It's HOW you read a book ...

Discussion in 'Psychology' started by alex.samant, Dec 18, 2007.

  1. It seems that everyone starting out and not making the mistake of throwing hundreds of dollars, if not thousands, off the window on online mentoring programs and chatrooms is buying books.

    People starting out buy books to find out more about the market. They stumble upon technical analysis and think "oh, this is going to get me money", "if i just find the right system" and your search goes on and on and on searching for the miracle system. This is a loop from which some wannabe traders don't get out until their accounts are totally depleted.

    Those who survive start reading books that deal more with individuals. Be it psychology, success stories, money management. That is because they discovered that it's a good thing to start paying more attention to yourself and the market as opposed to just the market.

    The idea here and the advice that i want to give to new traders is:

    When starting out and wanting to learn more about the market PLEASE learn more about the market itself: who the players are, when do they play, what drives them and the market, statistics etc.

    Then, move on and learn technical analysis in detail. Learn trend following indicators, learn oscillator, learn drawing tools, learn about S/R, BUT NEVER, and i repeat NEVER get stuck in a ready made technical analysis system, nor try to apply it, however tempting it may be ... (this saves you about 2 years of your learning curve)

    When you have aquired this basic and also vital knowledge


    Meaning, start exploring the way your market/markets work, look for repetitive patterns and their probability. Look for weakness in your market's armor.

    And then, when your research shows there are patterns to exploit, employ your technical skills to try to take advantage of your discoveries.

    This will be your system. When you apply your system you will get across two other barriers. These are called money management and psychology.

    Don't worry, these will dissappear as soon as you truly accept the probabilistic nature of trading. But they will not disappear because you read a book by Mark Douglas or Brett Steenbarger or Tharp. They will disappear when you will understand that you can't control your win-loss ratio, but you can control your risk-reward ratio, and by controlling one side of the ecuation, YOU ARE CONTROLING THE RESULT.