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Alexander Elder been sitting on your reading list? Pick up the key ideas in the book with this quick summary. Nowadays, the financial markets are open to everyone and there is a lot of money just waiting to be made. Just think of Warren Buffet and George Soros and the wealth that they managed to make.

However, it is important to mention that jumping into financial trading without any previous experience and knowledge could be a costly mistake.

As such, before you try your hand at trading, you should read this book summary. The New Trading for a Living is a book based on the experiences of a market expert and consists of a comprehensive guide to the basic rules that all trading beginners should know. With an OverDrive account, you can save your favorite libraries for at-a-glance information about availability.

Find out more about OverDrive accounts. Wiley Trading. Alexander Elder. The New Trading for a Living updates a modern classic, popular worldwide among both private and institutional traders. This classic guide teaches a calm and disciplined approach to the markets. Seller Centre Download. Your browser is not compatible with Shopee Video Favorite 3.

Fortunately, this page has broken down and collated the best books for beginners, top books for particular assets, as well as detailing how different formats can best suit your individual needs.

ETX Capital deliver a broad library of ebooks for traders to use. From technical analysis to global trends, there are ebooks that can help you whether you trade forex, commodities or stocks. All the resources are free and are well worth making use of. When you decide to take the plunge into trading, you swiftly realise how complex strategies, charts, patterns, platforms, and fees can get. Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising.

If you continue browsing the site, you agree to the use of cookies on this website. See our User Agreement and Privacy Policy. See our Privacy Policy and User Agreement for details. Published on Oct 30,. In his desperate effort to succeed, he must take on large positions-and the slightest wiggle of the market is sure to put him out of business.

A successful trader is a realist. He knows his abilities and limitations. He sees what is happening in the markets and knows how to react to them. A professional trader cannot afford illusions. Once an amateur takes a few hits and gets a few margin calls, he becomes fearful instead of cocky and starts developing strange ideas about the mar- kets. Losers buy, sell, or miss trades thanks to their fantastic ideas. They act like children who are afraid to pass a cemetery or look under their bed at night because they are afraid of ghosts.

The unstructured environment of the market makes it is easy to develop fantasies. Most people who have grown up in Western civilization have several sim- ilar fantasies. A fantasy seems to explain the unfriendly and impersonal world. It consoles a child but prevents him from seeing reality.

Our fantasies influence our behavior, even if we are not con- sciously aware of them. In talking to hundreds of traders, I keep hearing them express several uni- versal fantasies.

They distort reality and stand in the way of trading success. A successful trader must identify his fantasies and get rid of them. The Brain Myth Losers who suffer from the "brain myth" will tell you, "I lost because I didn't know trading secrets.

This fantasy helps support a lively mar- ket in advisory services and ready-made trading systems. A demoralized trader often whips out his checkbook and goes shopping for "trading secrets.

When that self-destructs, he sends another check for a "scientific manual" that explains how he can stop being a loser and become a true insider and a winner by contetnplating the Moon, Saturn, or even Uranus. The losers do not know that trading is intellectually fairly simple.

It is less demanding than taking out an appendix, building a bridge, or trying a case in court. Good traders are often shrewd, but few of them are intellectuals.

Many have not been to college, and some have even dropped out of high school. Intelligent and hardworking people who have succeeded in their careers often feel drawn to trading. Many have postgraduate degrees or own their businesses. The two largest professional groups among traders are engineers and farmers.

Why do these intelligent and hardworking people fail in trading? What separates winners from losers is neither intelligence nor secrets, and cer- tainly not education. The Undercapitalization Myth Many losers think that they would be successful if they could trade a bigger account.

All losers get knocked out of the game by a string of losses or a sin- gle abysmally bad trade. Often, after the amateur is sold out, the market reverses and moves in the direction he expected. The loser is ready to kick either himself or his broker: Had he survived another week, he might have made a small fortune! Losers take this reversal as a confirmation of their methods.

They earn, save, or borrow enough money to open another small account. The story repeats: The loser gets wiped out, the market reverses and "proves" the loser right, but only too late - he has been sold out again.

