By Toni Turner (2nd edition, Adams Media, 2007)
This book provides everything one needs to know to start trading stocks online by helping analyze charts, news, buy-sell strategies and cherry picking.
Trading Versus Investing
Before venturing into stocks as a means of income one needs to clearly understand the difference between investing and trading. Investing involves buying a part of a company through stocks by understanding its business model, financial stability, earnings sustainability, etc. whereas trading is buying and selling a stock with less regard to the nature of the company or its operations. Investing requires patience and long-term time commitment in terms of months to years, whereas trading is buying and selling stocks in a time-frame ranging from minutes, hours to days and a few weeks.
One Cannot Beat the Market but Can Swim With It
Trading may seem like it will give infinite returns. Novice traders think they can churn money from the market, only to find out it is just not possible to win the market. With solid and abreast information and the knack to read the charts one can reduce the losses. Losses are part of the game. A trader needs to embrace it and learn from it. Emotions such as fear, anxiety, frustration, and greed should be kept aside while trading.
Understand How Stock Markets Work, Choose a Trading Style
The book explains the stock market fundamentals. How the stocks are traded by brokers on the floor, and online brokers providing market access to individuals. How the market makers, analysts, institutional investors, fund managers control the market. It's an ocean infected with hungry sharks. Loners fishing for small fish are at greatest risk if they don't understand catch tactics. Traders should choose a style based on their time and other commitments. Day trading requires 100% of all senses focused on the trading screens. Strategies to adopt for different trading styles are discussed in moderate detail.
Brief Illustration of Technical Analysis and Numerous Illustrations on Chart Patterns
The book discusses all the frequently used technical indicators on charts but does not provide a very detailed explanation. For beginners, this should be of good help. There are other trading books dedicated entirely to technical analysis, which the author references at the end of the book. The book is filled with ample real examples of chart patterns with pointed explanations for each chart.
Emphasis on Psychology of Trading
Time and again, the book stresses the importance of virtues of a day-trader. One needs to learn to control emotions, assimilate losses, not lose temper, and take breaks from trading when the odds are acting against one's moves. All these can be achieved by proper planning, having the market information at finger tips. The book gives great pointers on controlling emotions. At the end of each chapter, the author provides some inspirational excerpts called "Center Point." They help the reader to step aside from the "money mind" for a moment and look at life from a Martian perspective.
A Must Have Book for All Beginning Day-Traders
This book can be kept as a quick reference while learning the trade of trading the stock markets and should be read before testing the market with real money.
For a review of a book on a typical life of an aggressive full-time day-trader read "Pit Bull" by Martin "Buzzy" Schwartz.
This article was originally published on SeekingAlpha
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