I've been so busy over the last six months that somehow I missed that Dr. Steenbarger released a new book. He is one of only a few authors that are on my list to buy whatever they release, without question. His work is also on the short list of material that I can say absolutely has been instrumental in helping me learn how to be a profitable trader. It's on amazon here.
This summer, I've been reading Walter Deemer's Deemer On Technical Analysis and it has been one of the best technical analysis books that I've read in a really long time. Mr. Deemer gives his take on using TA for longer term investors and he shy's away from the ultra short term time frames that many modern trading books focus on. He had a long career as a technical analyst and his book is chock full incredibly interesting and witty observations based on his own experiences from his career.
Deemer not only breaks down what he feels is useful about TA, he also does a great job of explaining his beliefs on why the TA that he uses works. You're not going to see pictures of massive charts with multiple indicators and squiggly lines in this book..he keeps his charts to the bare minimum of what he considers useful tools. This book will likely be the book that I recommend to people when they ask me for a good book that can help them get started with investing/trading or with TA in genearl. If you haven't read it yet, pick it up or order it for the kindle/ipad. It's well worth the read.
As a bonus, I coded his Breakaway Momentum indicator for think or swim. This indicator uses the NYSE advances and declines that are added together for the trailing 10 days and then a ratio is created of advances to declines. To be breakaway momentum, the reading has to be above a 1.97. These readings only happen once every 31 and a half years on average. That being said, we had three in 2009..a bit of an anomaly and a testament to how oversold the market was after the 2008 meltdown. For more info and historical recordings of breakaway momentum check out Mr. Deemer's website here.
Here's a chart, note TOS has some data issues with advance decline numbers starting in 2009 and going backwards, however, this indicator works well with recent data and you can still see the 3 breakaway readings in 2009..there are just some holes in the data that don't look pretty.
I love books that apply to trading that do not directly have anything to do with trading. These types of books tend to be about achievement and quite often about achievement in some type of competitive sport. The best are usually about the psychology of playing a competitive game, The Inner Game Of Tennis is a great example. Another great book that I've been slowly working my way through is Golf Is A Game Of Confidenceby Dr. Bob Rotella.
In this book, Dr. Bob walks you through 18 stories about different golfers that encountered and overcame some sort of challenge, generally a psychological challenge, in their golf game. Some of the players are professionals while others are just amateurs. To demonstrate how applicable some the principles of this book are to trading, I will show you an excerpt paragraph in its original form and then show it again but with a few words changed.
Original excerpt from the book:
The second constant is the game plan. I want professionals to make their decisions about par fives on Tuesday and Wednesday, during practice. That way, their decisions are more likely to be coolly taken than they would be in the heat of competition. Of course, a plan has to have some flexibility, taking into account such things as the presence or absence of favoring winds. But in general, a player who thinks she is executing a plan is morel likely to be decisive than a player who walks onto a tee wondering what to do. And decisive players, by and large, hit better golf shots.
Changed version adapted to trading with changes in bold:
The second constant is the game plan. I want professionals to make their decisions about trading scenarios (setups)before or after market hours. That way, their decisions are more likely to be coolly taken than they would be in the heat of the trading day. Of course, a plan has to have some flexibility, taking into account such things as the presence or absence of favoring market conditions. But in general, a trader who thinks she is executing a plan is more likely to be decisive than a trader who watches the market wondering what to do. And decisive traders, by and large, makemore profitable trades.
Very interesting. Sounds like a paragraph straight out of a trading book. I've only read about half of this book but from what I've read, I would highly recommend it. Dr. Bob Rotella also has another book that I'd like to read called Golf Is Not A Game of Perfect, which I'll probably get after I finish this one.
I just finished reading Adventures of a Currency Trader: A fable about Trading, Courage, and Doing the Right Thing by Rob Booker (yes, I know my blog says that I'm currently reading Exceptional Trading by Ruth Roosevelt and I still am, but I tend to read several books at the same time). It was a pretty good read and I must admit that there are some really good lessons to be taken from the book.
One thing that stood out to me was Harvey's 3 rules. In the book, Harvey is the mentor that helps the main character, Harry Banes, become a successful trader. Harvey claims that the "most important laws of currency trading have nothing to do with entries and exits." I would agree with that statement. Here are Harvey's 3 important rules:
Thou Shalt Never Lose More Than 25 Perecent of Thine Account.
Thou Shalt Test Before Trading.
Thou Shalt Stand Accountable to Another Person for Thy Trades.
Pretty good rules and overall a good book. Check it out sometime...especially if you're interested in trading currencies.
Don't even debate it, just read it. It's an introduction to trading composed by one of the best--a psychologist that understands the mental aspects of trading. If you're not familiar with Dr. Steenbarger, you should be. And, fyi, he's got a new book coming out. This is certainly worth getting.
I just finished reading Adventures of a Currency Trader: A fable about Trading, Courage, and Doing the Right Thing by Rob Booker (yes, I know my blog says that I'm currently reading Exceptional Trading by Ruth Roosevelt and I still am, but I tend to read several books at the same time). It was a pretty good read and I must admit that there are some really good lessons to be taken from the book.
