Trading Books

[Caseynotes]

Until searching books recently I was unaware of the great many that are available as free pdf downloads. Just google 'trading books pdf free download', you might also add a specific topic.

 

Some sites ask for sign up (not tried) but many just link straight to download. 

 

Some straight download sites:

 

 https://www.earnforex.com/forex-e-books/trading-strategy/ (trading strategy is 1 of 6 sections under Books)

 

https://vantagepointtrading.com/free-ebooks/

 

http://www.swing-trade-stocks.com/e-books.html

 

http://www.freebookcentre.net/Business/Stock-Trading-Books.html

 

 

 

 

 

 

[Caseynotes]

David Jones (ex IG Chief Market Strategist) turns up in the free online investing magazine 'Master Investor' with his take on the recent indices correction.

 

PDF download at;

 

https://masterinvestor.co.uk/magazine/

 

 

[CyclingTrader]

I am not sure whether this topic could be used as a repository for book reviews of published material for interesting titles which I was originally searching for or more broadly interesting articles people have come across to broaden views.

 

In any event I thought I would throw out a couple of book titles which I have personally found very useful:

 

1 - Trade your Way to Financial Freedom by Van Tharp - bit of a classic but I found the view of risk management and how to conceptualise it very useful.  I found that it wasn't the most concise book and laboured some of the points but it was a push to me to be more disciplined about record keeping and analysis of results.

 

2 - The Art of Execution by Lee Freeman-Shor - this was quite a punchy little book and that was one of the reasons I liked it there wasn't a lot of unnecessary repetition of points but it made the points well and thoroughly.  The book concentrates on some of the psychological pitfalls of trading and his experience seeing this in money managers.  Definitiely material I can relate to.

 

3 - Technical Analysis for the Trading Professional by Constance Brown - this is packaed with information, a very dense read and I have gone back to it several times.  I wouldn't say I agree with everything but I have found it very useful in my interpretation of charts.

 

4 - The (Mis)Behaviour of Markets by Benoit Mandlebrot - quite readable considering the advanced mathematics which underly some of the concept of complexity and chaos theory involved.  I find the idea of fractal dimensions fascinating and think the book overall helped to shape some of my thinking as to how markets behave.

 

There are many more books on my shelf but I thought I would put this out there to see if there was appetite for discussion around published material.

[Guest apadhani]

Books are written by failed traders, brokerage owners with agendas or trading educators.A search on google will show 95% of traders lose,  the figure is more likely to be over 99%. Buying any books is for beginners and learners,but be cynical traders trade, authors write beautifully, forum posters post to market their agendas on a broker's forum.

 

Van Tharp hid a lot of trading psychology from his  books, he sells educational courses for $60,000 a piece from his site, if he wrote the entire truth in his first book, the one suggested,he would not be able to sell his educational course.

 

The art of execution seems to fulfill the gap, of some psychological pitfalls, but not all. It confirms my first point that Van Tharp provided little information,little information is dangerous.How many have others used Van Tharp's little information and failed? There are psychological pitfalls for traders,these are still kept hidden from traders, this is where most traders will still fail despite reading this book.

 

Technical analysis by Constance Brown. Another failed trader may need to write another book,blind leading the blind.If this was so good, the reviews on the first 10,000 books were even better.

 

The (Mis)Behaviour of Markets by Benoit Mandlebrot. Markets are driven by humans with emotions, total fallacy and BS.

 

Alexander Elder wrote books, he sells trading education via seminars etc.The trading educators who have opened up forums are singing praises for Elder on their sites, so they can sell trading education on these private forums,He was a psychologist, I wonder if he knew even 10% of trading psychology.

 

Wykoff was a trading educator and broker, he made his money from selling education,writing books and promoting trading for his brokerage, after buying his books. People would trade more, with his brokerage, he was earning rebates, after reading his stuff.

 

All failed traders end up writing books, essentially the blind leading the blind.The people who can't trade profitable end up selling education.

 

It is questionable when characters come on forums with agendas, to sell education and advertise other paid sites, where their friends are paying rebates, if sales are made on the links posted on this site(to other sites where internet marketeers are selling education etc).

