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MrMagoo
Original Poster
1,607 posts
31 months
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Can anyone reccomend me some good books on the subject? I've been playing around with plus500 (not with real money) and would like more knowledge on the subject. A book where I can learn the basics so I feel more comfortable with what I'm doing.
Thanks
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raptor600
1,356 posts
15 months
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AdamTheTrader
105 posts
14 months
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raptor600 said: Yes this one is very good from someone that actually makes money  Agreed- The Naked Trader is a good shout. Edit: This focuses on currency pairs but the graphing analysis techniques still remain: Aside from books, I recommend fxbootcamp.com- they cover basically every angle from the very basics. They also upload a daily 1hr+ long video before the NYSE open analysing the markets and discussing where they're likely to be heading
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mids
346 posts
127 months
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Trading in the Zone by Mark Douglas
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limpsfield
2,853 posts
122 months
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there are some good books mentioned.
Just bear in mind that its one of those things that looks reasonably logical and maybe even easy in hindsight or on a demo account. But it is far from it! Good luck.
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MrMagoo
Original Poster
1,607 posts
31 months
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Thank you for the suggestions, shall look into all of them,
Much appreciated.
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Cheib
6,168 posts
44 months
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Successful trading comes down to one thing...discipline. You can have all the bright ideas in the world but without discipline you will almost certainly lsoe money.
It's human nature to realise profits and run losses.....which is obviously a very bad investment strategy.....it's why a lof of managed funds under-perform the market.
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Hoofy
47,829 posts
151 months
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Cheib said: It's human nature to realise profits and run losses.....which is obviously a very bad investment strategy.....it's why a lof of managed funds under-perform the market. Surely, professionals should be... professional about their managing of... funds?
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Cheib
6,168 posts
44 months
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Hoofy said: Cheib said: It's human nature to realise profits and run losses.....which is obviously a very bad investment strategy.....it's why a lof of managed funds under-perform the market. Surely, professionals should be... professional about their managing of... funds? Yes. But the reality is that a lot of managed funds underperform the market for this very reason. It's human nature..... There is a market expression "the first cut is the cheapest" i.e. it's cheaper to cut a loss making postion at the earliest opportunity. The best traders I have seen are the most disciplined and proactive. Also a lot of the very big funds do not make instantaneous risk decisions...they make them via a risk committee/process which can takes hours/days to do. The actuaries/advisors that allocate money to these asset management companies look for an "investment process" rather than one bloke making a decision at his whim. Personally I don't think it's the way to manage money but that is what the institutional market wants.......
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Hoofy
47,829 posts
151 months
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Cheib said: Yes. But the reality is that a lot of managed funds underperform the market for this very reason.
It's human nature.....
There is a market expression "the first cut is the cheapest" i.e. it's cheaper to cut a loss making postion at the earliest opportunity.
The best traders I have seen are the most disciplined and proactive.
Also a lot of the very big funds do not make instantaneous risk decisions...they make them via a risk committee/process which can takes hours/days to do. The actuaries/advisors that allocate money to these asset management companies look for an "investment process" rather than one bloke making a decision at his whim. Personally I don't think it's the way to manage money but that is what the institutional market wants....... Interesting insight!
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AdamTheTrader
105 posts
14 months
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Cheib said: There is a market expression "the first cut is the cheapest" i.e. it's cheaper to cut a loss making postion at the earliest opportunity.
The best traders I have seen are the most disciplined and proactive. Agreed- it's hard to give your confidence a bruising and cut a losing position but being decisive and doing it as soon as possible is a must. Hindsight's a wonderful thing and it's all-too-often that I cut a profit too early and think "if only I held on I would have made x amount more" The capability to curb greed and ability to manage risk in this 'profession' are the downfalls of the majority
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BarnatosGhost
6,381 posts
122 months
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Here's a quick question (probably more of maths than of trading)
Assumptions for the sake of simplicity:
A stocks in a make-believe stock market are erratic and equally so above and below a nominal start point
Money extracted from the 'game', be it profit or loss, is immediately reinvested at the next opportunity
There are no dealing costs or tax considerations.
So:
If you have, say, 100 bundles of money, and invest them in 100 random shares in this perfect hypothetical market. As soon as a share drops 1% it is sold and reinvested in a different share. Climbing shares are only sold once they have increased in price by 5%.
Will a profit be realised eventually? (assuming all shares are equally unpredictable and equally erratic in their movements, and all upwards and downwards movements net-out to zero in the long-run).
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Cheib
6,168 posts
44 months
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AdamTheTrader said: Cheib said: There is a market expression "the first cut is the cheapest" i.e. it's cheaper to cut a loss making postion at the earliest opportunity.
