Essentials of Trading: From the Basics to Building a Winning Strategy

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Overview

While trading may seem as easy as "buy low and sell high," thereality is far different. Ever-changing market trends can make forturbulent trading sessions, while lack of concentration can lead tocostly mistakes.

With nearly twenty years of trading and investing experience ina wide array of markets, author John Forman knows what it takes tosucceed in this arena, and with The Essentials of Trading, he showsyou how.

Written for those just ...

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Overview

While trading may seem as easy as "buy low and sell high," thereality is far different. Ever-changing market trends can make forturbulent trading sessions, while lack of concentration can lead tocostly mistakes.

With nearly twenty years of trading and investing experience ina wide array of markets, author John Forman knows what it takes tosucceed in this arena, and with The Essentials of Trading, he showsyou how.

Written for those just beginning their journey through the worldof trading, this straightforward and accessible guide provides abase of knowledge and understanding from which you can developtrading methods, systems, and techniques that best suit yourpersonality, situation, and financial objectives. Filled within-depth insight and practical advice, The Essentials of Tradingfirst takes you through the basics of placing a trade andunderstanding how markets work, and then progresses to thedevelopment of trading plans, the implementation of riskmanagement, and the building of trading systems. Along the way, theuse of exercises and examples brings these and other topics tolife.

By following the proven principles outlined within these pages,you'll learn how to:

  • Analyze the markets
  • Execute, manage, and monitor trades
  • Design, test, and compare trading systems
  • Determine the best trading arena in which to operate
  • Take your trading forward, beyond the basics
  • And much more

Since there is not enough room here to go into detail on everysubject put forward, additional resources for this book—postedon a dedicated Web site (www.andurilonline.com/book)—have beencompiled to allow you to research specific topics of interest. ThisWeb site also provides access to the support tools mentioned atvarious points in the text, as well as to the free companionworkbook designed to complement this book.

While you don't need to be a financial genius to make it as atrader, you do need to be disciplined in your approach to themarkets. With The Essentials of Trading by your side, you'lldiscover what it means to be a successful trader and how to puttogether an effective plan of action for your trading as a wholeand on a transaction-by-transaction basis with a system.

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Product Details

  • ISBN-13: 9780471790631
  • Publisher: Wiley
  • Publication date: 4/21/2006
  • Series: Wiley Trading Series, #267
  • Edition number: 1
  • Pages: 300
  • Product dimensions: 6.24 (w) x 9.09 (h) x 1.10 (d)

Meet the Author

John Forman is the Managing Analyst and Chief Trader for Anduril Analytics. He has nearly 20 years trading, investing, and analytic experience across a wide array of markets. His articles on trading methods and analysis techniques have been featured in numerous publications and his commentary has appeared in major global news media outlets. John also contributes regularly to Trading Markets and is former content editor for the Trade2Win active trader community web site. Over the last several years he has been involved in developing and presenting trading educational classes at the university level. A graduate of the Univesity of Maryland (MBA) and the University of Rhode Island (BS), John currently resides in Providence, RI.

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Table of Contents

Foreword.

Preface.

Acknowledgments.

About the Author.

Chapter 1. Introduction and Getting Started.

Introduction.

Getting Started.

Chapter 2. Trading Mechanics.

The Basics.

Trade Execution.

Behind the Trade.

Managing the Trade.

Chapter 3. Price Action and Its Influences.

Influences on Price.

Price Movement.

Chapter 4. Building the Trading Plan.

What’s a Trading Plan?

Journals.

Personal Assessment.

The Plan.

Chapter 5. Risk and Money Management.

What Is Risk?.

Money Management – Trade.

Money Management – Portfolio.

The Plan.

Chapter 6. Market Analysis.

Analyzing the Markets.

Fundamental Analysis.

Technical Analysis.

Quantitative Analysis.

Final Thoughts.

Chapter 7. System Design and Testing.

Trading Systems Defined.

A Sample System.

Defining the System Focus.

Entry and Exit Rules.

Test I—SMA Only for Buy or Sell.

Test II—SAR Only for Buy or Sell.

Test III—SMA Enter/SAR Exit.

Test IV—SAR Enter/SMA Exit.

Additional Considerations.

8. System Results and Position Size.

Comparing Performance.

Trade Size Determination.

Monetary Comparison.

Fine Tuning.

Risk and Position Size.

The Final System.

Chapter 9. Application.

A Few Last Plan/System Points.

Go Live.

Taking It Forward.

Appendix A: Boxes.

Box Trading Strategies.

Additional Combination Strategies.

Appendix B: Sample System.

A Few Advanced Words.

Part I—Identifying the Stocks.

Part II—Going After Big Returns.

Index.

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  • Anonymous

    Posted April 23, 2006

    Essential Guide for Traders

    What John has accomplished is, to my mind, the best general-purpose introduction to trading I have yet encountered. Having run a training program for aspiring professional traders at a proprietary trading firm, I know the questions that new traders ask and the lessons they need to learn. John has clearly addressed these in 'The Essentials of Trading'. He begins with trading mechanics: the nuts and bolts of executing and managing a trade. His discussion is accompanied by real examples, with screen shots of order tickets and trading screens. This is no academic, theoretical treatise, but a hands-on introduction to trading basics. Later chapters take up the important topics of trading plans and risk management, followed by methods for analyzing markets and designing, testing, and optimizing trading systems. Once again, practical examples abound, with clear illustrations of actual markets, positions, and systems. A nice touch are the text boxes throughout the book highlighting key concepts. Many of these are comments from traders and the lessons they've learned. Overall, I found John's writing to be clear and concise. He has served as content editor for the Trade2Win community site, and his writing experience shows. When I endorsed the book, I said that it was the text I wished I had when I started my training program. I stand by that comment: this is a great introduction to the trading world. Are there weaknesses to the book? Those will depend on readers' interests. Two full chapters are devoted to trading systems, but only part of a chapter to technical analysis. Valuable insights regarding trading psychology are scattered through the text, but there is no dedicated chapter to the topic. Conversely, the bonus sample trading system included in the appendix is worth the price of the text alone, providing an illuminating example of a trading methodology. In sum, I highly recommend 'The Essentials of Trading' for new and developing traders. From execution to planning to risk management to market analysis, it covers the basics in a clear, engaging style.

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