 

The agendas on broker's forum to promote scalping webinars, is also incredible, where broker gains 50 spreads a day from same customer for scalping.

 

Like minded traders in a forum  or people with agendas posting, indirectly to sell education and post links to some educational scam artist's site?

 

There is always an agenda with authors writing books. Real traders don't read books, they learn in the pit, in the real market.

 

What a trader sees in a book, relating to himself, is often nothing more than a selective attention bias .This a psychological flaw of the human mind.

 

 

 

 

 

 

 

[Caseynotes]

Oilpro is trying to convince himself that if he can't trade no-one can, and that only his ea's can make money (spoiler alert, they don't).

 

The 95% losing traders is taken out of context as BreakingOutBad explains here;  

 

 

gamble

: to take a risky action in the hope of a desired result; to stake something on a contingency; to take a chance

In the context of this definition, trading is gambling; however, so is starting a small business, going to college, getting married, having kids, buying a house, investing in the stock market. Keep that in mind as you read this post.

Dispel Mindset Toxicity or Risk Ruin

Your mindset is a fragile thing. Unlike a trading account which can be re-built over and over again due to additional capital injections obtained through work outside of trading, family, friends, etc., once your trading mindset is crushed, it’s very unlikely that you will have the ability or desire to move forward with trading. It is for this reason that it is extremely important that you treat your trading mindset with great care and sensitivity (I’m talking Hallmark Channel sensitivity). Part of that great care is dispelling and disproving all of the negative, toxic thoughts that enter your mind via external sources (e.g. goons on social media). And that takes us to the reason why I decided to write this post: to dispel the impact that two of the most toxic statements that a trader is forced to hear day in and day out will have on their mindset:

1. “95% of traders fail”
2. Trading is gambling and if you trade, you’re a gambler

 

How many times have you heard the “statistic” that “95% of traders fail”? That traders are gamblers? That trading isn’t a career choice, it’s a career mistake? All present-day traders have heard the aforementioned at least once in their career – but, with the presence of social media and the Internet, probably have heard it (and continue to hear it) a lot more than once – they probably hear it every **** day (I know that I do).

What kind of impact do you think this has on your mindset as a trader? Though it’s hard to quantify, it wouldn’t be a stretch to suggest that it plays some type of role in consciously and subconsciously shaping the mindset of most traders – especially new traders. And for many traders, it has meant the difference between pushing forward through adversity (e.g. taking **** from friends, family, and anonymous social media goons) and giving up due to destruction of mindset. This is unacceptable, especially because the “statistic” and “gambler” label is highly misleading and almost always void of proper context.

The “95%” Pseudo Statistic, Put into Context

Is there a high failure rate in trading? Yes, absolutely. Is it 95%? Who the knows. Let’s just agree, though, that it is quite high. But just like in trading itself, context is key. So, let’s look at this number through the proper context.

Breaking down the 95

First of all, not all “traders” are actually traders in the sense that, not all traders approach trading with the disciplined, process-driven, probabilistic mindset that consistently profitable professional traders possess. You see these characters on Twitter every day:

• Lazy, get-rich quick types with a completely unrealistic perspective about what it means to be a trader. These chumps are undoubtedly part of that “95%” pseudo statistic.
• What about those who start trading with $5,000 and access brokers and markets that allow 10, 20:1 leverage? Yep, they’re included in that statistic as well.
• What about those who are in fact, undisciplined gamblers, void of any semblance of a process? They’re part of that number, too.
• And what about those who quit their job to get rich as a trader, giving up their sole source of income, only to find that it takes longer than originally anticipated to make money, essentially forcing them to go back to work and put trading on hold (or quit altogether)? Another part of the “95%”.

Based on what I see on Twitter, I have no doubt that the aforementioned examples make up a huge portion of the “95%”.

The question I have is, what percentage of the “95%” are traders who have adopted and actually adhere to a process-driven, disciplined, probabilistic mindset? Although it’s difficult to truly know what that number is, one can assume based sheerly on the volume of degenerates who take up trading (as a perfect example, go look at the StockTwits.com ticker feeds to see the abundance of losers who consider themselves traders) that the number is relatively low. My educated guess is less than 10%, and possibly even lower.

