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Reading List: Trading (2019)

My initial plan with regards to reading trading books was primarily to boost my knowledge of the markets and to establish principles and discipline when it comes to trading.

It’s not whether you are right or wrong that is important. It is how much money you make when you are right and how much money you lose when you are wrong.

Books

This will be structured primarily by listing the key takeaways from each book and how I can apply these to my everyday trading habits.

1) Trading in the Zone by Mark Douglas (IN PROGRESS)

  • Assume full responsibility for your losses. An external catalyst can easily turn your winning trade into a losing trade. Don’t blame the market, and realize that losses happen and mature from it. Do not feel hurt, angry, or sad when you lose a trade, and do not feel overly optimistic when you win a trade.
  • Practice consistency. Maybe you had a lucky run (totally me). But can you always have lucky runs without a plan/strategy? There has to be a basic framework for entering and exiting trades, and once that strategy is established, live and die by its rules until adjustments need to be made. Your equity curve should be relatively stable and uptrending, not a quick uptrend into a steep descent.
  • Are you projecting your feelings onto the market? Even if your technical analysis and the stars align, sometimes you hesitate for fear of being wrong. You remember that one incident where your trade went wrong, and you now gather information to support an opposing thesis that is less likely to happen. Act on market information and not from past emotional projections, and do not be afraid of being wrong.

2) Principles by Ray Dalio (IN PROGRESS)

  • Seek out the opinions of others. Don’t be so sure you are right. Make sure the holistic view is presented, and then make your decision. Being biased by emotions or cockiness is sure to lead to undesirable losses.