That's when the fantasy is born: "If only I had a bigger account, I could have stayed in the market a little longer and won. It seems to prove that they would have won big, if only they had had more money to work with. But if they raise more money, they lose that, too - it is as if the market were laughing at them! A loser is not undercapitalized - his mind is underdeveloped. A loser can destroy a big account almost as quickly as a small one.

He overtrades, and his money management is sloppy. He takes risks that are too big, whatever the size of his account. No matter how good his system is, a streak of bad trades is sure to put him out of business. Traders often ask me how much money they need to begin trading.

They want to be able to withstand a drawdown, a temporary drop in the account equity. They expect to lose a large amount of money before making any!

They sound like an engineer who plans to build several bridges that collapse before erecting his masterpiece. Would a surgeon plan on killing several patients while becoming an expert at taking out an appendix? A trader who wants to survive and prosper must control his losses.

Give yourself several years to learn how to trade. Learn from cheap mistakes in a small account. Amateurs neither expect to lose nor are in any way prepared for it. The notion of being undercapitalized is a cop-out that helps them avoid two painful truths: their lack of trading discipline, and their lack of a realistic money management plan. The one advantage of a large trading account is that the price of equip- ment and services represents a smaller percentage of your money.

The Autopilot Myth Imagine that a stranger walks into your driveway and tries to sell you an automatic system for driving your car. Just pay a few hundred dollars for a computer chip, install it in your car, and stop wasting energy on driving, he says. You can take a nap in the driver's seat while the "Easy Swing System" whisks you to work. You would probably laugh the salesman out of your driveway. But would you laugh if he tried to sell you an automatic trading system?

Traders who believe in the autopilot myth think that the pursuit of wealth can be automated. Some try to develop an automatic trading system, while others buy one from the experts. Men who have spent years honing their skills as lawyers, doctors, or businessmen plunk down thousands of dollars for canned competence. They are driven by greed, laziness, and mathemati- cal illiteracy.

Systems used to be written on sheets of paper, but now they usually come on copy-protected diskettes. Some are primitive; others are elaborate, with built-in optimization and money management rules. Many traders spend thousands of dollars searching for magic that will turn a few pages of com- puter code into an endless stream of money. People who pay for automatic trading systems are like medieval knights who paid alchemists for the secret of turning base metals into gold.

Computerized learning systems have not replaced teachers, and programs for doing taxes have not created unemployment among accountants. Most human activities call for an exercise of judgment; machines and systems can help but not replace humans. So many system buyers have been burned that they have formed an organization, Club , named after the price of many systems.

If you could buy a successful automatic trading system, you could move to Tahiti and spend the rest of your life in leisure, supported by a stream of checks from your broker. So far, the only people who have made money from trading systems are the system sellers. They form a small but colorful cottage industry. If their systems worked, why would they sell them? They could move to Tahiti themselves and cash checks from their brokers!

Meanwhile, every system seller has a line. Some say they like programming better than trading. Others claim that they sell their systems only to raise trading capital. Markets always change and defeat automatic trading systems. Yesterday's rigid rules work poorly today and will probably stop working tomorrow. A competent trader can adjust his methods when he detects trouble.

An auto- matic system is less adaptable and self-destructs. Airlines pay high salaries to pilots despite having autopilots. They do it because humans can handle unforeseen events.

When a roof blows off an air- liner over the Pacific or when a plane runs out of gas over the Canadian wilderness, only a human can handle such a crisis.

These emergencies have been reported in the press, and in each of them experienced pilots managed to land their airliners by improvising.

No autopilot can do that. Betting your money on an automatic system is like betting your life on an autopilot. The first unexpected event will destroy your account. There are good trading systems out there, but they have to be monitored and adjusted using individual judgment.

You have to stay on the ball-you cannot abdicate your responsibility for your success to a trading system. Traders who have the autopilot fantasy try to repeat what they felt as infants.

