Overcoming 7 Deadly Sins of Trading

Paperback
Publisher: Traders Press, Inc. (2004)
Language: English
ISBN-10: 0934380910
ISBN-13: 978-0934380911
Product Dimensions: 8.9 x 6 x 0.4 inches
Shipping Weight: 9.6 ounces

Roosevelt shares common traits or emotions traders undergo during the course of their trading activities. These common traits are as follows:

1. Fear (versus excitement, intuition or protectionism)
This feeling is a future-based emotion. It can be a fear to start trading or fear to stop loss. It makes a trader lose control and often paralyzes a person. An antidote is to recognise our desires and turn this emotion into a caution-based feeling. This is only possible if one is clear on the aims and strategies laid out beforehand.

2. Greed
This is spurred on more by opportunity cost than anything else. The perception of scarcity distorts the correct view that the market is always there. A solution is always to think of abundance and to exercise caution.

3. Recklessness (excitement seeking or anxiety)
A cure is to be confident and to have a plan. One ought to feel detached and think of the big picture.

4. Perfectionism
This has been ingrained into us since young as we seek for the ideals. We have to recognise that trading is about approximations and not to seek so much control as the market forces are outside us.

5. Pride
Over confidence can interfere with clarity of strategy. We need to be always cautious and learn how to cut loss.

6. Anger
This emotion affects everything else and our mood. We should use it to act on what we can control and do it reasonably. We must not be personal when it comes to trading.

7. Impatience
This is due to opportunity costs as well. We have to learn to wait and to practice timeliness.

Good trading patterns can only be achieved via strong personal character and virtues. This is done by having clarity, calmness, consistency, courage, cautiousness, commitment to excellence and confidence.

This book is excellent in identifying trading sins and dispositions. It helps one to associate one's trading patterns and our own fallacies. At the end of most chapters, there are sections on inventory-taking and on how to adjust. Also, it reveals supporting beliefs so we can learn to incorporate them into our character formation.

Technical Analysis of Financial Markets

Hardcover: 576 pages

Publisher: Prentice Hall Press; Subsequent edition (January 4, 1999)

Language: English

ISBN-10: 0735200661

ISBN-13: 978-0735200661

This highly academic book covers technical analysis almost in its entirety. It has taken me several weeks and 40 over pages of notes to record down what I have garnered from this text. Murphy has certainly written a great educational text despite it being published a few years back.

The following are the chapters within the book itself and some inadequately brief descriptions:

1. Philosophy of Technical Analysis
• The basics with an argument against fundamental analysis
2. Dow Theory
• The beginning of stock analysis
3. Chart Construction
4. Basics Concepts of Trend
• Trends can be relative at different points of a chart so trend analysis is more of an art than rocket science.
• Volume plays a huge role in trends
5. Major Reversal Patterns
• Pre-requisite is to have prior trend
• Many patterns and can often be misinterpreted
6. Continuation Patterns
• Made up of triangles
• A resting pause in trends
7. Volume and Open Interest
• Volume precedes price
• Increasing volume suggests continuing trend
8. Long Term Charts
• Not for trading purposes
9. Moving Averages
• Best for trending markets and worst for sideways/choppy market
• Use for signaling a change of trend
10. Oscillators and Contrary Opinion
• Best in non-trending markets, especially for end of market moves
11. Point and Figure Charting
• Pure study of price movement
12. Japanese Candlesticks
• Trend must be determined before interpreting Japanese candlesticks
• Has many reversal and continuity patterns
13. Elliot Wave Theory
• Important factors to note are pattern, ratio and time
• Characterized by 5-wave advance and 3-wave decline
• Each Wave is characterized by a smaller wave
14. Time Cycles
• Longer term – more than 2 years
• Intermediate term – 9 to 26 weeks
• Short (trading) term – 4 weeks
15. Computers and Trading Systems
16. Money Management and Trading Tactics
17. Intermarket Analysis
• Cascade effect: Currency affects commodities, which affects bonds, which affects stocks
18. Stock Market Indicators
• The more market averages move together, the stronger the trend
19. Putting it all together
• A checklist is made to systematically analyze the market and to facilitate decision making
20. Appendix
• Advance Technical Indicators
• Market Profile
• The Essentials of Building a Trading System
• Continuous Future Contracts

Anyone who wants a well-rounded picture of technical analysis is highly recommended to read this book. Just be warned that it is not for the leisure-reader or the light-hearted.