Book of the Month: “Come Into My Trading Room” by Alexander Elder

Book of the Month: “Come Into My Trading Room” by Alexander Elder

Book of the Month: “Come Into My Trading Room” by Alexander Elder

A review of one of the best introductions to trading

In this new recurring section we will be reviewing books on the topic of trading. All selections will give insight into its different aspects and what you need to know about the markets and yourself to become a better trader.

Alexander Elder’s “Come Into My Trading Room” is ranked among the most useful books for traders who want to identify and understand the vital components of what trading is and how they can position themselves to better understand its ins and outs.

Although this is the second book by Elder on this topic, in our opinion it is the better example with a more detailed and structured approach to the building blocks of what trading is about. In the first book he coins the term “the three M’s”, but here he manages to expand on all of them.

The first one is the Mind. With Elder being an ex-psychiatrist, he knows his way round the human psyche and mixed with his experience as a stockbroker, the intersections are quite fascinating. For him this is the foundation of trading – it’s how we take on the market, how we interpret it. It’s different with every person and he emphasises on improving your own capacity for understanding different situations and increasing your ability to take on calculated risks.

The second M is for Method and here the author presents his technically oriented analyses. It ranges from discussions on false breakouts, the strength of bulls and bears to “Safezone Stops” etc. All can be useful, but the one that stands out is the “Triple screen” section where he advocates the usage of multiple timeframes to confirm your predictions. It gives you context for the market movement and improves your tactics and strategy, protecting you from something that might be just temporary and unreliable.

Money Management comes in as the third M and covers how you control and observe your bottom line. It’s full of details, but one point is how commissions and slippage are usually looked upon as details but in the end they can add up to some serious numbers and shouldn’t be ignored.

Some criticise the book’s examples as unclear, or that the signals derived from the technical analysis aren’t reliable, but the value doesn’t come from those parts. It is indeed in the concise description of how the mind works when you put the challenge of trading in front of it, coupled with some very useful actions that place it on a more disciplined and straightforward path, increasing clarity and reducing risk.

Let us know in the comments if you found this review useful, as well as what other topics you’d like us to cover in the blog. One of you will receive “Come Into My Trading Room” as a gift from us for your feedback. We will contact the winner over email with details before the 26th of September, 2014.

8 thoughts on “Book of the Month: “Come Into My Trading Room” by Alexander Elder

  1. I’d like this review. It’s expose three core principles, that the author of the book present. But i’m a little sceptical about technical analysis because traders can’t predict fundamental news and their influence over financial markets.
    Еxcept this, i’m agree about importance of good money management for successful trading. Maybe this is the difference between losers and winners on the markets.
    Keep posting. All articles are very useful.
    I would to read more about most successful traders in the world, like George Soros, Benjamin Graham, Paul Tudor Jones and etc.

    1. Hi Mark. We will indeed continue reviewing similar books in this series and hopefully they will broaden the knowledge of our readers.
      Regarding famous traders – we’ll also have a series about them describing how they made their fortunes and why they are so successful.

  2. I’m a complete trading newbie and as such, it was great to see this article in the software’s newsfeed. I’m very interested in the possibility of eventually trading with my own money, but of course, much research is needed before that interest becomes action. Having recently completed a Psychology degree, it’s encouraging to have an introductory text recommended with emphasis on the psychological challenges facing traders. Mental robustness is clearly vital within the proffession. If you can’t roll with the punches, the gloves you put on were never tight enough! This applies to many of the things life has to throw at us. A mind prepared for the worst is calmer before and after, in any event. So, I’m grateful for the recommendation and would certainly like to see more articles providing insight into psychological aspects surrounding trading. Perhaps it would be valuable to include case-studies of traders that focus on personal trading mishaps endured – both from psychological and technical angles – and how they did, or (more importantly) didn’t cope with the situation effectively. This focus gives scope for either the trader in question (if you are able to employ others for the purpose of writing the article- different trader per week?) or staff writer to give suggestions in hindsight toward potential courses of action that would have limited/remedied the detrimental effect. This segment would work well as a regular item as I am certain there exists a plethora of trading mishappenings to call upon as well as multiple solutions to any given problem. Personally, I would find this very useful when coming to terms with my own inevitable future mishaps.

    1. Hi Jamie, we’ll definitely have your comment in mind for our future materials. The general aim of the blog is to provide background and context for traders, both in terms of the financial world and how it works, as well as the multifaceted experience of trading. At the moment we’re preparing a series on general trading psychology which will touch on mental preparation and dealing with challenging situations, so we hope you’ll find it interesting.

  3. I’m thrilled to have been selected to receive a copy of ‘Come Into My Trading Room’, which arrived yesterday! I’ve made it through the first chapter, ‘Financial Trading for Babes In The Woods’, which is written very well and has already inspired me further to endeavour towards a future full of freedoms, enabled by trading. Thank you Trading 212!!

    1. You’re welcome, Jamie! We’re delighted to know that you’re happy with the gift and that it’s useful and interesting. Wishing you the best of luck on the financial markets with Trading 212 PRO.

  4. Hi Guys,
    I was selected to receive the book ‘Market Wizards’ from the previous book giveaway and just wanted to say a huge thank you! I can’t wait to get stuck into it, i nearly bought an older version so this was a great surprise. Keep up the good work guys and thanks again! 🙂

    1. Thanks, Steve! Enjoy the book and don’t forget to test what you’ve learnt from it on a Trading 212 PRO Practice Account.

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