Trading for a Living by Alexander Elder
As a software developer who loves to follow the latest news in the technology world, I have come across many articles about automated trading platforms in the financial markets. The jargon they use was foreign to me. My financial strategy has always been index funds and 401ks. I have read many books warning about the dangers of day trading and imploring readers to follow simple long term, proven strategies. However I was always curious as to why day traders believed what they did.
This book provides a thorough overview of technical analysis for day traders. It helped me understand the computerized day trading articles that pop up in my news feeds. The author has a doctorate in psychology and emphasizes that trading based on greed and thrill seeking will spell doom for any trader. He proclaims that emotions have no place in trading, that the markets will never react to your feeling and most traders fail due to their own self destructiveness.
After reading the book, I realized I am not ready to jump into technical analysis day trading, and I may never be. My thoughts, which may be completely specious, is that markets always change and no single or set of technical indicators will provide ever lasting profits. A good trading system must be unique and evolving.
I wish the section on money management contained more information. To my surprise, the amount of money to put at risk on any single trade seemed small. However, since no system never loses money, you need to have enough in your account to account for risk. Plus, I think risking small amounts of you account will allow you to be less emotional about loses. Losing 50% as opposed to only 2% on a single trade can have a dramatic effect on your decision making.
In summary, I enjoyed the book, but concluded that I would rather be spending my time on other constructive activities rather than working on a trading system which may lose money.