Will reading books really help you in trading?
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    Will reading books really help you in trading?

    Hi traders! Value trader is "on air".

    I’ve been asked very often of what books to read. In this thread I will share with you my ideas on this topic and give a small read-list of books that helped me in my development in early days of my trading career.

    As far as I concern, reading and consuming information is a little bit overvalued because it’s not logics that drives our actions, it’s our deep beliefs. Those beliefs can be obtained only in the process of deliberate practice. When you’ve seen something with your own eyes 10000 times, you will believe in what you are doing. If you have just read book on the topic, you will easily forget everything learned from the book once market starts to behave in volatile unpredictable manner (it very often does).

    Of course, when we come to trading, first thing we want to do is to read, read and read more. That’s our natural way to deal with uncertainty. We want to get a quick answer, but more often than not, we are just internalizing some ideas that make us feel confused in a process of real trading. For example – have you ever seen such beautiful trending lines (or, say, support/resistance lines?) in a real trading environment? Most of trading best sellers include plenty of beautiful but unrealistic (or, rare) trading setups.

    I guess, no. So, the first element thing that most of trading literature does – it fails to prepare us to real trading environment, which happens to be much more ambiguous, much more complex than it is shown on beautiful snapshots.

    Confirmatory bias

    The main thing that 90% of trading books do – they show you how your ideal setup would look like. By the way, it’s not only trading books, most books on success and personal growth also do the same thing. They tell you what you would need to do to get to point B from point A. But, they don’t tell you what you are not expected to do.

    The better advice for the field where 90% fail to survive, will not tell you «how to achieve your goal», but rather how to survive in a process of testing and probing your ideas in a process of real trading.

    Warren Buffet once had said that «Investing process is saying «no» to 90 proposals and «yes» to just one proposal».
    Best trading books that may change the way you think, will not tell you what to do in each and every case. They, instead, will focus your attention on nuances, details and obstacles that are rarely spoken about. Nuances make difference between amateur and professional trader.
    I will provide small list of books that helped me some years ago.

    «Enhancing trader performance» by B. Steenbarger.

    Brett Steenbarger is a famous trading psychologist (and a trader himself). In this book he talks not just about «greed and fear», but about various steps of learning process. You may understand from this book how to find your own trading niche, how to understand you position of the learning curve.
    From this book, I’ve captured one very valuable idea – all our internal characteristics (or behavioral characteristics) that we consider as obstacles, as something to fight with, in reality have huge potential to become our strengths.

    For example, in my trading it was anxiety and inability to hold position in some cases, I was closing position too early very often, and therefore, and missed some good opportunities. Later on, I have understood that I had pretty strong feel of changing market momentum. So, I should have become momentum trader, not trend-following trader. After I have understood this, I’ve changed my trading style and made it more synchronized with my strengths.

    You see – when I was trying to fight it, it was very tough, when I’ve made strengths out of my weaknesses – things have become much easier.

    «Mind over markets» and «Markets in profile» by J. Dalton.

    J. Dalton is authority in the world of auction market theory, but what us more valuable – he has huge experience in trading and in the past was running institutional trading desk working for big market participants.

    Markets are very visual. If you want to capture important information from visual analysis of market profile as well as candlestick chart, this book is for you.
    This book may seem a bit complex and it is not giving direct advices of what to do – when to open and close a position. But as I have told you before – real trading education is not about knowing your ideal setup, it’s about ability to know the whole picture including bad setups as well.
    Also, this book is about «market profile» – not every trader has this tool at his disposal.

    «Diary of professional commodity trader» by P. Brandt

    And last (but not least) in my read-list is a book by Peter Brandt, professional money manager, who was keeping trading journal in a real time for several months describing his thoughts and explaining his actions. This circumstance makes this book valuable, because it’s really what we would like to know – how does professional trader think and act in a real time.
    Also, tools that Peter Brandt uses – conventional technical and charting analysis, it will be familiar to any trader. Though, he trades on big timeframes (W1 and D1), this book will help to change the way you think about most trading challenges and ideas.

    Good luck!
    Last edited by Value trader; 06-30-2014 at 09:32 AM.

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