Why do I think that the 95% trading failure rate consists of 10% real traders and 85% gamblers? Because good trading takes a lot of work, especially in the beginning when the learning curve is substantial. Most people just aren’t willing to take the time to build a system, a process, the proper mindset. Most people don’t have the maturity to be a trader. Most people aren’t willing to act like traders because the process of exceptional trading can be boring. Most people suck at managing their own money.

The point is, the pool of those in society who actually have the drive and the mental, emotional, and financial maturity to develop the qualities necessary to be a successful trader is very small. Yet society is full of individuals who want to make a lot of money and want to make it fast – individuals who undoubtedly are drawn to trading and to the markets. And thus, the 95% failure rate is inherently flawed as it relates to your odds of success if you’re a trader who acts like a trader (more on that below) because the failure rate is comprised of a significant percentage of jokers who want to get rich fast by taking massive risks (i.e. not acting like traders). In other words, traders who act like traders are being lumped in with degenerate gambling bozos which significantly distorts the true trading failure rate, since degenerate gamblers are being lumped in with actual traders.

Failure rates of common life endeavors

Second, anything with potential reward carries with it risks and varying rates of failure. Let’s look at some examples of other, not as often discussed, failure rates in order to further put the “95% of traders fail” pseudo statistic into a more proper and meaningful context.

Note: Just as with the widely reported 95% trading failure rate, I believe the following failure rates to be potentially flawed; however, these are the widely reported failure rates, so we are comparing apples to apples when comparing them to the trading failure rate. 

• 95% of small businesses fail (i.e. run out of money) within the 5th year of operation, and 96% of small businesses fail within the 10th year of operation; 50% of small businesses fail within the first year.
• 90% of startups eventually fail
• New businesses based on established models – franchises, family business and tested ideas – report an 85% risk of failure within their first few years.
• Around 60% of new restaurants fail within the first year. And nearly 80% shutter before their 5th anniversary.
• 70% of California Community College students fail (some with a significant amount of debt and no degree to help them).
• 56% of college students who started at a 4-year college drop out (fail) by year 6 of their college career.
• 41%, 60%, and 73% – the failure rates (i.e. divorce rates) of 1st, 2nd, and 3rd marriages, respectively.

The aforementioned failure rates – all failure rates that are commonly accepted and reported when doing research on the Internet – demonstrate that, on the surface, failure is a part of life for most of us. However, just as is the case with the trading failure rate, if we were to eliminate some of the common variables that lead to failure with these endeavors, then the failure rate of those who start a small business, go to college, or get married without said variables in the picture would look much better.

Let’s take small business for example:

• Small business: A small business is more likely to fail due to:
  • Lack of experience
  • Insufficient capital
  • Poor location
  • Poor inventory management
  • Over-investment in fixed assets
  • Poor credit arrangements
  • Personal use of business funds
  • Unexpected growth
  • Competition
  • Low sales

And college:

• College: Variables that increase or decrease your probability of failing college:
  • Full-time students are 55% less likely to fail at college than students who go to school exclusively part-time.
  • Students who start college before turning 20 have a 13 – 22% lower chance of dropping out than those who start college after turning 20.
  • A study showed that children from low-income households were 7.6x less likely to complete a bachelor’s degree than those from well-off households.
  • 40% of college dropouts have parents who do not have a degree higher than a high school diploma.

And marriage:

• Marriage: You’re less likely to get divorced if:
  • It’s your first marriage
  • Your parents are still married
  • You are over the age of 25
  • You went to college

So again, though the failure rates of the aforementioned endeavors are all considerably high, it’s important to apply the proper context to each failure rate in order to eliminate a large portion of the participants from each endeavor who really had no business taking up said endeavor in the first place (I consider these individuals to be gamblers, much like the gamblers included in the trading failure rate). The odds are significantly against them, and with those odds, they face great risk of ruin (more on those specific risks of ruin soon) across a variety of spectrums. Again, gambling.

“Trading involves significant risk of loss and is not suitable for all investors.”

