I wish I had read this book years ago. It would have corrected my understandings of what investment trading is all about and how to go about it. I particularly appreciated the detailed explanations of risk verses reward and position sizing. I have heard "risk vs reward" talked about in many places, but never had it explained in a way that I could use it.

THE MOST IMPORTANT FACTOR IN YOUR SUCCESS: YOU! The Legend of the Holy Grail 3 The Holy Grail Metaphor 6 What’s Really Important to Trading Modeling Market Geniuses 11 Summary 14

chapter 2 Judgmental Biases: Why Mastering the Markets Is So Difficult for Most People 17 Biases That Affect Trading System Development 2 0 Biases That Affect How You Test Trading Systems 3 5 Biases That Affect How You Trade Your System 3 8 Summary 41 Chapter 3 __- I plan everything. I set up worst-case scenarios, and we run through them just as an exercise. I have specifications on the best case and the worst casefor each scenario. Thus, when something comes along, I have usually plannedfor it and have a range of expectancy. If the results fall within that range, then I know everything is as planned. If the resultsfull outside that range, then It is important to note that if you follow the 2% rule, religiously you could have 100 losing trades and still have some money left. Chapter 6 Understanding Expectancy and Other Keys to Trading Success 130 The Six Keys to Investment Success 130 Maybe you have a friend you love working out with. Invite her over to workout to a YouTube playlist at home for free.

I am very strategic and patient, which I believe is useful in developing long-term strategies for trading. I’m self-confident, which gives me a lot of psychological strength in trusting the systems we develop. In terms of weaknesses, 1 guess I’m always trying to get R lot done-perhaps too much. Sometimes that can distract mefrom my primary mission as a trader. How about your strengths and weaknesses in terms of personal discipline? questions will not tell you that directly. You’ll know that more by your emotional response to the questions. The emotions you feel when answering the questions will be a big clue for you. If you don’t want to answer the questions and put off doing so, then you have some psychological issues. If you get angry or disturbed at some questions, then you probably have some psychological issues. However, keep working at these questions until you are finished and have answers you can live with. Part of the reason for doing the questions is to find out about the most important part of your trading-you. You might also ask if the questions are telling you that you should not trade. If you have not completed the questionnaire, or have not completed it to your satisfaction, then you are not ready to trade. I would not recommend that you do so until you thoroughly understand each question and your own response to it. Of course, once you’ve done that, you must still develop a trading system that fits tfine criteria you’ve developed for yourself. Lastly, you might ask how the questions will guide you in system development. What the questions do is allow you to establish boundaries around which you must design your trading system. I’d recommend that you answer the questions, read the book thoroughly, and then reanswer the questions. When you’ve done that, then you will understand what you need to do in terms of developing a system that fits you. Take an Inventory 61 2. Develop an Open Mind and Gather Market Information 63 3. Determine Your Objectives 66 4. Determine Your Time Frame for Trading 66 5. Determine the Best Historical Moves in That Time Frame and Notice What Those Moves Have in Common 69 6. What’s the Concept behind Those Moves and How Can You Objectively Measure Your Concept? 70 7. Add Your Stops and Transaction Costs 72 8. Add Your Profit-Exits and Determine Your Expectancy 73 9. Look for Huge Reward Trades 74 10. Optimize with Position Sizing 76 11. Determine How You Can Improve Your System 77 12. Worst-Case Scenari-Mental Planning 78 Chapter 5 A comprehensive guide to developing trading strategies: The book provides a comprehensive guide to developing trading strategies, including how to develop, test, and implement them. Let’s explore internal control, the key to trading success, from another perspective. When I’ve had discussions about what’s important to trading, three areas typically come up: psychology, money management (i.e., position sizing), and system development. Most people emphasize system development and de-emphasize the other two topics. More sophisticated people suggest that all three aspects are important, but that psychology is the most important (about 60 percent), position sizing is the next most important (about 30 percent), and system development is the least important (about 10 percent). This is illustrated in Figure l-l. These people would argue that internal control would fall only into the psychological sector. Ed Seykota once told me that he taught a college course in trading (in the late 1970s) that lasted 10 weeks. He spent the first week of class teaching basic information about trading. He then spent another week teaching the class Donchin’s lo-20 movingaverage crossover system. However, he needed the remaining 8 weeks of the class to convince people to use the system that he had taught-to get them to work on themselves enough to accept the losses that it (or any other good trading system) would generate. I’ve argued for a long time that trading is 100 percent psychology, and that psychology includes position sizing and system development. The reason is simple: We are human beings, not robots. To perform any behavior we must process information through the brain. Behavior is required both to design and to execute a trading system. And to duplicate any behavior one must learn the ingredients of that behavior: That is where the science of modeling comes into play.Come into My Trading Room by Alexander Elder is a must-read for anyone looking to improve their trading. The book is a gem in the world of trading. Dr. Elder is the author that explained to me the importance of the three core trading dynamics, risk management, trading psychology, and the right trading strategy, what he calls the three “Ms” of trading: mind, money, and method. 5. Trade Your Way to Financial Freedom by Van Tharp Trade Your Way to Financial Freedom by Van Tharp is a must-read for anyone looking to improve their trading skills. The book is a comprehensive guide to everything from the basics of trading to advanced concepts, with practical examples that make it easy to understand and apply the concepts to your trading. His explanation of the marble game that he used to teach the effects of different position size levels to his trading students is one the best examples of understanding the impact of risk on a trading system’s performance I have ever seen. The late Van Tharp was an elite trading teacher and author. Conclusion let my profits run. If1 everfind a trade that keeps going in my direction so that I never have to get out, great! I use trailing or technical stops. Once those are hit, I’m out of the position. What do you do in terms of money management (which I call “position sizing” in this book)? I set up a portfolio ofinstrumenls to be traded at set risk and Strategy 1 and 2 are widely covered in most trading books and articles, so let’s take a look at strategy three in more detail, which comes down to position sizing secrets.

