Taking you deeper into the world of currencies and the stock market
A book often found among the “bibles” of trading and one of the most re-read in the community. If you ignore the subtitle of the book, designed to reel in a wider net of readers, it’s full of really useful pointers both on the wider picture of trading, as well as on specifics like chart setups and suitable entry points for day trading.
The first chapter’s title has one of our personal favourite quotes explaining markets – “Markets don’t move because they want to, they move because they have to.” It explains the dynamics and currents that govern price changes on a more profound level. Although they don’t influence every single day’s comings and goings, everyone would be wise to keep them in mind.
Chapter two covers what the author sees as the basics of trading psychology, pointing out that emotions have to be limited and that overconfidence is directly correlated to losses. Chapters four and five give you the lowdown on how markets operate as a whole, including forex, indexes and the stock market. He points out the metrics that are his personal choice for gauging direction and the most suitable entry points.
Then comes the more detailed stuff that delves into a multitude of day trading setups and scenarios:
- pivot points
- (something like) averaging
- many others
Day trading is the choice of many traders at the moment, as it allows them to bank on movements that end within one or several trading sessions and explanations here can be described as the foundation of most of the online tutorials and case-studies you might come across.
One of the main subjects in the book, and one that makes it unique, is the discussion of having a business plan (chapter 19). It advocates that trading should be approached essentially as a business – all variables should be examined in advance – the instrument, positions size, risk levels. There is also a sample plan from a novice trader.
A positive of the book is that it is indeed written from experience. Cold and hard facts can be correct and point to the truth, but presenting them from a personal perspective is what builds trust and rapport with readers, enabling them to better understand what is actually written. This is what we have with Mastering the Trade.
One note is that the book is not for complete beginners. Readers will get more out of the book if they are acquainted with the basics of chart reading, types of trades and the different types of instruments. One of the criticisms that has been aimed at the book is the level of detail. On occasion it can be too much, but we think the overall value you’ll get from reading the heavier sections will outweigh that little bit of annoyance.
You can win the book by leaving a comment with other reads you’d like us to review, or general suggestions for the blog. One of you will receive “Mastering the Trade” as a gift from us for your feedback. We will contact the winner over email with details before the 28th of November, 2014.