How can I acquire a basic understanding of trading?

[Potte]

Hello all,

I am looking for a beginner book on trading and perhaps some other basic learning resources, mainly for the purposes of determining whether I want to start pursuing a trading career.

Background:
I have a master in science and economics, which I completed a year ago. Since then I have been playing poker professionally, which I enjoy very much. It seems to me that poker and trading require similar types of skills, such as understanding math, assessing risk and reading the opponents. Before I start throwing my cv to potential employers I want to do some research on my own, with two goals in mind:

1.To assess whether I want to become a trader at all, i.e. if the job seems to fit my skills and interests.
2. To build a basic understanding of the job so that I can write good cover letters and do well on interviews.

Any ideas on books and/or other resources for my purposes (1-2 above) are greatly appreciated.


//Patrik

 

[Lord Flasheart]

If you genuinely have succeeded at poker you have all the skills required.Learn everything from this site and dont waste money on exspensive courses

 

[N Rothschild]

read read read and read some more, then spend 1-2years face time with the markets

 

[RedGreenBen]

Hello all,

I am looking for a beginner book on trading and perhaps some other basic learning resources, mainly for the purposes of determining whether I want to start pursuing a trading career.

Background:
I have a master in science and economics, which I completed a year ago. Since then I have been playing poker professionally, which I enjoy very much. It seems to me that poker and trading require similar types of skills,

The key difference between poker and trading (and I speak as an OK trader and terrible poker player) is that you don't get to 'see' who you are up against, just their collective action.

This shows itself as price, just like poker players have patterns and styles that can be exploited, the same is true of price. As others have suggested, you need to spend time watching price action, many of the other skills (money management etc) you probably already have.

Ben

 

[GammaJammer]

The key difference between poker and trading (and I speak as an OK trader and terrible poker player) is that you don't get to 'see' who you are up against, just their collective action.

This shows itself as price, just like poker players have patterns and styles that can be exploited, the same is true of price. As others have suggested, you need to spend time watching price action, many of the other skills (money management etc) you probably already have.

Ben

Not strictly true Ben - you don't get to see individual names sure, but you more often than not can find out what type of investor / speculator / hedger is doing whatever it is you can see happening. And at that point the poker analogy probably has more relevance.

Of course, at the very short timeframe end, only the wholesale players have that type of info available (and even then, it's not democratic, it's more like a club sometimes). But at the mid to longer end it's far more widely available. Which is why I can never understand why retail traders just wanna sit and prat about scalping - what informational edge do they possibly have - none.

 

[Vaco]

potte,

I'm confused, do you want info on what type of trader jobs are out there and what is required to get these jobs

or do you wish to become a retail trader and want to know where to start educating yourself?

 

[GammaJammer]

Or both (which is understandable, although maybe not realistic).

 

[Potte]

read read read and read some more, then spend 1-2years face time with the markets

What should I read?

 

[Vaco]

What should I read?

no one can answer that untill you make yourobjectives clearer

 

[Potte]

potte,

I'm confused, do you want info on what type of trader jobs are out there and what is required to get these jobs

or do you wish to become a retail trader and want to know where to start educating yourself?

I am sorry for my vagueness, it probably comes from my lack of knowledge in the field of trading and the fact that english is not my first language. To clarify, based on your reply:

I am not looking for an actual trader job yet, since I am not yet convinced that I want to move from poker to trading. If I decide to pursue a trading career, I will probably start a new thread in another sub-forum (or use the search function) to find out what type of trader jobs there are and how to get them.

My first step would not be to start trading on my own, but rather to look for a position at a firm. The reasons are not important in this discussion.

What I am currently looking for is ways to educate myself on financial markets and trading in order to (1) assess whether I want to start pursuing a trading carreer at all and (2) build a basic understanding in the field so that if I start looking for a job I can write good cover letters and do well on interviews.

I was hoping that there is a book out there that explains:
- Who are the players and what do they do?
- Why is money made? Who wins and who loses and why is it so?
- What kind of information are decisions based on?
- Which are the financial instruments?
- etc etc etc...

I have found "Traderpedia" on this site very helpful for a starter, but I would like to read about these things in more detail.

 

[Vaco]

I am sorry for my vagueness, it probably comes from my lack of knowledge in the field of trading and the fact that english is not my first language. To clarify, based on your reply:

I am not looking for an actual trader job yet, since I am not yet convinced that I want to move from poker to trading. If I decide to pursue a trading career, I will probably start a new thread in another sub-forum (or use the search function) to find out what type of trader jobs there are and how to get them.

My first step would not be to start trading on my own, but rather to look for a position at a firm. The reasons are not important in this discussion.

What I am currently looking for is ways to educate myself on financial markets and trading in order to (1) assess whether I want to start pursuing a trading carreer at all and (2) build a basic understanding in the field so that if I start looking for a job I can write good cover letters and do well on interviews.

I was hoping that there is a book out there that explains:
- Who are the players and what do they do?
- Why is money made? Who wins and who loses and why is it so?
- What kind of information are decisions based on?
- Which are the financial instruments?
- etc etc etc...

I have found "Traderpedia" on this site very helpful for a starter, but I would like to read about these things in more detail.

I've highlighted that parts of your statement that stand out to me, from this I am pressuming that you are looking for a position in a prop shop where they will train you and then let you trade.

If that is the case there are many threads here relating to that.

As for basic knowdlege i suggest you begin here Amazon.com: "Top 5 stock trading books for beginners"

I cant recommend any of them but I can tell you that no one book will give you all the info you are after.