When he says in Chapter 12 of this book that "...money mangement is the most important aspect of system development, other than pysychology..." Tharp is absolutely correct. Perhaps you have had the experience of attending a workshop conducted by an investment expert who explains his success secrets. For example, I just told you about a class that one of the world’s greatest traders taught on trading in the early 1970s. He spent 2 weeks teaching them a method that would have made them very rich (at the time) and then required 8 more weeks to get them to the point where they were willing to apply it. Like the people in the class, you may have been impressed in some workshop you attended by the expert’s presence and skills. You may have left the workshop full of confidence that you could make money using his methods. Unfortunately, when you tried to put his secrets into practice, you may have discovered that you weren’t much wiser than you were before the workshop. Something didn’t work or somehow you just couldn’t apply what you had learned. Why does this occur? The reason is that you do not structure your thinking in the same manner as the expert. His mental structure, the way he thinks, is one of the keys to his success. When others teach you how they approach the markets, chances are they only superficially teach you what they actually do. It’s not that they mean to deceive you. It’s just that they really do not understand the essential elements of what they do. And even if they did, they would probably have trouble transferring that information to someone else. This leads you to assume that perhaps you must have a certain “gift” or type of talent to be successful in the markets. Many people, as a result, become discouraged and leave the markets because they believe that they do not have the talent. But talent can be taught! I believe that if at least two people can do something well, then that skill can be taught to most other people. Over the last 20 years, the science of modeling has emerged almost as an underground movement. That movement comes out of a technology developed by Richard Bandler and John Grinder, called Neuro-Linguistic Programming (NLP, for short). While paying someone else isn’t as glamorous as having money in the bank, it does bring you closer to financial freedom.Detailed analysis of the strategies used by successful traders: The book delves into the specific strategies used by these traders and how they have been able to achieve success. It covers various strategies, from trend following to discretionary trading and from futures to equities. What is your trading capacity? How do you expect to achieve it? What do you expect to do when you achieve it? How will that change your trading? A guide to developing a winning strategy: The book provides a guide to developing a winning strategy for trading, drawing on the principles of casino games and the experience of successful traders.

Tips and techniques for managing risk: The book covers risk management techniques used in casino games and how they can be adapted and applied to trading. Okay, so at this point, you’re probably thinking, “My debt is a lot more than my salary, how can I pay it off if I don’t make enough?”

Customer reviews

Comparison of different markets and instruments: The author also compares different markets and instruments and how the principles of casinos can be applied to them. They expect risk in the 5-10 percent range. Any drawdown that is over 15 percent or fhat lasts~over a year is deadly-lots of clients would fire us.