A “Must Read” for all stock traders!
When someone tells them they want to get into stock trading the first book I tell them to read is “Trading for a Living” by Dr. Alexander Elder.
Now I must preface this by saying this book is not about “how to trade” so you won’t be learning a Trading System at all. It’s all about getting your mindset right and preparing yourself to get in the right headspace to be a successful trader. What’s great about it is that all the advice it provides works with any trading system you adopt. So day traders and swing traders alike will benefit from giving this a read (or a listen, if you’re like me and prefer audiobooks)
Some of the key takeaways from this book are:
- Taking the emotions out of trading. Don’t let emotions cloud your mind when trading. (This foundational principle is why I chose the name “SpockTradez” for this blog)
- The importance of having a set of rules for when to take or leave a trade aka a Trading Plan or System. Plan the trade and trade the plan.
- Learning that trading isn’t about making profits, it’s about Risk Management. Focus on protecting your capital and the profits will take care of themselves. Never risk more than 2% of your account on a single trade.
- Keeping a trading journal to track the info when you entered and exit a trade to learn from your past wins and losses. (Yes, there will be losses no matter what those YouTubers are selling you)
- The importance of chart analysis for setting Protective Stops, finding Support & Resistance, and spotting Trends
- Not getting upset when you exit a position that keep going up. Never be upset about leaving money on the table.
- Learning why prices move by understanding the psychology of traders and trends.
- Lots of stock market terms and their definitions.
This is just a brief summary of a few things you’ll glean from this book. I highly recommend the print copy so that you can highlight and take notes as you should re-read it at least once a year to rest your brain and realign yourself in case you have drifted into sloppy trading habits.
There’s a new edition of the book titled, you guessed it, “The New Trading For a Living.” The book is kinda pricey, but in my opinion is worth every penny. Think of it as your tuition to “stock school” or “the cost of your tools.” If you wanna build a house, you need to buy a hammer, right? Invest in your skills and they’ll payback with interest! (You could also look for a used copy or just do a free Audible trial and listen to as well).
Aside from this book, Dr. Elder also has other trading related books that are great as well. I’ll cover some of those in future posts.