As traders, we see this disclaimer all of the time. But why don’t we see this same disclaimer for small business loan commercials? Or those feel good college education commercials? And what about the nauseating eHarmony commercials? Do you ever hear them end a commercial spot with “Marriage involves significant risk of loss and is not suitable for all people.”? Of course you don’t. But – based solely on the numbers – all 3 of these commonly accepted and encouraged endeavors carry with them their own degrees of significant risk and danger. Yet trading undoubtedly gets the most significant scrutiny and stigma applied to it.

Gambling: A Balancing Act Between Probabilities and Risk vs Reward

After reading about these failure rates of very common endeavors for a high percentage of people in developed, free countries, think about this:

• How many people who opt to start small businesses are referred to as gamblers or degenerates by their family and friends? The mainstream, broadly reported failure rate of small businesses is almost identical to that of the commonly discussed trading failure rate. Moreover, those who start small businesses usually put a great deal (or all) of their own capital into the business, oftentimes not taking a salary nor making money for years from the date of inception (and that’s if they are successful). What happens to that capital when their business fails? It’s gone. Is that risk not as great as that of a trader? Then why is the same stigma not more commonly applied to small businesses?
• How many students who opt to go to college are referred to as gamblers or degenerates by their family and friends? With a 56% failure rate among college students who started at a 4-year college but dropped out by year 6, are the odds not, on the surface, against the student? Mix in the fact that a high percentage of students take out student loans to fund their education and are students not taking on a even more significant risk? Yes, if they graduate, then they have the potential to find a well paying job in their field which can help mitigate some of said risk. However, there’s no guarantee that they will find a job. That sounds like a pretty big gamble to me. But again, you typically don’t hear the same stigma associated with getting a college education as you do with trading. Why not?
• How many people who opt to get married for the 2nd and 3rd time are referred to as gamblers by their family or friends? With 2nd and 3rd marriage failure rates at ~60% and ~70% respectively, is getting married a 2nd and 3rd time not a massive gamble, especially given how emotionally and financiallydevastating divorces can be for both men and women? And when kids are involved, the gamble is even greater. Again, the same “gambling” stigma applied to traders doesn’t seem to be applied to those who are looking to get married.

As mentioned earlier, traders are commonly viewed as gamblers. However, based on what we’ve discussed so far in this article, is it not fair to say that starting a small business, going to college (especially with student loans), and getting married (especially 2nd and 3rd marriages) are all forms of gambling? Well, in my opinion, we can’t properly answer this question until we’ve examined each endeavor’s risks and rewards.

Risk vs Reward Comparison

I’ve heard many times that you’re gambling when the odds are against you. But looking at gambling through the lens of probabilities isn’t enough, in my opinion.

When you gamble, you take a risk betting that the outcome (reward) will be worth the risk. Thus, it seems most fitting that in order to properly gauge the degree to which something is to be considered gambling, one must look at the probabilities in addition to the Risks vs Rewards. Since we’ve already discussed the failure rates of small businesses, college students, marriage, and trading, let’s now look at their risks and rewards.

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Small Business Risks vs Rewards

Risks:

• Losing all of your initial investment if the venture fails.
• Suffering significant lifestyle setbacks for yourself and, if applicable, your family, if not able to turn a profit and take a salary and/or distributions.
• Neglecting, damaging, or even destroying relationships due to lack of time or stress caused by trying to build a successful small business.
• Significantly damaging your own mindset should the small business venture fail.
• Potential health problems due to the stresses of running a small business or dealing with a slowly failing business.

Rewards:

• Be your own boss
• Set your own schedule
• Unlock your potential as a human being
• Employ others, allowing you to take a direct role in the potential enrichment of the lives of others and their families.
• If successful, potentially make good (or great) money.
• Build a family business legacy which can be passed down from generation to generation (theoretically, but this is more vulnerable to potential seismic shifts in the marketplace or to the health of the economy).

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College Risks vs Rewards

Risks:

• Failing to graduate
• Carrying varying degrees of student loan debt (obviously, the more debt the greater the risk).
• Carrying varying degrees of student loan debt without a job or without a well paying degree-related job out of school (and potentially for years to come).
• Seismic shifts in the marketplace which could potentially limit or wipe out your career options.
• Damaging relationships with friends or family due to the need to focus on higher education.
• Significant mindset and/or emotional distress due to either a) failing at college (with or without student loans) or graduating college but b) not being able to find a job at all or c) not being able to find a job that pays well (with or without student loans).

