Book recommendation

[sub5mango]

Hi all

Can anyone recommend some good books that would take me to the next step?

This is my status:

I would like to start trading futures.

So far I have a basic understanding of:
risk (3-5% of my principle on any 1 trade - use stop orders), the ratio of profitable to loss trades (4:6), protecting my principle (trade 20% of margin at any one time), profit ratios (1:1.5-2).

I intend to focus on using technical analysis BUT I don't have any entry, exit strategies formulated.
I have time to day trade but thought it better to start out with swing trading.
I have a small principle (that's why I chose futures over stocks).

I thought the next step would be learning to read charts and I was considering these books:
Schwager, Jack D Technical Analysis (Schwager on Futures)
Schwager, Jack D Study Guide: Technical Analysis (Schwager on Futures)
John J. Murphy Technical Analysis of the Financial Markets: A Comprehensive Guide to Trading Methods and Applications (New York Institute of Finance)
John J. Murphy Study Guide: Technical Analysis of the Financial Markets: A Comprehensive Guide to Trading Methods and Applications (New York Institute of Finance)
Richard J. Teweles (Author), Frank, J. Jones The Futures Game: Who Wins, Who Loses, & Why: Who Wins, Who Loses, and Why

Thanks in advance for any advice.

 

[new_trader]

Try this thread in the FAQ

http://www.trade2win.com/boards/trading-faq/30637-books-should-beginner-read.html

 

[Magos]

What do you mean by next step: ?
Money Management ? Trading Psychology? Research?

 

[sub5mango]

Thanks for you reply Magos

What do you mean by next step: ?
Money Management ? Trading Psychology? Research?

I guess by "next step" i was actually asking where it is advisable to focus (money mag, psycho, etc.) considering my status.

In terms of money management i was thinking: Money Management by Ryan Jones
In terms of trading psychology: Trading In The Zone by Mark Douglas
Research: ? I would welcome any suggestions

(new_traders link helped me find those - thanks nt.)

 

[Magos]

I can recomment you some
-----------------------------------
Money Management: The Disciplined Trader - Douglas, The Mathematics of Money Management: Risk Analysis Techniques for Traders (Wiley Finance) - Ralph Vince

Trading Psycology:Enhancing Trader Performance: Proven Strategies From the Cutting Edge of Trading Psychology (Wiley Trading), The Trading Athlete: Winning the Mental Game of Online Trading by Shane Murphy and Doug Hirschhorn

Research ??????? Big question: WHAT DO YOU WANT TO TRADE ???

 

[zigglewigler]

I have three recommendations.

1. Trading In The Zone, by Mark Douglas.
2. Trading In The Zone, by Mark Douglas.
3. Trading In The Zone, by Mark Douglas.

Get that bit right, the rest will follow.

All the TA stuff you can source on the web, try, reject etc.

Nothing works until your head does.

 

[sub5mango]

Thanks Magos, I will check those out

Research ??????? Big question: WHAT DO YOU WANT TO TRADE ???

Futures, probably one of the minis at first as I have low capital.

 

[sub5mango]

Thanks zigglewigler, you've convinced me to get trading in the zone.

All the TA stuff you can source on the web, try, reject etc.

Can you recommend any sites to source the TA stuff. I've found bits and pieces but not really concrete?

 

[Magos]

Thanks Magos, I will check those out



Futures, probably one of the minis at first as I have low capital.

Ok lets talk about stradegy. Are you going to do scalping, short term/medium term or long term strategy

If trading Money markets check out: Trading STIR Futures: An Introduction to Short-term Interest Rate Futures by Stephen Aikin
:smart:

 

[Albert Carey]

risk (3-5% of my principle on any 1 trade - use stop orders), the ratio of profitable to loss trades (4:6), protecting my principle (trade 20% of margin at any one time), profit ratios (1:1.5-2).

What are "profit ratios"? This is not standard terminology. You are probably referring to either the profit factor or the avg. win to avg. loss ratio.

If the ratio of profitable to loss trades is 4:6 then I take that to mean that for every 10 trades you get 4 winners and 6 losers. Thus, your success rate is 40%.

(A) If your avg. win to avg. loss is equal to 2 as a best case scenario then your profit factor will be equal to about 1.333. After slippage and commission you will NOT be making any money. This profit factor is way to low.

(B) If you meant that your profit factor is equal to 2 as a best case scenario, then the required ratio of avg. win to avg. loss is about 3. You will need average winners 3 times as large as average losers in this case. I find that extremely hard to realize in any trading time frame other than longer term.

The formulas I used for the calculations I made are from the book "Profitability and Systematic Trading: A Quantitative Approach to Profitability, Risk, and Money Management" by Michael Harris, just published by Wiley:

Wiley:rofitability and Systematic Trading: A Quantitative Approach to Profitability, Risk, and Money Management

This book is a real gem. Michael Harris is a down to earth trader and this is reflected in his software (Discover trading systems automatically with APS Automatic Pattern Search trading software) and books. I also liked his first book, Short-term Trading with Price Patterns. He talks about shortcomings and limitations of trading methods and systems, something that hyped-up authors systematically avoid since they only want to please traders.

Albert

 

[sub5mango]

Hi Magos,

short/medium term.
I haven't decided on a market - that is one of the answers I am looking for from researching / reading.

