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," the reality is far different. Ever-changing market trends can make for turbulent trading sessions, while lack of concentration can lead to costly mistakes.

With nearly twenty years of trading and investing experience in a wide array of markets, author John Forman knows what it takes to succeed in this arena, and with The Essentials of Trading, he shows you how.

Written for those just ...

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Overview

While trading may seem as easy as "buy low and sell high," the reality is far different. Ever-changing market trends can make for turbulent trading sessions, while lack of concentration can lead to costly mistakes.

With nearly twenty years of trading and investing experience in a wide array of markets, author John Forman knows what it takes to succeed in this arena, and with The Essentials of Trading, he shows you how.

Written for those just beginning their journey through the world of trading, this straightforward and accessible guide provides a base of knowledge and understanding from which you can develop trading methods, systems, and techniques that best suit your personality, situation, and financial objectives. Filled with in-depth insight and practical advice, The Essentials of Trading first takes you through the basics of placing a trade and understanding how markets work, and then progresses to the development of trading plans, the implementation of risk management, and the building of trading systems. Along the way, the use of exercises and examples brings these and other topics to life.

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 every subject put forward, additional resources for this book have been compiled to allow you to research specific topics of interest. This Web site also provides access to the support tools mentioned at various points in the text, as well as to the free companion workbook designed to complement this book.

While you don't need to be a financial genius to make it as a trader, you do need to be disciplined in your approach to the markets. With The Essentials of Trading by your side, you'll discover what it means to be a successful trader and how to put together an effective plan of action for your trading as a whole and 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
  • Sales rank: 1,418,723
  • Product dimensions: 6.24 (w) x 9.09 (h) x 1.10 (d)

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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