The Disciplined Trader: Developing Winning Attitudes
One of the first books to address the psychological nature of how successful traders think ~ The Disciplined Trader™ is now an industry classic. In this groundbreaking work published in 1990 ~ Douglas examines the causes as to why most traders cannot raise and keep their equity on a consistent basis ~ and brings the reader to practical and unique conclusions as to how to go about changing any limiting mindset. The trader is taken through a step-by-step process to break through
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Come Into My Trading Room: A Complete Guide to Trading
The trading bible for the new millenniumIn Come Into My Trading Room, noted trader and author Dr. Alexander Elder returns to expand far beyond the three M’s (Mind, Method, and Money) of his bestselling Trading for a Living. Shifting focus from technical analysis to the overall management of a trader’s money, time, and strategy, Dr. Elder takes readers from the fundamentals to the secrets of being a successful trader–identifying new, little known indicators that can lead to huge profits.Come Int
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A Complete Insight Into The Disciplined Trader,
The number one reason that I like The Disciplined Trader is that Mark Douglas has no formal training in psychology. Rather, Douglas was trained in the only classroom that matters-the battlefield of actual trading. Even though this book was published in 1990 and there have been a plethora of trading-psychology books published since then, Douglas’ material stands out has an innovative classic. He just uses his own gift for seeing the mental shortcomings of the losing trader and spells out his own fresh insights on what we, as traders, need to do to experience real success in trading.
Douglas starts the book out from a perspective that many traders can identify with-crushing defeat. Humbling himself to the higher power that the market is and analyzing the formula for defeat, Douglas shows how he was able to reverse-engineer it to find the formula for success that many of the book’s readers over the years have found useful in exorcising their own psychological demons.
Central to Douglas’ thesis is that the elements of character that produce success in most of life’s endeavors are completely different from those that will make you successful as a trader. To thrive in business or some professional career, you have to work hard to develop the skills that will allow you to be in control of your environment. To build a business empire, you have to be a great leader of people. To become a heart surgeon, you have to learn how to control your scalpel. To be a good mother, you have to know how to discipline your children.
But successful trading, says Douglas, is the process of yielding to the market and being in control only of yourself and the way you respond to changing market conditions. When the idea of being in control of yourself sinks in, you realize that you as a trader get exactly what you deserve from the markets. If you consistently get poor results, you deserve this. If you consistently get great results, you deserve that. The market doesn’t care, one way or the other.
As with any book filled with original and profound ideas, The Disciplined Trader isn’t always an easy read, particularly as it slogs through the painful process of pummeling away at our self-destructive mechanisms. Fortunately, as with life, the journey provides a reward and Douglas spends the final chapters of the book explaining practical techniques that will help you to “get it together” as a trader.
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|Pearls of wisdom – encrypted over and over,
First off let me assure you that Mark Douglas deserves all the generally positive reviews he’s received for this book and for “Trading in the Zone.” What Douglas has to share is essential, extremely valuable information for both aspiring and veteran traders alike. That said, stand warned that Mr. Douglas has quite a tedious writing style. He suffers (and thereby, so does the reader) from a particularly diffuse, circular, and repetitive style. He gives redundant a bad name. Here’s a sample, you be the judge:
“Our committed expectations about the future will act as a force on our perception of market information to control its flow into our mental system in such a way as to avoid a confrontation with anything that doesn’t conform with what we already believe is possible.” Got that? Then this book is for you.
You don’t have to worry about picking between The Disciplined Trader, and Trading in the Zone – Mr. Douglas is so repetitive that he essentially wrote the same book twice. Material from each book is either reprinted verbatim or repeated in a slightly different way in the other.
In fairness, Douglas is struggling to convey some very complex psychological concepts which don’t easily distill down to catchy one-liners. Still, for all of his good things to say, Mr. Douglas would only benefit from a good editor.
Stick with it though – the keys to success are buried within. And then re-encrypted over and over.
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|rating this book,
As I read the reviews on this book, it seemed that there were two groups of reviewers: the group that just loved the book and the (small) group that hated it. After reading it, I found that the solution to this phenomenon was the following: to truly understand the book, you need: 1) To understand, that this book is not going to present you a clear trading plan or any technical knowledge whatsoever. It’s about the mental aspects of trading. 2) A certain level of intellect (not that it is very hard to read, but I’m sure it is too difficult to understand for some). 3) (a lot of) trading experience. You can only appreciate and understand the book, if you can relate to the mental processes and experiences that are presented in this book.
Once these three conditions are satisfied, I’m sure you’ll just LOVE this one.
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|Traders Magazine Review – Helen Quenet,
Book Review – Come Into My Trading Room by Dr Alexander Elder
It was with a great deal of curiosity that I began to read Come Into My Trading Room. Trading for a Living, Elders first and classic book was the second trading book I ever read and even 40 or so books on from there I still rate it in my top five and frequently recommend it to others who want a considered and honest introduction to trading.
I was interested to see how the themes and emphasis had changed and developed in the nine years since the first book was published. I had briefly read a couple of reviews that suggested it didn’t add much to the previous book but I was eager to make my own mind up.
So the first question I asked myself was what hasn’t changed?
The style of writing is as clear and engaging as in the first book. The layout is logical and in all key areas he suggests further, more specialised reading to take you deeper into the subjects that may interest you. For the size of the book (only 313 pages), it is very comprehensive and covers the three main areas of competence for a trader. Psychology, Technical Analysis and Money Management. So the three pillars from the first book are still very much standing.
What is different? A great deal in my opinion. The psychology section is vastly improved. I thought that to be the main weakness in the first book, with an over reliance on the AA model which (because of my professional background I have issues with) He draws the title of the psychology section from another excellent book by Mark Douglas, again giving the impression that Elder himself has been learning a lot over the past few years.
