My Book Reviews

In the first part of the book, Howard Abell talks about the psychology trading. In part two, he teaches his day trading techniques. The rest of the book contains interviews the author conducted with several traders about the techniques that they use. They are mostly unknown, expert maybe for Bill Williams, who is a semi-well-known author who writes about chaos theory and trading. Here are some of the valuable quotes and ideas I got from the book:

• "You should love your losses."
• For those traders who have difficulty "pulling the trigger," putting resting orders in the market will get you into the trade.
• "Traders often say they 'make a profit' but 'take a loss.' The reality, of course, is that we make both."
• Making scratch trades may help condition you to pull the trigger.
• "Take your losses swiftly and clearly; the first loss is your easiest loss."
• You should mentally rehearse the mechanics of the trade before you put it on.
• Morning weakness into support has a good potential to react profitably as the day wears on. However, most afternoon breaks into support are not as reliable.
• Bill Williams: "Day trading is not a very highly intellectual process at all; it's a very simple process. And, in fact, I think that the brighter and the smarter and the more intelligent you are, probably the more difficult it is for you to make money, because what happens is that the brighter and the more intelligent you are, the more likely you are to form an opinion."
• Bill Williams: "Good trading is almost like a religion in the sense that you're giving up your personality to a larger, greater force, and that larger, greater force is the market. So I think there's a lot of parallels between good trading in religion!"
• Four psychological biases that people have: 1. A bias for certainty. 2. A bias for control. 3. A bias for avoiding pain (losses) 4. A bias of believing that the way we see reality as a reflection of the way things really are.

This book is OK, but I wouldn't call it "good". There is no bad advice in the book (except for an offhand comment the author makes where he downplays the importance of money management). The best thing about it is that it has some very good advice about how to handle the psychology of trading. The worst thing is that it is pretty unfocused and tries to do too much. It teaches specific techniques, and carries interviews with random advice. There are sporadic charts and vague advice. But all this random content is too thin. The reader would be better off reading books that specialize in each topic. For example, if you want a book about psychology then buy "The Disciplined Trader" by Mark Douglas.