One good trade has some good overall lessons how to approach both trading and investing. One Good Trade: Inside the Highly Competitive World of Proprietary Trading -burn8
Unless you are a floor trader or trying to scalp off a screen (good luck with that) then we are all basically investors no matter what our poison, the question then just becomes what is our preferred timeframe, and method of operation Markets display similar behavioural characteristics in all timeframes from tick chart through to however long a period your charting package displays, easy to see, much harder to make money from, with the shortest timeframes being the hardest.lol. Smart investing starts with finding the optimum point to enter available at that particular point in time. So some simple maths will show how great the positive percentage return is impacted compared to the risk taken on, think of it as a sliding rule, the better the entry the lower the risk if done correctly, generally, buy and hold is fraught with danger because of this mathamatical phenomenon to the downside as well. Therefore, I would suggest that it is imperative that an investor have an understanding about what is loosely referred to as trading. Another point relating to risk management is that a small percentage can be used to make superiour returns whilst the balance of the assets can be invested in low risk areas, allowing for far better overall returns with lower risk and if done smartly no risk of loss apart from possibly inflation or opportunity cost. Therefore, a good understanding about what is loosely referred to as trading is critical to overall success. Cheers John
I have read the first 3 books mentioned and agree particularly with Reminiscence of a stock operator and considering his/her good judgement will now probably read the last three. One book that I would also recommend is "The Elements of Successful Trading" by Robert P Rotella. I should note that it was only after I gained a comprehensive understanding of the markets that I was able to develop an effective money making approach. This is more a text book style rather than your run of the mill "Do this and you will become a millionaire" style book, as with every profession it pays to start with the basics. This book helped me lay the foundations that led me to develop successful strategies that I have never seen presented anywhere else. To the budding Wall Street Warriors, I wish you all the best in your journey of discovery. Cheers John
Though one could argue that anyone who ever sells, regardless of how long he held the position, is a "trader" (as opposed to those who buy and never sell), investors and traders have different goals and perceive the market differently. Investors aren't going to be in and out several times a day. Traders aren't going to spend much time with 10Ks. Since the OP has not clarified what he meant, I assume he had something in particular in mind when he chose the word "investing".
I'm not so sure that you could argue that at all, people buy and sell at all different times for any number of reasons, that doesn't make them traders. How many people do you know that buy and never sell, I personally don't know of many, by your metric there are hardly any investors at all. On another note, it is always a mistake to assume anything as it tends to make an ass out of you and me.lol But if you want your ego stroked then call yourself a trader, it doesn't change anything. lol Cheers John
My point was not that everyone is a trader but that there are differences between investors and traders. Your position was that everyone is an investor. If you want to consider someone who is in and out several times a day an investor, that's your privilege, but it alters the traditional meaning of "investor" considerably. In any case, the subject of the thread is books. Perhaps the OP is interested in trading books as well.
Perhaps if you were to re read my original post you would see that I separated floor traders and scalpers who are generally in and out of positions numerous times per day, from investors. I was simply saying that being fully informed pays dividends and is a good place to start, but of course if you don't agree feel free to say so. Cheers John
Those who are in and out more than once a day are not necessarily scalpers. Nor are those who hold a trade for a day or more investors. As I said, investors and traders look at the market in different ways and want different things from it. What matters is not what one calls himself but being clear on what he wants from the market and how he plans on going about getting it. And perhaps the OP will find useful information in books on trading. Unless and until he checks in, I can't say.