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Trading Rules that Work: The 28 Essential Lessons Every Trader Must Master
Trading Rules that Work introduces you to twenty-eight essential rules that can be shaped to fit any trading approach—whether you’re dealing in stocks, commodities, or currencies. Engaging and informative, Trading Rules that Work outlines the deeper psychology behind each of these accepted trading rules and provides you with a better understanding of how to make those rules work for you.
210 pages, Kindle Edition
First published November 1, 2006
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Displaying 1 - 4 of 4 reviews
February 23, 2020
This book mainly talks about the psychology of trading with little or no mention about technicals. The author introduced many crowd thinking and market behaviour concepts. I agreed with almost everything the author says - a whopping 95% I’d say. Most of the maxims are common knowledge that have reiterated by numerous other successful traders. The author did a great job in condensing that information and presenting it in short summaries. Once again, this book is a prime example of the adage “self mastery is market mastery”.
I agree with most of the rules in this book with the exception of a few that needed clarification. For instance, Rule #20 - Don’t Trade the News. I think what the author trying to imply is not to gamble ahead a major news announcement i.e. not having an open position prior to the release. The market normally needs a catalyst to breakout a consolidation zone. Thus, a specific kind of news release are needed for intraday traders. Traders need to react upon news, they should not hold any bullish or bearish opinions or perceptions about a stock. As the market does not give a damn about what one thinks.
New ideas:
Rule #24 - All Markets Are Bearish by nature. Thats why market always breakdown faster than they rally breakouts. The author talked about the science and philosophy of the “hedger’s benefit” maxim. I have never viewed price action from a hedger’s perspective until now. I think this is a key concept that most retail participants are not aware of. The art of short selling in connection with hedging is not intuitive to understand and can be quite confusing. But the author did a decent job and explained in a simple and concise manner. To put it simply, the downward descend will always be greater than upward ascend. Think of it this way: What constitutes a rising stock? Buyers long pushing the price higher. What about a falling knife? Sellers exiting + shorts covering pushing the price lower. Two forces of nature versus one, simple as that. This imbalance phenomenon causes a different rate for a rising or falling stock. It is sort of like the fundamental physic principles, what goes up must come down; downward terminal velocity is easily achieved given enough space than upward velocity due to gravity and other factors. “Always remember that bull markets are temporary.”
If you are ever angry at the market for any frustrating, painful, irritating loss, stop and think about how foolish is it for you to be mad at your car if it ran out of gas. You simply ignored all the signals the car was giving you. Coupled with a lack of preparation, you are to be blamed for the recklessness. I should add further to this metaphor that by not placing a stop-loss "insurance ceiling", you are basically driving a car without a brake. The consequence of that will reap nothing but wreckage.
Give me a trader with regimental set of rules and I will show you a good trader. From the guidelines laid out in this book, I can assure you that the author is a consistent and profitable market participant.
Furthermore whats great about this book is that there is literally no “expiry date” for this book. Meaning for as long as human trading the stock market, the nature of the game will remain intact for many years to come.
“Trading is a kill-or-be-killed environment.” Very harsh but true.
This book is great for intermediate and seasoned traders. It is a short book to review every now and then to consolidate your different ideas from different sources and put everything into perspective.
I agree with most of the rules in this book with the exception of a few that needed clarification. For instance, Rule #20 - Don’t Trade the News. I think what the author trying to imply is not to gamble ahead a major news announcement i.e. not having an open position prior to the release. The market normally needs a catalyst to breakout a consolidation zone. Thus, a specific kind of news release are needed for intraday traders. Traders need to react upon news, they should not hold any bullish or bearish opinions or perceptions about a stock. As the market does not give a damn about what one thinks.
New ideas:
Rule #24 - All Markets Are Bearish by nature. Thats why market always breakdown faster than they rally breakouts. The author talked about the science and philosophy of the “hedger’s benefit” maxim. I have never viewed price action from a hedger’s perspective until now. I think this is a key concept that most retail participants are not aware of. The art of short selling in connection with hedging is not intuitive to understand and can be quite confusing. But the author did a decent job and explained in a simple and concise manner. To put it simply, the downward descend will always be greater than upward ascend. Think of it this way: What constitutes a rising stock? Buyers long pushing the price higher. What about a falling knife? Sellers exiting + shorts covering pushing the price lower. Two forces of nature versus one, simple as that. This imbalance phenomenon causes a different rate for a rising or falling stock. It is sort of like the fundamental physic principles, what goes up must come down; downward terminal velocity is easily achieved given enough space than upward velocity due to gravity and other factors. “Always remember that bull markets are temporary.”
If you are ever angry at the market for any frustrating, painful, irritating loss, stop and think about how foolish is it for you to be mad at your car if it ran out of gas. You simply ignored all the signals the car was giving you. Coupled with a lack of preparation, you are to be blamed for the recklessness. I should add further to this metaphor that by not placing a stop-loss "insurance ceiling", you are basically driving a car without a brake. The consequence of that will reap nothing but wreckage.
Give me a trader with regimental set of rules and I will show you a good trader. From the guidelines laid out in this book, I can assure you that the author is a consistent and profitable market participant.
Furthermore whats great about this book is that there is literally no “expiry date” for this book. Meaning for as long as human trading the stock market, the nature of the game will remain intact for many years to come.
“Trading is a kill-or-be-killed environment.” Very harsh but true.
This book is great for intermediate and seasoned traders. It is a short book to review every now and then to consolidate your different ideas from different sources and put everything into perspective.
February 20, 2021
Author focuses on changing how I think
Read
September 27, 2015Excellent and thought provoking.
September 19, 2020
So many nuggets of wisdom in this book. Highly recommended, at least the latter half.
Displaying 1 - 4 of 4 reviews