I feel so strongly about this book that I would probably not hire someone to work for me that had not read this book. So today for my "Trader Ten Minutes" I simply browsed my old paper copy of the book and re-read my brief notes from the book.
- There is no single true path.
- The universal trait is discipline.
- Trade your personality.
- Failure and perseverance are part of every successful trader's life.
- Great traders are flexible.
- It takes time to become a successful trader.
- Keep a record of your market observations.
- Develop a trading philosophy.
- What is your edge? Big picture tech, change, on the cusp, understand big trend before others, shifts.
- Confidence is important, and you build it from hard work.
- Hard work.
- Market wizards are innovators, not followers.
- To be a winner you have to be willing to take a loss!
- Risk control. Stop-loss, or reducing position size, limit initial position size, short selling.
- You can’t be afraid of risk
- Some limit downside by focusing on undervalued stocks. (but still can drop.)
- Value alone is not enough. Need catalysts.
- The importance of catalysts.
- Focus not only on when to get in, but when to get out
What really surprised me when reading the book was that each trader in the book had a very different philosophy and method of trading, but they almost all cited the importance of taking losses. They all were rather quick to cut losses and focused a lot on controlling risks when trades went bad.
This one idea has really stuck with me.
The book is available on Amazon in a variety of formats. (It's also available in a bootlegged free PDF copy on the web if you want to cheat Schwager out of his royalty for writing this masterpiece. You decide.)