I've bought and read a LOT of books on trading over the years, and I'm always keen to learn more. I have about 70 trading books in my library and you can read a lot of my reviews on amazon good and bad on what i've read.
This book stood out as different initially because I could see from the first few pages that there was no flannel or waffle and as I got further into the book Chicks simple analysis of what works in the market and why makes perfect sense.
One of the first few things he underscores is that "We trade only price. We do not trade information. We do not trade knowledge (of the asset being traded). Nor do we trade computing power or expertise. We do not trade anything at all other than price: ie: the number. Therefore since the only factor that counts in this game is the price, it is only smart to focus all, or almost all, our attention on this number on the pice and its movement; in other words, what the price has done in the past and is doing in the present. Approach the game/business of trading in this manner - an up down number game where the focus is on what the price does and not why - and you will be on the right path to succss as a trade"
simple theory, but a conclusion I had already reached beforehand having myself experienced "indicator overload" from exploring numerous analysis techniques in the past. So this idea rang true immediately.
He then goes on to analyse what works and what doesnt in terms of probabilities of success vs reward. A quote I particularly liked was in the section about what Chick calls the "laws or trading" where he analyses the odds of trading with a trend vs trying to pick a top or bottom in the sense that a "$1000 profit earned by buying the exact low is not worth a penny more than a $1000 profit earned by buying the middle of an established uptrend, even though the former is much more difficult than the latter." he goes on to say "Since a price with clearly established momentum and trend (ie: a pattern of continuity) is more likely to cntinue its current direction rather than change and if the payoff is the same whether you trade with this higher probability or against it, then obviously the intelligent action is to trade on the expectation of continuation rather than change.
Trading with clearly established momentum and trend is twice smart: first, the probability of success is greater - better odds, and second the payoff is better than the actual probability - better risk/reward"
All sounds perfectly sensible? you bet. I rate this book so highly because Chick analysises everything very logically right from the introduction where he considers trading vs investing, an overview of risk vs reward and the odds/risk/reward of any particular trade, his basic rules for trading and then a detailed breakdown of each of the things he considers in his setups and how he uses these in his trading for entries and exits.
Also covers numerous detailed analysis of example trades from a variety of different markets and his points of entry and exit along with a commentary of what he did and why.
Very useful for me as far as formulating a trading plan and trading as a business. He even includes examples of when he makes "mistake" trades and how to handles them.
I think I already said that Chick is a position trader, whereas I am a scalper. The stuff in the book clearly formulated a lot of the ideas I was already working around - the principles are good for any type of trader.
Chick doesnt even use a computer, although you have already seen his rules computerised. This method works equally as well for me on 100tick charts as it does on daily bars for chick, although I have a few of my own flavour of trading rules in there too, I am essentially following Chicks plan.
What more can I say? its a big book, very difficult to touch on everything it covers.
