Could some one you (or everyone) list your top 3 favourite books about investment, trading and finance overall? Books worth reading that doesn't consists of 200 pages of complete bs!
Funny thing, right after I posted my previous post that I didn't know what it was, it was right in front of me on my paper!
There's a lot of "discussion" about edges on ET. And elsewhere. Some think you have to be bonking Lloyd Blankfein's daughter. Some think a bowl of hot oatmeal every morning provides an edge. I have yet to find a definition that beats Mark Douglas': "Your edge begins with the knowledge you gain through your research and testing that a particular . . . market behavior offers a level of predictability . . . that provides a consistently profitable outcome over time." With it, you make money, if you can implement it and do so consistently. Without it, you're just guessing your way through the day, hopefully with paper trades. Edge or skill? Does it matter? As long as one knows what to look for and makes money with what he finds, who cares? Take Rearden Metal's ES trade, for example. Though he did not want to reveal his edge in coming up with his trade, and had every right not to do so, it may be purely coincidental that the trade was simply a matter of buying the extended lower limit of January's trading range at 18 and selling as price approached the upper limit at 44, the key level being 31, the mean of the range. Is a knowledge of and understanding of mean reversion an edge? Arguably. Did any of those who were following this call have any idea what was going on? Not that I could tell. Why was that? This isn't cabalism. Study the market, do your research, test your hypotheses, find out what works and what doesn't. Then trade your results consistently. Only a tiny percentage of traders bother to do this. So only a tiny percentage of traders succeed.
Also interesting that the ES bounced off that mean within a few ticks Sunday nite, then propelled itself through the top of the range to 56. I wonder if anyone took advantage of that.
Dennis, Very important to watch out for SNAKE OIL SALESMAN who try to help you at first and then try to get you to pony up $10k for "education" through email correspondence. Blotto does this.
Since only one person answered your question, I'll offer some of the books I recommend, at least to someone who's just starting: General Semantics of Wall Street by John Magee This is the book I would recommend to anyone interested in trying his hand at the stock market. It is not, however, exciting, by any stretch of the imagination. Nor is it a book to read over the weekend. Magee takes his time, and the reader would do well to take his time also. This is a book to think long thoughts about. It is not at all difficult. It is, in fact, very easy. But the concepts which it addresses are fundamental, in the deepest sense of the word, to an understanding of what markets are, how they work, and what one can expect to earn from them. The Nature of Risk/How to Buy/When to Sell by Justin Mamis Once you understand the basic concepts explored in Magee's book, these three will tell you most everything else you need to know to be a successful trader/investor. These are classics, which to some people means "old" or "out of date". How to Buy and When to Sell were, in fact, out of print for a while, but reader demand brought them back, which is always a nice endorsement. Following are the reviews I wrote for The Nature of Risk: It's been four years since I first reviewed this book [next review], and I still consider it to be absolutely essential for anyone considering any sort of involvement in the financial markets. In fact, it's probably essential for anyone who is considering anything at all that entails more than minimum risk. The amateurs miss the point. This is not about the best stochastic settings or how to massage the bid and the ask. This is about facing up to the very real risks inherent in the financial markets, including the very real risk of financial ruin. Amateurs don't see the risk; therefore, they don't bother to grapple with it. Instead, they would rather blow up and disappear. If one wants to last, he must come to terms with the nature of risk, his own tolerance for risk, an understanding of how to manage risk. Without that, he's doomed. ----- The Nature of Risk is a seminal work for anyone who understands that self-knowledge is key for success in the financial markets, particularly at market extremes. Rather than babble about risk in general, Mamis takes this engine apart and examines its parts, among which are information risk and price risk. He explains that as one's tolerance for information risk increases (the need to know why the stock is doing whatever it's doing), one's price risk diminishes (one is better able to jump in and take advantage of whatever opportunities for picking up cheaper shares present themselves). On the other hand, if one has no tolerance for information risk and must know everything about a stock's movement, his price risk will be that much greater because the price will likely, by then, have risen to an over-extended level. Therefore, having identified these components of risk (time risk is another), one must then balance them out in order to approach the markets rationally and unemotionally. An extremely important work, particularly for the investor who is plagued by doubt, confusion, and anxiety. The Nature of Risk and When to Sell were updated in 1999 and How to Buy in 2001, largely because they hadn't been updated in years. And while most novices want whatever is hot off the presses, the concepts presented in these books are timeless and require no "updating" whatsoever. What did and does require updating were the "indicators" which Mamis used for helping him get a feel for what was going on underneath the market, and by "indicators" I don't mean mathematically-derived appliances like RSI and MACD and CCI, I mean indicators of breadth and sentiment and so on, such as those which Zweig has used [or "used"; he has since died] for so many years, e.g., specialist short-selling, odd lot sales, new highs/new lows, etc. Unfortunately, what with the dominance of funds, hedging, arbitrage, and online short-term trading, most of these indicators are no longer of much use, leaving advancing and declining volume pretty much alone as a guide to underlying sentiment.
Not a surprise that my last post on this thread didn't survive. The powers that be here find it acceptable for one of ET's sacred cows to tweak a guy who is discovered to have solicited others for $10K email training, but it's unacceptable to tweak the sacred cow who also scrounges for followers to profit from. In my view, anyone who holds himself out as a veritable guide to the hapless is fair game for sarcasm and jeering from members of the peanut gallery who see him for what he is. Obviously that view doesn't comport with management's desire for increased post count. It's all in good fun anyway. Having spent a year away from this place, I find myself less tolerant of the bullshit that goes on now that I'm back. I just request a fair warning to archive some stuff from my account before I am permanently banned, which I'm thinking is not too far off in the future.