How To Trade In Stocks: The Review
We have spoken with our Analysts and have asked which books have given them the greatest insight into the markets and is a must read for all investors / traders alike. In this mini-series, we look to uncover the books that you can read to enhance your own knowledge in today’s markets.
The issue with most traders is they are looking for the magic key to investing which will do all the hard work for you. Too many investors are looking to find the perfect trading system so they can become rich over night. You have to spend years watching the stock market and not a few days to begin to gain any useful knowledge
How to Trade Stocks is written in Livermore’s inimitable, no-nonsense style, and details with guidance on important investment factors:
- Reading market and stock behaviors
- Analysing leading sectors
- Market timing
- Money management
- Emotional control
The beauty of this book is that it uncovers the gems and provides his Master Key to follow in Jesse Livermore’s footsteps in trading a successful, rule based, system.
They main points to note in the book is that it is essentially picking stocks in a leading industry that are ready to breakout into newer highers or lower lows. The book itself is quickly to follow and understand, and more importantly the rules provided are just as easy to implement.
Livermore’s accounts and advice are quite possibly the best material available to a trader today, it really is that good.
More than 70 years later, these are rules every trader needs to keep in mind:
21 Rules From How To Trade In Stocks
- Nothing new ever occurs in the business of speculating or investing in securities and commodities.
- Money cannot consistently be made trading every day or every week during the year.
- Don’t trust your own opinion and back your judgment until the action of the market itself confirms your opinion.
- Markets are never wrong – opinions often are.
- The real money made in speculating has been in commitments showing in profit right from the start.
- At long as a stock is acting right, and the market is right, do not be in a hurry to take profits.
- One should never permit speculative ventures to run into investments.
- The money lost by speculation alone is small compared with the gigantic sums lost by so-called investors who have let their investments ride.
- Never buy a stock because it has had a big decline from its previous high.
- Never sell a stock because it seems high-priced.
- I become a buyer as soon as a stock makes a new high on its movement after having had a normal reaction.
- Never average losses.
- The human side of every person is the greatest enemy of the average investor or speculator.
- Wishful thinking must be banished.
- Big movements take time to develop.
- It is not good to be too curious about all the reasons behind price movements.
- It is much easier to watch a few than many.
- If you cannot make money out of the leading active issues, you are not going to make money out of the stock market as a whole.
- The leaders of today may not be the leaders of two years from now.
- Do not become completely bearish or bullish on the whole market because one stock in some particular group has plainly reversed its course from the general trend.
- Few people ever make money on tips. Beware of inside information. If there was easy money lying around, no one would be forcing it into your pocket.
The book owes itself to any investor, beginner or seasoned. The rules above help outline what every investor should follow and master. This book holds some of the foundations we start with when it comes to Alpha Trading Signals. Although we are yet to provide Stock Trading Signals, we are more than happy to have a discussion about this book.
P.S) This book would make a great gift!