I had a look at those books you recommended, here's my thoughts:
Money Management
The Mathematics of Money Management: Risk Analysis Techniques for Traders (Wiley Finance) - Ralph Vince
Looks very interesting but looks too complex for me at the moment. I like the look of, The Trading Game: Playing by the Numbers to Make Millions (Wiley Trading) by Ryan Jones - have you read it?

Trading Psycology
Enhancing Trader Performance: Proven Strategies From the Cutting Edge of Trading Psychology (Wiley Trading), The Trading Athlete: Winning the Mental Game of Online Trading by Shane Murphy and Doug Hirschhorn
The Trading Athlete seemed to resemble a book I have on how to improve the mental game of my skiing! So because of that overlap, I think I prefer the look of Trading in the Zone by Douglas.

Thanks for your continued input.

 

[Magos]

Hi Magos,

short/medium term.
I haven't decided on a market - that is one of the answers I am looking for from researching / reading.

I had a look at those books you recommended, here's my thoughts:
Money Management
The Mathematics of Money Management: Risk Analysis Techniques for Traders (Wiley Finance) - Ralph Vince
Looks very interesting but looks too complex for me at the moment. I like the look of, The Trading Game: Playing by the Numbers to Make Millions (Wiley Trading) by Ryan Jones - have you read it?

Trading Psycology
Enhancing Trader Performance: Proven Strategies From the Cutting Edge of Trading Psychology (Wiley Trading), The Trading Athlete: Winning the Mental Game of Online Trading by Shane Murphy and Doug Hirschhorn
The Trading Athlete seemed to resemble a book I have on how to improve the mental game of my skiing! So because of that overlap, I think I prefer the look of Trading in the Zone by Douglas.

Thanks for your continued input.

Ok trading in the zone is in my top5 Psychology books

ON the other hand check the attachment in this reply.. it will give you a head up on money management by Tim Wilcox . the guy is legent

 

[sub5mango]

ON the other hand check the attachment in this reply.. it will give you a head up on money management by Tim Wilcox . the guy is legent

Hi Magos, can't seem to open the attachment - tried double clicking and get no response...

OK got it open - already reading a pdf online and that was blocking it.

 

[Magos]

hope that will get you on track LoL

 

[sub5mango]

What are "profit ratios"? This is not standard terminology. You are probably referring to either the profit factor or the avg. win to avg. loss ratio.

If the ratio of profitable to loss trades is 4:6 then I take that to mean that for every 10 trades you get 4 winners and 6 losers. Thus, your success rate is 40%.

(A) If your avg. win to avg. loss is equal to 2 as a best case scenario then your profit factor will be equal to about 1.333. After slippage and commission you will NOT be making any money. This profit factor is way to low.

(B) If you meant that your profit factor is equal to 2 as a best case scenario, then the required ratio of avg. win to avg. loss is about 3. You will need average winners 3 times as large as average losers in this case. I find that extremely hard to realize in any trading time frame other than longer term.

Hi Albert, thanks for your input.
First up, I read the first chapter from Profitability and Systematic Trading: A Quantitative Approach to Profitability, Risk, and Money Management by M Harris and I like it. It's recent and nicely lays out the reasons for doing things.

My numbers:
Yes success rate of 40%.
By profit ratio 1:1.5-2 I meant for every £1 I risked I expected to make a return of at least £1.5-£2.
So if I made six trades loosing 6x£1=£6 and four trades making 4x£1.5-2=£6-8 I would end up breaking even or with a profit of £2.
So yes I agree I have set it too low as I have made no allowance for slippage or commission.

 

[sub5mango]

Magos, anyone

"Trading by the book" by joe ross seems to get a lot of good press...any comments?

 

[sub5mango]

New Market Wizards - try and get inside the mind of the sorts of people who are taking a ton of dough out of the market.

And while you're reading it, ask yourself this question;
"How many of the people interviewed in this book are scalping off 5 min charts trading currencies?". Yup - none of em.

GJ

Hi GJ, yea New Market Wizards I think is a must buy, thankyou.

 

[Magos]

Magos, anyone

"Trading by the book" by joe ross seems to get a lot of good press...any comments?

I dont know about the "Trading by the book"... havent read it sorry.

I am reading at the moment a book called Traders, Guns and Money nothing relevant to money management. Maybe the opposite

 

[zentrade]

I have three recommendations.

1. Trading In The Zone, by Mark Douglas.
2. Trading In The Zone, by Mark Douglas.
3. Trading In The Zone, by Mark Douglas.

Get that bit right, the rest will follow.

All the TA stuff you can source on the web, try, reject etc.

Nothing works until your head does.

Basically a newbie here, and just started out reading this along with Stan Weinsteins "Secrets of Profiting in Bull and Bear Markets"


Both are making for great reading.

 

[porph]

I dont know about the "Trading by the book"... havent read it sorry.

I am reading at the moment a book called Traders, Guns and Money nothing relevant to money management. Maybe the opposite

An excellent book. I've read it through at least 4-5 times.

I tend to prefer the books that are more anecdotal rather than books that say 'if you do this you will make money'. Reminsces, Market Wizards etc

Having said that, has anyone read any of Jack Schwagers books on tech or fundamental analysis? I need something to aid my fundamental ideas and I really don't want to have to dust off my economics textbooks...