Recommended reading for a newbie trader

A

akeserla

Hi:

I have been trying to get a feel of the stock market for the last 6 months. I have spent significant amount of time trying to learn the art of trading.

I do read a lot of articles/books/newspapers etc. I get a feeling techinical analysis seems to be the most important factor a day trader.

To keep abreast of the day to day happenings and also possible trades/education.

I subscribe to Barrons already for the last 6 months. I just started subscribing to IBD and FT this month.

Any suggestions from fellow traders will be appreciated
 
Quote from akeserla:

Hi:

I have been trying to get a feel of the stock market for the last 6 months. I have spent significant amount of time trying to learn the art of trading.

I do read a lot of articles/books/newspapers etc. I get a feeling techinical analysis seems to be the most important factor a day trader.

To keep abreast of the day to day happenings and also possible trades/education.

I subscribe to Barrons already for the last 6 months. I just started subscribing to IBD and FT this month.

Any suggestions from fellow traders will be appreciated
More...



Thoughts:

I have been doing this a long time. Technical Analysis is pretty much a waste of time. Many will say otherwise, but many institutional studies prove them wrong.

Stay away from Elliot Wave. Fibonacci, astrology, "candlestick patterns", Gann and other Hocus Pocus. They are popular but basically useless.

Almost everyone who gives you advice here on ET is a paper trader, not a successful trader.

Almost every trader will lose their money. You are no different. Figure that 95% of traders lose their money. Most of the remaining 5% break even or make small amounts. Very few make a living. You are no different.

Focus your time on price action. Be prepared to spend over 8000 hours before profitable.

Stay away from gurus, mentors and vendors. 99% of them have no idea what they are doing. You will lose everything trying to find the 1%. If you do this anyway, INSIST on audited returns/track records - watch them make excuses when you demand this.

No matter what people here say, you will not be making regular, dependable money after a few months.

Advice? For the average person, almost any other pursuit is better than trying to become a successful trader.
 
Technical Analysis is not a waste of time. I trade based on charts only. I am a day-trader and trading is my only means of making a living. Traders need to have something to lean on in order to trade. Will you buy a share of MSFT stock for $100/share? It depends. So how do you judge? You can only tell by looking at a chart. (I will buy MSFT at $100 if there is a high probability that the next guy will buy it from me at $100.50). Any action that involves looking at a chart is, by definition, doing technical analysis. So how can technical analysis be a waste of time? If you are a pure fundamentalist, then you buy MSFT or whatever your favorite stock is, regardless or price, regardless of the market conditions, at any time, without looking at the chart. Why? Because you are a fundamentalist. If the fundamentals look good, you don't need to look at no charts.

Now reading Barrons, Investor Business Daily, Wall Street Journal... *that* IS a waste of time. Especially if you are (and your mentioned) day trading. Those publications are for sheeps//////investors. The price of any stock has already moved by the time you see the article(s) printed in those publications. Basing those to do your tradings will guarantee you to be in the 90-95 percentile. Decide who you want to be. An investor? Or a trader?

Forget about spending much time reading this and reading that about a particular company. By the time you read a "story" about a stock, it is usually too late to get in. Spend more time in practicing how to trade based on price action movements and learn from your own mistakes. The exercise is simple: Narrow to only a few stocks to look at. Make some predictions based on a price action setup or something (however you want to trade). Validate. If it turns out that the price moves in a different direction than you predicted, learn what went wrong. You will become better and better at it. This trading business is mostly about "what NOT to do".
 
If you are looking to day trade, then I completely agree with Bolimomo's post.

If you're looking for books to read, I suggest in the following order:

1. Reminiscences of a Stock Operator - I can always get something useful out of that book, personal preference to chapter 5.

2. Trading in the Zone - Good stuff on psychology.

3. Mastering the Trade

4. A Complete guide to technical trading tactics - this is technical analysis, mainly around pivot points and candlesticks.

5. If you have time, check out the Market Wizard books.

These are just my personal opinions, others will vary.
 
Thanks Bolimomo & CTT, you guys are right. I did start reading Reminiscenses of a stock operator. Seems like it is the must read book.

The sentiment you passed on with regards to IBD/Barrons/FT was something i was sensing. It seemed like it was too late and most of the price action was already over. Though the stocks could go higher... it is not day trading.

Appreciate the feedback.
Sincerely
 
Quote from TraderZones:



Thoughts:

Almost everyone who gives you advice here on ET is a paper trader, not a successful trader.
More...


Including, I assume, YOURSELF.
 
Quote from akeserla:

Thanks Bolimomo & CTT, you guys are right. I did start reading Reminiscenses of a stock operator. Seems like it is the must read book.

The sentiment you passed on with regards to IBD/Barrons/FT was something i was sensing. It seemed like it was too late and most of the price action was already over. Though the stocks could go higher... it is not day trading.

Appreciate the feedback.
Sincerely
More...

On second thought, the front page of IBD can be useful. I'll pick up a copy if I miss a day trading just to see what happened, it focuses more on short term then the financial times for examples.
 
Bolimomo has it right. As a day trader, I have been consistent using very simple technical indicators - support/resistance, trend lines, stochastics, and 8- and 20-period moving averages. The last few months of my journal has many charts posted showing the technical indicators that got me successfully into and out of trades (starting around this page - http://www.elitetrader.com/vb/showthread.php?s=&threadid=132626&perpage=6&pagenumber=13).

Check out Oliver Velez' day trading books and his free webinars - I found them to be superb. I also highly recommend Josh Lukeman's Market Maker's Edge for his opening chapters on risk management - priceless, especially if you have the discipline to follow his advice.
 
Thanks again CTT and NoDoji, I am happy I am getting the answers that I had been look for. This is the forum for aspiring day traders.

Thanks for the informative posts
 
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