 

[RedGreenBen]

Not strictly true Ben - you don't get to see individual names sure, but you more often than not ...

I don't want to hijack this thread, but interesting points noted, ta. - Ben

 

[timetotrade]

If you are looking for a book to persuade you to pursue a trading career, I recommend Reminiscences of a Stock Operator by Edwin Lefevre. Definitely one of my all time favourites and will answer most of your questions. Martin Zweig used to give a copy to everyone who went to work for him.

 

[GCC]

I am looking for a beginner book on trading and perhaps some other basic learning resources, mainly for the purposes of determining whether I want to start pursuing a trading career.

If one beginner of poker approaches you and ask you how to acquire a basic understanding of poker, how will you answer him?

You can see it is not a easy question to answer!

To start with, if you want to trade forex, I recommend the book Bird Watching in Lion Country by Dirk du Toit, or if it is for trading in general, I recommend Trading Chaos by Bill Williams.

It seems to me that poker and trading require similar types of skills, such as understanding math, assessing risk and reading the opponents.

This sounds interesting to me: if you have never traded before, where do you get the impressions that trading is like poker?

And this is also seen in the below paragraph:

I was hoping that there is a book out there that explains:
- Who are the players and what do they do?
- Why is money made? Who wins and who loses and why is it so?
- What kind of information are decisions based on?
- Which are the financial instruments?
- etc etc etc...

I can see that you are trying to approach trading as if it is poker, so that you insist on knowing all the above as if all other traders are playing poker with you on the same table.

But I can tell you, you can become very profitable without knowing the above, although it may be interesting to know. In fact, since there are so freaking many participants in the markets, with different strategies and objectives, you will never know why they are doing what!Information is simply imperfect in trading. In a longer timeframe, you may be able to identify what the big players are up to, but that alone is not enough to help you to make decision.

Also, if you try to get too much information in trading you may get paralysed! That's why some traders are purely technical and trade in a vaccum, and they are more successful than all those novices who try to read the market and follow news.

That's why I suggest you to abandon the "poker" mindset and start to see trading as something completely new, in this way you can learn about trading much faster.

My first step would not be to start trading on my own, but rather to look for a position at a firm. The reasons are not important in this discussion.

Unfortunately, prop firms are more interested in people who already have experienced or interest in trading. See this post:

http://www.trade2win.com/boards/general-career-advice/30213-advice-getting-job-trading.html

 

[Potte]

GCC,

thank you for taking your time to to reply to my thread. It was certainly a good read.

If one beginner of poker approaches you and ask you how to acquire a basic understanding of poker, how will you answer him?

I understand this question is rhetorical, but I still want to answer to make my point.

Depending on what type of game he wants to play I would tell him/her to buy "Small Stakes Holdem" + maybe "Weighing the odds in holdem poker" for limit, "Harrington on cash no limit holdem" + "No-limit holdem, theory and practice" for no-limit cash, "Pot-limit omaha poker" for omaha high, "High-low split poker" for O8 and "Harrington on Holdem" + "Tournament poker for advanced players" for multi table tournaments. Throw in "The theory of poker" and perhaps "The mathematics of poker" for a basic understanding of poker in general. I would also tell this person to sign up for one of the learning sites, e.g. pokerxfactor, and watch as many videos as he/she can bare. Thirdly, I would tell this person to play a lot, think a lot (analyse your hand histories and ask for opinions at 2+2 forums). If you want to become really good, you need to play even more, think even more.

if you have never traded before, where do you get the impressions that trading is like poker?

You are absolutely right, I cannot know that trading is like poker since I have never traded. The impression comes from:
- A bunch of the really successful online poker pro's have actually gone from trading to poker. I have heard these people argue that they have their trading career to thank for their success in poker. Good understanding of math and risk assessment are two skills they say are important to both trading and math.
- I have a few friends working as analysts on investment banks and they say that many of the traders in their firms are also playing poker and are quiet successful at both.
- Poker is about collecting information and using this information to make as good decisons as possible. There is insane amounts of information to be gathered and almost all of this information is uncertain. To be successful you need to be able to pick out the most important pieces of information, weigh in the uncertainty and make the best possible decision (which is purely mathematical when we get to this point). I think this is similar to what a trader does (but again, I cannot know).

But I can tell you, you can become very profitable without knowing the above, although it may be interesting to know. In fact, if the above, like WHO they are and WHY they do it, can be known, then the guy who know it should have already been the richest guy on earth. However, information is simply imperfect. In a longer timeframe, you may be able to identify the big players, but that alone is not enough to help you to make decision.

I wasn't really refering to the actual persons/organizations, but rather the types of players there are. E.g. prop firms, investment banks, brokers, traders, etc.

That's why I suggest you to abandon the "poker" mindset and start to see trading as something completely new, in this way you can learn about trading much faster.

Point taken.

Unfortunately, prop firms are more interested in people who already have experienced or interest in trading.

I am sure you are right, but I have a sought-after degree with good grades so I still think I might be able to get some interviews.

 

[blancspa]

Trading is like an argonauts journey. Doesnt matter what books you read throughout it.
Arrive safely and with all the gold.
I am really enjoying it this time.

 

[GCC]

I wasn't really refering to the actual persons/organizations, but rather the types of players there are. E.g. prop firms, investment banks, brokers, traders, etc.

After talking to you I am sure you'll like the book Bird Watching in Lion Country I recommended in my last post. Go grab a copy and start learning!