The technical analysis section goes much less into describing basic TA than the first book did and instead focuses more on the application of TA to trading. It also includes an update on a method first described in the first book the “triple screen” and a section on systems trading and system testing. As someone who is toying with developing systems at the current time I particularly enjoyed his discussion of the distinction between systems and discretionary traders.
The book is not just aimed at day traders, in fact he lays great emphasis on people examining their own motives to become day traders suggesting that you require at least a years successful experience with end of day trading before you move to intraday trading. He does ask his readers to answer tough questions about themselves and if you are able to give honest answers you will profit greatly from this book.
He also concurs with one of my prejudices, which I am happy to repeat here, he stresses that traders should take their first steps in inexpensive markets to trade. So with futures for example trading the Eurostoxx50 at 10 euros per point is a better starting point for the new trader than Dax at 25 euros per point. He also provides a helpful method for working out which markets you can afford to trade. It is this applied aspect of the book that makes it so valuable. There is no irrelevant padding here, every paragraph has relevance.
The overall balance of the book is about perfect now. In the first book the basic TA took up a large percentage of the volume, this time the sections are much more equitable, with quite rightly, money management and record keeping getting a much more through treatment than in the previous book.
One change in this book (and I did wonder if he had read Tony Oz’s wonderful “The Stock Trader”) is an addition of some actual trade examples. I always like seeing these because following them through gives a real insight into the traders mind in a way simple chart examples can’t.
I think there is a more cautious/warning tone about this book than the first. I suspect this might be because Elder runs trading camps and has had lots of experiences with wannabe traders since writing the first book. He’s very aware of the main reasons why people fail and makes these very explicit in the text.
There is also a very good and well referenced basic description of the major trading instruments their advantages and disadvantages something that was missing from the first book.
The section for new traders (or babes in the wood) as he calls them covers the basics of setting up to trade from home, which instruments and markets to look at and the issues of commission, slippage and expenses. He stresses the importance of the bottom line and the need to keep trading expenses such as commission under control
Conclusion
This is a book written by a mature trader and trader educator, who has seen and done it all and can now give the most balanced, practical and honest description of learning to trade you will find anywhere. I highly recommend it to new traders and improvers alike.
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|An Excellent Follow-Up to Elder’s Trading For A Living,
Alexander Elder gained well-deserved prominence for his first book, Trading For a Living. It’s one of my favorite books on trading. Out of this classic came such new indicators as the Force Index, which is one of the indicators I use regularly in my chart software. I read Elder’s follow-up, Come Into My Trading Room, in hopes of learning additional insights of the Force Index. While I found some new information here, I was even more impressed by the following lessons Elder shared:
1) “Some of the best trading opportunities occur after false breakouts” – I’m finding this more and more these days, which is why I actively use my Momentum Divergence indicators to separate the fakeouts from the real breakouts. Elder does a great job showing numerous charts throughout his book, laying the groundwork for the divergence examples he explains in great depth when you step into his trading room in the final chapter with many actual trading examples. You need to understand the concept of divergence to trade today’s markets more profitably, and this book will be a great help in showing you how to trade divergence setups.
2) Triple Screen – Elder explains the important of using multiple timeframes, though he advocates two to no more than three time frames. The key concept is that whatever timeframe you use, you need to go up to the next longer timeframe to get confirmation. This provides the bigger picture trend to define the nature of your trades, and then you can return to the shorter timeframe and make more tactical decisions with this broader trend in mind as well.
3) Grade Your Performance – Elder actually quantifies trading effectiveness by defining the width of the channel for a stock, and what percentage of the move the trader actually captured to determine his grade. Regardless of how a trader measures his performance, it must be tracked in order to make improvements and experience constant improvement.
4) The SafeZone Stop – While I have not tested this indicator in my systems yet, Elder’s SafeZone Stop looks like a more effective way to place a trailing stop than standard moving averages. The SafeZone Stop appears to adjust more rapidly to trending versus flat periods for a stock, compared to moving averages. This new technique should easily be worth many times the price of this book by itself.
5) Chapter 9: Trading for a Living – This chapter was my most highlighted chapter, as Elder covers the stages of growth from beginning to professional trader, covering a wide range of topics on trading discipline, time management, organization and developing a viable trading plan, to highlight just a few.
All in all, Come Into My Trading Room is an excellent follow-up to Elder’s Trading For A Living, and I think you’ll also find it a quick and thought-provoking read.
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|Not crazy about it,
Too well written for a 1-star, and you just have to respect the author of Trading for a Living. But I was quite disappointed.
Essentially it’s a trend following methodology of entering on pullbacks to the 20 MA and exiting when they extend to the outer band (envelope, band, channel, it doesn’t matter). Classic indicators are tweaked slightly and pitched as “Elder Indicators” which of course you can buy the disks for. Really this whole book could have been condensed to a 3 or 4 page .pdf file and not left any of the concepts out.
He advises against day-trading and questions whether it can actually be done profitably. That is pretty short-sighted of him in light of all the known profitable daytraders out there. His reasoning is that with his method it would be too difficult. That came across as egotistical and closed-minded to me.
The thing that really threw me off is that after a book teaching a trend-following system (and warning against other methods), the last section of chart examples are all counter-trend trades! Every single one of them is completely the opposite of what is taught in the book. You would think he could have thrown in at least one actual example that actually was trading the method in the book?
I joined his mailing list after reading the book and after almost two years of being on it, not one example of a trade set-up that comforms to the method in this book has been given. Instead, periodic “opinions” of market direction have been given for copper, oil, bonds, and the S&P 500. This from a guy who says don’t have opinions on market direction. Too boot, all of them have been wrong! Got to wonder about this guy now, was Trading for a Living just a lucky fluke?
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