stoictrader

Book Reviews

1.  “Diary of a Professional Commodity Trader – Lessons from 21 Weeks of Real Trading” by Peter Brandt

Diary of a Professional Commodity Trader is an excellent book and I highly recommend it. The book is divided into two halves – the first half is an explanation and summary of the Factor Trading Plan; the second half is a trade diary showing charts and describing entry signals and management of about 70 trades. The appendices include a list of trades in a table format, a quick reference to the charts presented in the book, and a good list of recommended resources. The information in first half of the book gives great insight into Peter’s process and trading plan, including: trade identification, trade management, psychology, position sizing, record keeping, and other lessons learned from a long career in speculation.  Buy this book.

2. “Trading for a Living” by Dr. Alexander Elder

Trading for a Living is excellent and is a classic of trading literature. The book is divided into 10 sections with 48 chapters, which cover three main areas: psychology, technical analysis (classic charting and indicators), and management (trade systems and risk management). The book provides an overview of the many different methods traders use to identify and manage trades, themselves and their equity. I particularly enjoyed the very broad and succinct summary of classic chart patterns and indicators which make up the bulk of the book.

3. “Way of the Turtle” by Curtis M. Faith

Way of the Turtle is an excellent trading book that is underappreciated in my opinion. It is the first book I have read that accurately presents a complete trading plan and then describes it in detail and fits it all together. It also includes an insider account of the legendary turtle trading story, and thoroughly describes the fundamentals of backtesting.  The specific turtle strategy (a simple Donchian breakout strategy to identify trends) isn’t the main theme of the book, nor is the turtle story, which I think most people misunderstand.  Way of the Turtle covers some fundamental concepts including types of traders, market states, trading plans, measuring returns, and trading with an edge, as well as systems, backtesting, optimization, system death, and psychology. It also describes how the market (and technical analysis) is concerned with cognitive biases, which is hugely important and not sufficiently covered in trading literature in my opinion.  It is about trading – creating a plan and trading that plan consistently. A plan includes markets, position sizing, entries, risk/stops, exits, and tactics/management, and the book puts it all into both detailed and general context in a clear and readable way.

4. “The Little Book of Currency Trading” by Kathy Lien

The Little Book of Currency Trading is a great primer on currency trading.  It explains the role of currencies in life and business, gives a brief overview of the currency market and includes sections such as “A-Z of Forex” and “Top 10 Mistakes.” Kathy touches on market participants, fundamentals and technicals, scams to watch out for, trade planning, and she recommends some trade identification methods. I would recommend the book to someone was thinking about exploring the world of currency trading and wanted a concise, intelligent and straightforward book.

5. “Attacking Currency Trends” by Greg Michalowski

Attacking Currency Trends by Greg Michalowski is a good book, aimed at mainly beginners but those with experience trading will also learn some things. He focuses on two key concepts: (1) trading at borderlines, and (2) the importance of psychology to reduce uncertainty and fear; and how both concepts fit well with a trend following strategy.
I enjoyed his description of a multi-timeframe analysis with 100/200 simple moving averages, and since reading the book I notice Greg’s “three’s a crowd” set-up all over the charts. His suggested strategies were clearly explained and included chart examples although I sometimes found the charts crowded and difficult to decipher in black and white.

6. “Trend Following” by Michael Covel

I’m glad I read it, and I have a lot of respect for systematic trend following.  Appendix A is brilliant and fascinating – and written by a different author. Covel’s writing style is simple and readable, but is inconsistent and repetitive. There are a lot of good quotes in the book, but the way they are assembled (dumped) throughout the text makes them less compelling.  The author obviously has great respect for CTAs and trend followers but, incredibly, I think his understanding of trend following is only superficial (maybe journalistic is a better description). His comparisons of trend following systems to non-trend systems are logically flawed (even if I agree with many conclusions), leading me to conclude that Covel is not a trader and does not have an inherent understanding of the method.  This is even more obvious when you read Appendix A which is everything that the rest of the book was trying to be but is not. His access to great traders is substantial, and the book at least has that going for it, but these traders deserve a better advocate – except that I don’t think they really want one anyway.  Covel provides Appendix A, which I highly recommend, separately on one of his websites at: http://www.turtletrader.com/blackstar-funds.html

[Longer review coming sometime]

7. “Come Into My Trading Room – A Complete Guide to Trading” by Dr. Alexander Elder

Come Into My Trading Room is a good and worthwhile book, with substantial wisdom especially for beginner traders (say 0-2 years’ experience), but with useful reminders and some new ideas for more experienced traders.  The book is divided into three sections: an introduction to trading for beginning traders; a large section covering psychology, technical analysis, trading plans, money management, and some trade set ups; and six example trades from Dr. Elder’s trading diary. The book is well written and for me is a rare example of a ‘complete’ trading book that touches on theory, set-ups, entries, exits, record keeping, psychology, money management, and general advice.  Some experienced traders may find parts too basic, but there are also a lot of higher level concepts like stop placement, how to define and calculate market noise, and tactics for swing versus trend trading which more experience traders will benefit from.

8. “Forex Patterns & Probabilities” by Ed Ponsi

Forex Patterns and Probabilities is a good book for beginners and relatively inexperienced traders.   It covers the absolute basics (skip the first 50 pages if you have any knowledge of trading or the forex market whatsoever), and has a number of valuable recommendations and general guidance. The largest sections of the book, and the real appeal of the content, are descriptions of two trending strategies and  three or four non-trending strategies.  The strategies are good, not complicated, and explain many elements of a good strategy for beginners. The way in which the set-ups / strategies were presented and summarised could have been significantly improved which was a small drawback. Also I thought the book should have included more/better information on money management and record keeping.  Despite the shortcomings, I recommend the book for beginners and for those wanting to see some basic strategies.

9. “Beyond Technical Analysis: How to Develop and Implement a Winning Trading System” by Tushar Chande

[Review coming soon]

 

10. “High Probability Trading Strategies” by Robert Miner

[Review coming soon]

11. “Entries & Exits – Visits to 16 Trading Rooms” by Dr. Alexander Elder

[Review coming sometime]

Other books that may get reviewed:

– “Beat the Forex Dealer” by Agustin Silvani

– “Technical Analysis Explained” byMartin Pring

– “Market Wizards” and “New Market Wizards” by Jack Schwager

– “The Complete Turtle Trader” by Michael Covel

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