- about the author: Alexander Elder;
- review: ” The New Trading for a Living”;
- tips and quotes on transactions;
- psychology advice and quotes;
About the author: Alexander Elder
Dr. Alexander Elder – a certified psychologist, as well as the author of several books on stock trading, conducts training courses and trainings on trading. He is world famous as a consultant researching technical analysis and psychology of traders. In 1998, Elder created his own trading training company “Financial Trading Seminars”, or “FTS Inc. ” for short. The book “The New Trading for a Living” – the most popular and famous work. Another popular book by the author: “Come Into My Trading Room: A Complete Guide to Trading “. It includes specific instructions on how to organize your work and how to keep records in order to learn not only from your victories, but also from mistakes. Includes a task book and 100 questions, allows you to check your level of knowledge before risking money. And also ” Two Roads Diverged: Trading Divergences ” a small book telling about the divergences of various indicators. The author tells on examples in which cases it is a reversal signal, and in which it is not worth starting a trade.
Review: “The New Trading for a Living”
The book is written for “dummies”, for those who first encountered exchange trading. It is suitable for independent basic training. Extensive information set forth in an understandable language, with personal stories of the author.
Alexander Elder about his path: “My path to success was a long one: dizzying highs, then painful falls. Moving forward or looping, I repeatedly stuffed myself cones and ruined my trading account. After each failure, I returned to work in the clinic, saved money, read, thought, clarified the methodology, and then started playing again “.
It’s nice to read the experience of a trader who has been trading and winning the market for so long. At the beginning of the work, A. Elder introduces the reader to the course of general concepts, terms and principles of stock exchanges. All terms and concepts necessary for an initial understanding do not require any special education. Then he talks about who and why is winning money, and who is losing. Further, the methods of technical analysis and various indicators are described. The author shows how to use the figures head and shoulders, inverted head and shoulders, support and resistance lines. The book “The New Trading for a Living” discusses the principles of using indicator’s the MACD, ADX, Force index, TRIN, NH-NL and others. A. Elder talks about the basics of technical analysis of the stock market and the mental problems encountered in trading. The most valuable, in my opinion, is the consideration of the psychological aspects of trading – emotions, as the driving force of the market. Much attention is paid to the logic of the formation of movements, discipline, preparation of the trader for trading and other details.
Tips and quotes on transactions
1. Three main principles of the stock market game: 1) Reasonable individual psychology; 2) a logical system of the game; 3) a sound capital control plan.
2. You can’t lose a dollar more than the planned risk, regardless of slippage, spread, swap, etc. It’s impossible to succeed without proper money management.
3. The crowd creates movement. Do not argue with the crowd, but do not be afraid. It is ingenuous and possible to beat.
4. The advantage of a private trader is to choose the time for the transaction. Be patient and not greedy. The main thing is not quantity, but quality.
5. The main thing is to realize that you are losing in arithmetic progression, and win back in geometric. After losing 50% of the deposit, you need 100% profit. Better not to get into such a hole initially.
6. Correctly limit the loss by months, after losing 6-8% of the deposit do not trade, analyze the market and closed transactions.
7. If there is not enough money to live on them trading on the exchange. The most correct decision is not to increase your leverage, thereby increasing the risk of going bankrupt. And get a great track record. People themselves will bring money to management, from which you will receive the necessary income for life.
8. Trading on the exchange is a marathon, not a short distance. The author sets up novice traders for long hard work. Trading skills will improve over the years, and with it, capital will grow. To succeed, you need to take a sober look at the stock market game; don’t be greedy, don’t pounce on the market. According to statistics, the main loss of deposits does not occur during crises, but in the first months of acquaintance with the exchange.
9. The main thing is to understand that in trading first comes skill, and with it money. Therefore, it is impossible to earn money without mastery. The stock market is not a game with 0 amount. There are sellers and buyers, the money is redistributed by one another, but at the same time there are intermediaries in the form of brokers taking a percentage of transactions. In other words, you can’t earn money without taking it from others, and the pros take the money in their business.
10. The primary task is not to lose capital and hold out for many years; the second task is to gradually increase; and the third task is to earn high profits; the majority puts the third task in first place, not knowing about the existence of the first and second. Money is the result of success, not the goal itself. No professional considers profit during work, doctor or lawyer, etc.
11. To learn how to make money on the exchange, you need to work on the system: when you buy or sell assets not under the influence of minute sentiment, but on the basis of a clearly defined trading strategy.
12. Be sure to keep a trade journal. Write down: the reason for opening or closing a position, time, volume, leverage, stop loss and take profit, etc. The main task is not only to keep a journal, but to constantly analyze the accumulated results.
Psychology advice and quotes
1. The first miss is the cheapest. Cannot be tied to a position and increase the volume of losing trades.
2. It’s bad to lie, and to yourself it’s a completely hopeless thing. If a deal is knocked out by a stop loss market, and then the price rolls back. This does not mean that stop loss is not needed. This means that strategies need refinement.
3. Gurus will never be transferred, because the public requires them. It’s hard for a person to make his own decision and bear responsibility for it. I want to blame the blame on another person, and not admit my own mistake. Do not follow the guru, a broken clock also shows the right time 2 times a day.
4. Do not deviate from the plan and do not fall into euphoria. When a deal has gone your way or a series of deals have been successful, work on the strategy should be continued. Do not think that I know and know everything. The market is changing every day, you can not lag a day.
5. To build a long-term career as a trader can only be recognized that the reason for losing is only in yourself. Having realized this, you can develop the self-control inherent in the winner.
6. You cannot be gambling in the market. It owes nothing to anyone and does not forgive mistakes. If you don’t come with a plan to make money, then pay money for entertainment.
7. During the game, analyze emotions and make sure that decisions are reasonable; you also need to draw up a capital control plan that does not allow you to leave the game after a long series of losses.
8. Always study, read and listen to experts, but treat everything with a share of healthy skepticism; ask experts, but do not accept words without evidence. None of the well-known systems guarantee success (although still better than none). Every sensible trader understands that, ultimately, no guru will enrich, financial independence can only be achieved by one’s own efforts.
An excellent book “The New Trading for a Living” on trading on the stock exchange for any level of reader, written in a clear language, perfectly structured. It contains an excellent theoretical part on technical analysis. It is especially suitable for beginners in trading, but also for experienced traders there are a lot of unusual ideas. The book is saturated with the experience of a trader who has repeatedly lost and eventually learned to win.
This work pushed me to the strategy that I use today in a trading robot. I wish you new discoveries! And to continue self-education I recommend a book «The Intelligent Investor»!