The best traders I have seen are the most disciplined and proactive. Agreed- it's hard to give your confidence a bruising and cut a losing position but being decisive and doing it as soon as possible is a must. Hindsight's a wonderful thing and it's all-too-often that I cut a profit too early and think "if only I held on I would have made x amount more" The capability to curb greed and ability to manage risk in this 'profession' are the downfalls of the majority There is a case for having strength in your convictions though....assuming those convictions have solid foundations. There are times when it is right to run a loss making position because of posible short term external factors. The reality is if it was easy lots of people would do it and it would be possible to build the perfect computerised trading system....but it isn't.
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Hoofy
47,829 posts
151 months
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BarnatosGhost said: If you have, say, 100 bundles of money, and invest them in 100 random shares in this perfect hypothetical market. As soon as a share drops 1% it is sold and reinvested in a different share. Climbing shares are only sold once they have increased in price by 5%.
Will a profit be realised eventually? (assuming all shares are equally unpredictable and equally erratic in their movements, and all upwards and downwards movements net-out to zero in the long-run). The problem occurs when the rectum falls out of the market and prolapses you into hell as we had in 2008. All stock drop 10% overnight. What now? You withdraw all money and reinvest in stuff that you hadn't originally bought asap and the market plummets once again.
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R11ysf
1,301 posts
51 months
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BarnatosGhost said: If you have, say, 100 bundles of money, and invest them in 100 random shares in this perfect hypothetical market. As soon as a share drops 1% it is sold and reinvested in a different share. Climbing shares are only sold once they have increased in price by 5%.
Will a profit be realised eventually? (assuming all shares are equally unpredictable and equally erratic in their movements, and all upwards and downwards movements net-out to zero in the long-run). You will definitely lose money. If all movements are random and erratic then the chance of a share going up 1% or down 1% is entirely equal. The chance of going up 5% or down 5% will also be equal but not 5 times more likely than a 1% move, probably more like 10 or 20 times. Therefore, you will constantly take a series of small losers and gradually deplete your account. I knew someone that ran a relatively successful system which looked for a 5 tick winner or puke a 10 tick loser. Based on probabilities it was very simple and relatively successful (until he interfered with the grey box and hand traded - a whole different story which echoes what's above about traders with no discipline!!)
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raptor600
1,356 posts
15 months
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What books did you go for in the end OP?
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La Liga
758 posts
25 months
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mids said: Trading in the Zone by Mark Douglas By far the most important trading book ever written. Even better in audio-book from iTunes. Do you know what you mean by trading? Equities, indicies, forex? I assume you mean spread betting? Learning from a professional is essential. I can put you in touch with the guy who is teaching me (successfully) to day trade indicies through spreadbetting if you'd be interested.
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Hoofy
47,829 posts
151 months
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La Liga said: By far the most important trading book ever written. Even better in audio-book from iTunes.
Do you know what you mean by trading? Equities, indicies, forex? I assume you mean spread betting? Learning from a professional is essential. I can put you in touch with the guy who is teaching me (successfully) to day trade indicies through spreadbetting if you'd be interested. I'd be interested to see how you are doing in 1 year's time tbh...
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La Liga
758 posts
25 months
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Not as interested as I will be.
I think most people agree trading is 90% psychology. It's not that hard to find strategies which are essentially looking for repeating patterns, that over a series give a higher probability of X occurring rather than Y. The problem is, as people have mentioned, is discipline. That being apart of the fundamental change of thinking that is required to be successful in trading. Mark Douglas describes it as moving from thinking from 'right and wrong' to 'thinking in probabilities'. A very hard journey to do by oneself, which no doubt accounts for the extremely high failure rate of retail traders. Some will manage on their own. Very hard given the channels one is led down when one enters the low-level world of trading. For others, learning from someone who has been through that pain and come out the other side is necessary, and equally importantly, less costly!
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Hoofy
47,829 posts
151 months
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La Liga said: Not as interested as I will be.
I think most people agree trading is 90% psychology. It's not that hard to find strategies which are essentially looking for repeating patterns, that over a series give a higher probability of X occurring rather than Y. The problem is, as people have mentioned, is discipline. That being apart of the fundamental change of thinking that is required to be successful in trading. Mark Douglas describes it as moving from thinking from 'right and wrong' to 'thinking in probabilities'. A very hard journey to do by oneself, which no doubt accounts for the extremely high failure rate of retail traders. Some will manage on their own. Very hard given the channels one is led down when one enters the low-level world of trading. For others, learning from someone who has been through that pain and come out the other side is necessary, and equally importantly, less costly! Indeed. Who is your teacher? One of the established/well-known trainers?
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