Rewards:

• Graduating with a degree which has the potential to help you secure a high-potential job or career (with no guarantees).
• If able to find a well paying job related to degree, then having a higher income compared to peers with less education.
• An increased probability of financial security and relational security (i.e. better marriage).
• Being able to say that you graduated from college.

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Marriage Risks vs Rewards

Risks: With divorce comes the risk of:

• losing financial assets (such as your house), to varying degrees of significance.
• exposure to alimony payments
• unfair child support payments
• losing regular access to your children (men are especially at risk here, specifically in the U.S., due to significant court bias in favor of women).
• separating from and losing a potentially close friend (your spouse).
• having a strained or severed relationship with your in-laws and/or other spousal relatives.
• having a strained or severed relationship with your parents, siblings, and/or relatives.
• having a strained or severed relationship with friends that both parties shared during the marriage.
• significant emotional pain and suffering due to having to experience a divorce.
• knowing that if you get married again, your next marriage would carry with it an even higher potential divorce rate (61% for 2nd marriages).

Rewards: With marriage comes the reward of:

• having a trusted partner who you are legally bound to, for better or for worse.
• a statistically more potentially promising environment for children
• shared finances
• if both parties work, two primary income sources instead of one (on the surface, less financial risk)
• potential tax benefits
• potentially positive health benefits

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Trading Risks vs Rewards

Risks:

• Losing all of your trading capital, which you may or may not be able to afford to lose.
• Suffering significant lifestyle setbacks for yourself and, if applicable, your family, if not able to obtain profitability.
• Neglecting, damaging, or even destroying relationships due to lack of time or stress caused by trying to become a successful trader.
• Significantly damaging your own mindset after severe or compounded setbacks.
• Potential health problems due to the stresses of learning to trade or dealing with a trading account in a perpetual or significant state of drawdown.

Rewards:

• Be your own boss
• Set your own schedule
• Unlock your potential as a human being.
• If successful, potentially make good (or significant) money.
• Build a family trading business legacy which can be passed down from generation to generation (not nearly as vulnerable as a small business legacy since the market will always be open for trading (unless the world comes to an end)).

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Trading, Small Business, College, and Marriage Can All Be Gambling

By writing this blog post, am I trying to suggest that you shouldn’t start a small business, go to college, or get married due to the broadly reported high rates of failure associated with each? No. What I’m saying is, if you’re interested in starting a small business, going to college, or getting married, take the time to understand the failure rate numbers. Understand which variables may increase your probabilities of failure and which variables may increase your probabilities of success. Then, based on that, determine if you have a more likely chance of succeeding or failing at your specific venture. Once this is determined, then you need to measure the risks vs rewards. It’s only after you do these two things that you can come to your own conclusion about whether or not something should be considered gambling or whether it should be considered just taking a **** risk.

The main point that I want to drive home is the following: All 3 of the aforementioned, commonly accepted and promoted by society, life changing decisions carry with them significant levels of emotional, relational, and financial risks, just as trading does. Each have varying degrees of potentially high failure rates. Each have potentially promising rewards. But we as traders are led to believe that attempting to become a trader is a shameful endeavor, a form of gambling, with a failure rate and risk factors far greater than other more common life endeavors (such as those mentioned in this post). Based on the research I’ve done (and included in this post), that’s complete *****.

Can trading be gambling? Yes, absolutely. But based on the information described and cited in this post, so can starting a small business, going to college, or getting married. You need to determine if the potential failure rate is lower (or higher) for your particular situation prior to determining if you’re gambling or just taking a risk (people take risks every single day, risks are a part of life).