Their mothers used to fulfill their needs for food, warmth, and com- fort. Now they try to re-create the experience of passively lying on their backs and having profits flow to them like an endless stream of free, warm milk. The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth. When they come under pressure, they change their tune and start looking for "strong leadership. When I was growing up in the former Soviet Union, children were taught that Stalin was our great leader.

Later we found out what a monster he had been, but while he was alive, most people enjoyed following the leader. He freed them from the need to think for themselves.

When I came to the United States and began to trade, I was amazed to see how many traders were looking for a guru- their "little Stalin" in the market. The fantasy that someone else can make you rich deserves its own discussion later in this chapter.

Trade with Your Eyes Open Every winner needs to master three essential components of trading: a sound individual psychology, a logical trading system, and a good money manage- ment plan. These essentials are like three legs of a stool-remove one and the stool will fall,. Losers try to build a stool with only one leg, or two at the most. They usually focus exclusively on trading systems. Your trades must be based on clearly defined rules.

You have to analyze your feelings as you trade, to make sure that your decisions are intellectually sound. You have to structure your money management so that no string of losses can kick you out of the game. In , the classic book on market manias, Extraordinary Popular Delusions and the Madness of Crowds, was published in England. It is still in print today. Gum manias spring up faster now than they did centuries ago, thanks to modern telecommunications. Even educated and intelligent investors and traders follow market gums, like the devotees of the false Messiahs in the Middle Ages.

There are three types of gurus in the financial markets: market cycle gums, magic method gums, and dead gums. Some gums call important mar- 9 ket turns. Others promote "unique methods '-new highways to riches.

Still others have escaped criticism and invited cult following through the simple mechanism of departing this world. Market Cycle Gurus For many decades, the U. Significant bear market lows occurred in , , , , , and The broad stock market has normally spent 2. A new market cycle gum emerges in almost every major stock market cycle, once every 4 years. A gum's fame tends to last for 2 to 3 years. The reigning period of each guru coincides with a major bull market in the United States.

A market cycle gum forecasts all major rallies and declines. Each correct forecast increases his fame and prompts even more people to buy or sell when he issues his next forecast. As more and more people take notice of the gum, his advice becomes a self-fulfilling prophecy.

When you recognize a hot new guru, it pays to follow his advice. There are thousands of analysts, some of whom are certain to be on a hot streak at any given time. Most analysts become hot at some point in their careers for the same reason a broken clock shows the right time twice a day. Those who have tasted the joy of being on a hot streak sometimes feel crushed when it ends and they wash out of the market. But there are enough old foxes who enjoy their occasional hot streaks, yet continue working as usual after their hot streak ends.

The success of a market cycle gum depends on more than short-term luck. He has a pet theory about the market. That theory-cycles, volume, Elliott Wave, whatever- is usually developed several years prior to reaching star- dom. At first, the market refuses to follow an aspiring gum's pet theory.

That is when the star of the market guru rises high and bright above the marketplace. Compare this to what happens to fashion models as public tastes change. One year, blondes are popular, another year, redheads. Suddenly, last year's blonde star is no longer wanted for the front cover of a major women's mag- azine. Everybody wants a dark model, or a woman with a birthmark on her face. A model does not change - public tastes do. Gurus always come from the fringes of market analysis.

They are never establishment analysts. Institutional employees play it safe and never achieve spectacular results because each uses similar methods. A market cycle guru is an outsider with a unique theory. A guru usually earns a living publishing a newsletter and can grow rich selling his advice.

Subscriptions can soar from a few hundred annually to tens of thousands. A recent market cycle guru was reported to have hired three people just to open the envelopes with money pouring into his firm.

At investment conferences, a guru is surrounded by a mob of admirers. If you ever find yourself in such a crowd, notice that a guru is seldom asked questions about his theory.

His admirers are content to drink in the sound of his voice. They brag to their friends about having met him. A guru remains famous for as long as the market behaves according to his theory-usually for less than the duration of one 4-year market cycle. At some point the market changes and starts marching to a different tune. A guru continues to use old methods that worked spectacularly well in the past and rapidly loses his following.

