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The book I posted this morning.... Plummer "Psychology of Techincial
Analysis" is excellent in terms of understanding the nature of the market
and its participants.
Good stuff.
At 09:17 AM 5/25/99 -0400, Denis Rochat wrote:
>Good thoughts Ira
>
>How about some opinions on the single best book for the three item
>mentioned.
>1) Understanding the true nature of the market and it's participants.
>2) Control of our emotions
>3) Money management
>
>Thanks a million
>Denis
>Rochat
>denis@xxxxxxxxxxx
>
>-----Original Message-----
>From: Ira <ist@xxxxxx>
>To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
>Date: Monday, May 24, 1999 10:46 PM
>Subject: markets
>
>
>>The following was sent to me by another trader and does it ever sum up
>>the
>>old adage "K.i.s.s.":
>>
>>"We live in an age of total computerization. With the appearance of
>>Omega
>>Research’s
>>Tradestation products, the world of trading has changed forever. Traders
>>are
>>now
>>chasing after ever more exotic and complex indicators. TS now comes with
>>
>>about
>>150 standard indicators, and it’s programming capabilities let the user
>>develop
>>any
>>kind of kind of personal indicator the heart desires.
>>
>>The phenomenal sales revenues of Omega Research, and other vendors
>>selling
>>similar software (such as Metastock, etc), show how far our
>>indicator-fascination has come. Those who own TS, or similar software,
>>cannot
>>comprehend how anyone could still survive without such software.
>>
>>No wonder that software vendors have such success selling us new
>>indicators
>>by mass mailings. No wonder that new traders on this forum often ask,
>>“what’s the best indicator?”
>>
>>What is often overlooked is the fact that all these sophisticated
>>indicators
>>rarely improve the trader’s results.
>>
>>Asking, “what is the best indicator?”, is like asking Rembrandt,
>>“hey Rembrandt, I want to paint like you. What kind of brush do you
>>use?”
>>
>>If you can’t paint, changing brushes will not improve your painting
>>much.
>>If you can’t trade, going from one indicator to another will not improve
>>your
>>trading much. The basis of good trading does not come from indicators,
>>it
>>comes quite different sources.
>>
>>The basis for good trading comes from money management, control of
>>our emotions, understanding the true nature of the market and it’s
>>participants.
>>
>>Yet, we need to do some kind of analysis, to avoid trading purely by
>>instinct
>>(which is contrary to what we were brought up to do). If we don’t put so
>>much
>>emphasis on indicators, what should we then do?
>>
>>As Steve has pointed out so correctly, most indicators in use are
>>calculated
>>from data presented on your bar chart. Such an indicator cannot possibly
>>
>>contain
>>anything that is not already present in your bar chart. The indicators
>>are
>>just
>>another way of presenting what’s already contained in that same chart.
>>
>>The message then is clear: if you are currently trading and changing
>>from
>>indicator to indicator, stop your search! You will not find the Holy
>>Grail in
>>the
>>maze of indicators. Go with what you already have, and try to become
>>more
>>familiar with the tools you are already using! Pay more attention to the
>>
>>basics!
>>The bar chart is full of hints and messages. All we have to do is learn
>>how to
>>read it.
>>
>>For the new trader: Don’t worry about indicators. Don’t feel intimidated
>>
>>because your more experienced peers use indicator names you have never
>>heard off before. Learn the basics! Buys some books that teach you how
>>to
>>work
>>with a chart (such as the works of Magee or Murphy)!
>>Try to recognize repetitive patterns on your charts! Try to figure out
>>what
>>really
>>makes the markets tick! Learn how to understand the mass psychology of
>>trading!
>>
>>And above all, keep your losses small!"
>>
>>Good day trading, Ira
>>
>
>
Stewart Taylor
Taylor Fixed Income Outlook
Voice: 501-219-9774
Fax: 501-228-0963
E-Mail: staylor@xxxxxxx
Web Site: http://www.cei.net/~staylor/
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