(Degenerate) Gambler vs Trader

In terms of trading, I did my homework. I knew that the 95% trading failure rate statistic, even if slightly true, was comprised of a great deal of:

• undercapitalized,
• overleveraged,
• undisciplined,
• immature (financially),
• impatient,
• unrealistic,
• lazy,
• egotistical,
• unprofessional

idiots who had no business opening a $1,000 – $5,000 Futures account in the first place. When you take all of those degenerates out of the picture, the true trader failure rate is much lower, specifically for those who:

• are well capitalized relative to their risk
• never abuse leverage (i.e. compromise risk management controls)
• consistently practice discipline in routine and process
• have their personal finances under control and spend less than they make
• practice patience-building exercises every day
• understand the realities of trading and potentially how long it can take to reach consistent profitability
• have a strong work ethic, always looking to learn and grow
• keep their ego in check
• approach trading as a business, with a ***** business plan

Change Your Perspective on Risk

The way I look at it, given that our time alive is finite, are you risking more working a 9-5 job for ***** pay, longing for the weekend to come, doing something that you may not even like, or are you risking more taking a chance to unlock your ultimate potential as a free human by doing something that you love by starting a small business or trading? I say small business or trading because the risks and rewards between the two are very similar, as previously outlined in this post. However, I personally believe that the rewards are much greater with trading, which is one of the reasons why I gave up my six figure income as a small business owner years ago to pursue a career as a trader.

Traders Are Small Business Owners, Not Gamblers

In closing, the next time someone parrots the 95% trading failure rate to you, or condescendingly and negatively infers that trading is gambling or that you’re a fool for attempting to become a trader, remember this post (or better yet, send them this post to shut them up). Most importantly, remember this:

• If you approach trading like a trader and not a degenerate gambler, then you’re taking a risk similar to that of a small business owner with, in my opinion, a much more favorable reward profile. By approaching trading in this manner, you are a small business owner, not a gambler, with a much, much lower potential failure rate than 95%. Most importantly, don’t be an ***** and get married for a 3rd time.

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[Guest apadhani]

People with agendas on forums, especially a broker's forum.

 

The 95% losing traders is taken out of context as BreakingOutBad explains here;  

 

People will question why Casey hangs around a forum?

 

If the argument on statistical facts is destroyed with cut and paste options,copied and pasted from the internet, BTW  cut and paste content from other sites is no a discussion, but it is also illegal and copyright breaches.

 

If people can be brainwashed with rebuttal of the 95% argument, they can keep trading, broker keeps generating more and more income.

[Caseynotes]

I notice you can't refute a single one of the numerous points put forward in a well thought out, structured argument which completely dismisses your assertions.

 

I gave due credit to the author who had expressed he wanted it circulated freely, as for 'hangs around forums' your 10 year history on some 8-9 forums must take some explaining, especially the habitual baiting and flaming your are so regularly accused of.  

[Guest apadhani]

Casey is A classic example of the forum rebuttal teams. If you look at the likes given to Casey, most of them are from the IG  staff.

 

They cut and paste from another rebuttal poster, from another  site to give their arguments credibility.

 

Broker advertising /sponsoring forums , i.e  broker's money may be behind the original cut and paste article, therefore allowing it to be circulated freely. 

 

I always suspicious of forums, I can smell, I never went to the FXCM/REFCO forum, this is a shame as a I G customer for over 20 years.

[Guest PandaFace]

Congrats you’ve successfully gone and ruined another thread vomiting your crappy words all over the place.

 

You talk about psychology a lot. You’d be a fantastic test case for a psychological experiment you realise?

[Caseynotes]

Oh look, only one IG staffer in the top 12 people giving likes.

 

None of your arguments ever stand up to scrutiny. And lets be honest, you're the cut and paste king, under your various guises you must have cut and pasted half the web.

As for your suspicions of forums is that because you have been banned from most of them (7 out of 9 and counting). It's always a ban for the same thing, baiting and flaming, though ingeniously you always managed to blame everyone else.

 

The original piece was one of many blogs written by a well known independent trader that I have followed for years, I know well reasoned argument when I see it and I recognise the opposite when I see that too.

 

 

[JamesIG]

This thread is now closed.

 

Please keep things on topic and remember our community guidelines.

 

Furthermore, please note that anyone who is an employee of IG has a clearly marked username and any 'likes' or similar given out are based on the merit alone of the post. If there is a like, it's down to the poster being helpful or submitting interesting content. We do not cast opinions via 'likes' and try not to interact with trade ideas or sentiment (i.e. if there is a like on a trade idea post, whilst unlikely to even happen, it's important to note that it doesn't constitute endorsement of the trade direction).