When the guru's forecasts stop working, public admiration turns to hatred. It is impossible for a discredited market cycle guru to return to stardom.

The reigning guru in the early s was Edson Gould. He based his fore- casts on policy changes of the Federal Reserve, as reflected in the discount rate. His famous rule of "three steps and a stumble" stated that if the Federal Reserve raised the discount rate three times, that showed tightening and led to a bear market. Lowering the discount rate in three steps revealed a loosen- ing of the monetary policy and led to a bull market.

Gould also developed an original charting technique called speedlines-shallow trendlines whose angles depended on the velocity of a trend and the depth of market reactions. Gould became very hot during the bear market of He vaulted to prominence after correctly calling the December bottom, when the Dow Jones Industrials fell to near The market rocketed higher, Gould presciently identified its important turning points using speedlines, and his fame grew.

By , he had lost most of his following, and few people today even remember his name. The new market cycle guru emerged in Joseph Granville stated that changes in stock market volume preceded changes in prices.

He expressed it colorfully: "Volume is the steam that makes the choo-choo go. He wrote in his autobiography that the idea came to him while sitting on a toilet contemplating the design of floor tiles. Granville took his idea from the bathroom to the chartroom, but the market refused to follow his forecasts.

He went broke, got divorced, and slept on the floor of his friend's office. Granville toured the United States speaking to overflow crowds. He arrived on stage in a camage, issued forecasts, and chided "bagholders" who would not recognize his theory. He played piano, sang, and, on occasion, even dropped his pants to make a point.

His forecasts were spectacularly cor- rect; he drew attention to himself and became widely quoted in the mass media. Granville became big enough to move the stock market. When he announced that he was bearish, the Dow dropped over 40 points in a day - a huge decline by the standards of that time. Granville became intoxicated with his success. The market surged higher in , but he remained very bearish and kept advising his dwindling band of followers to continue to sell short. The market rocketed higher into Granville finally gave up and recommended buying when the Dow doubled in value.

He continued to pub- lish a market newsletter, a shadow of his former successful self. A new guru entered the spotlight in Robert Prechter has made a name for himself as an Elliott Wave theorist.

Elliott was an impecunious accountant who developed his market theory in the s. He believed that the stock market rallied in 5 waves and fell in 3 waves, which in turn could be subdivided into lesser waves. Like other market cycle gurus before him, Prechter had been writing an advisory letter for many years with modest success. When the bull market penetrated the level on the Dow, people began to pay attention to the young analyst who kept calling for the Dow to reach The bull market 7 went from strength to strength, and Prechter s fame grew by leaps and bounds.

In the roaring bull market of the s, Prechter's fame swept outside the narrow world of investment newsletters and conferences. Prechter appeared on national television and was interviewed by popular magazines. As the Dow crashed points, mass adulation of Prechter gave way to scorn and hatred. Some blamed him for the decline, others were angry that the market never reached his stated target of Prechter's advisory business shrank, and he largely retired from it.

All market cycle gurus have several traits in common. They become active in the forecasting business several years prior to reaching stardom. Each has a unique theory, a few followers, and some credibility, conferred by sheer survival in the advisory business. The fact that each gum's theory did not work for a number of years is ignored by his followers.

On the other hand, I added several new chapters that focus on new tools, notably the Impulse system. I also added a section on stops, proft targets and other practical details. Money management is extremely important because fnancial markets are hotbeds of risk.

That was the weakest part of the original book, and I completely rewrote it. Keeping good records will enable you to learn from your experiences. During his time as a psychiatrist, he learned a lot about human behavior and used that expertise in the professional areas of development. Are you impatient to become a wealthy investor? Wait a minute; even Warren Buffet had a strategy before he became an investor of the highest order.

Getting a stock tip is much easier than understanding the whole system. Every stock trader should take into account a phenomenon named trade commission. Next in line is slippage.

What does this mean? The first one limit indicates that you intend to purchase a stock for a certain sum. Unfortunately, many people are misled when it comes to trading. Do you like making money at a speed of light?

What should we do? First things first — control your urges.