================
from THE TRADING ZONE, Mark Douglas

page 121

1) Anything can happen

2) You don't need to know what is going to happen next in order to make money.

3) There is a random distribution between the wins and losses for any given set of variables that define an edge.

4) An edge is nothing more than an indication of a higher probability of one thing happining over another.

5) Every moment in the market is unique.

page 185

I AM A CONSISTENT WINNER BECAUSE:

1) I objectively indentify my edges.

2) I predefine the risk of every trade.

3) I completely accept the risk or I am willing to let go of the trade.

4) I act on my edges without reservation or hesitation.

5) I pay myself as the market makes money available to me.

6) I continually monitor my susceptibility for making errors.

7) I understand the absolute necessity of these principles of consistent success and, therefore, I never violate them.


=====================


"To my knowledge, no trade has a guaranteed outcome; therefore, the possibility of being wrong and losing money is always present."

"While this may sound complicated, it all boils down to learning to believe that: (1) you don't need to know what's going to happen next to make money; (2) anything can happen; and (3) every moment is unique, meaning every edge and outcome is truly a unique experience. The trade either works or it doesn't."

=====================

If you understand that the reason(s) you enter a trade have no effect on the outcome of the trade then you understand the essence of trading.

User avatar
kc8flq
rank: <50 posts
rank: <50 posts
Posts: 48
Joined: Sun Jan 11, 2009 7:22 pm
Reputation: 0
Location: Just another Buckeye
Gender: None specified

Another Must Read IMHO....

Postby kc8flq » Sun Feb 28, 2010 10:25 pm

Image

Available here at amazon or here at half.


KC
Give a man a fish.... feed him for a day...
Teach a man to fish.... feed him for a LIFETIME!!!

User avatar
bredin
rank: 1000+ posts
rank: 1000+ posts
Posts: 1032
Joined: Mon Feb 16, 2009 10:41 pm
Reputation: 0
Gender: None specified
Contact:

Postby bredin » Sun Feb 28, 2010 11:32 pm

Think and Grow Rich
Winners and Losers

Both fantactic books on changing your psychology, Winners and Losers is vital imo as it will point out exactly when you are thinking like a loser.

G.
Welcome to the era of "Guns and Maskies" Trading!
The previous message contains discretion. Viewer nudity is advised.
Insanity Industries Indicators Here
Insanity Industries on YouTube!

User avatar
tmanbone
rank: 500+ posts
rank: 500+ posts
Posts: 723
Joined: Sun Nov 15, 2009 3:52 am
Reputation: 0
Gender: Male

Postby tmanbone » Sun Feb 28, 2010 11:42 pm

http://www.amazon.com/Daily-Trading-Coa ... item-added

Steenbarger is legendary. Read Douglas no less than three times.
"The simplicity of the markets is it's greatest disguise"

T

Please add www.kreslik.com to your ad blocker white list.
Thank you for your support.


Return to “beginners forum”