Way of the Trader: A complete guide to the art of financial trading

by Ian Murphy

Overview

Way of the Trader offers a fresh perspective on a mysterious art - trading the financial markets. Over 15 compelling chapters, Ian Murphy unpacks the world of a private trader, providing a wealth of practical tools for those wishing to make a living from the markets. In Part A he examines the job of a trader and their relationship with the market - and how to survive where so many others have failed. In Part B he reveals the habits of serious professionals. These include essential procedures such as the Eight Checks and the Nine Filters which should be employed by all traders before a single penny is placed in the market. Most important of all, Ian explains how the Five Limits of Risk allow us to embrace the dangers at the heart of trading, so we can face the market with confidence and clarity. In the Six Edges chapter, psychology - the key to trading success - is closely examined and we see how the concept of a trading edge is overrated and misunderstood. We also learn how Buddhist techniques for working with the mind can be profitably employed in the market. In Part C the author shares three consistently profitable trading strategies which expose opportunities inherent in the market and demonstrates how to leverage those opportunities. These strategies are explained in great detail with the aid of annotated charts and backtested results. Way of the Trader is a must read for anyone thinking of trying their hand at trading. It's also an indispensable tool for experienced traders who are unable to remain profitable over the long run and need to introduce order and structure to their daily routine. Murphy doesn't claim to be another market guru or promise to make you millions. He’s the guy up the street who figured out how to become profitable after years of frustration and confusion. Based on his own experience and that of other professional traders, he systematically demonstrates how patience and perseverance, when coupled with an open mind and hard work, offer a path to a lifestyle which is financially independent and free. If you have the courage to take that path, this book is the first step on the way.

Product Details

ISBN-13:	9780857196996
Publisher:	Harriman House
Publication date:	04/15/2019
Sold by:	Barnes & Noble
Format:	eBook
Sales rank:	775,487
File size:	10 MB

About the Author

Ian Murphy is a successful private trader, trading his own account using trend-following, swing-trading and day-trading strategies. He has studied various facets of trading with a number of experienced traders, including psychology and trading methods with Dr. Alexander Elder. He has also worked closely on technical analysis and trading strategies with Kerry Lovvorn. Throughout his trading career, Ian has maintained detailed records and a diary documenting the highs and lows of his trading experiences. Over time, he identified the most important aspects of the journey as he began to interact with other traders. The lessons learned have now been brought together in his new book, Way of the Trader. Based in Ireland, after college Ian Murphy trained in electronics before travelling in Europe, North Africa and Central America. He returned to Ireland to work in the metal recycling industry, eventually specializing in precious metals. This brought him into contact with the financial markets and he has been an active trader ever since. murphytrading.com

Table of Contents

The Foreword Dr. Alexander Elder xi

The Introduction 1

Part A 5

The Job: Is Trading a Job or a Business? 7

Working in paradise 7

A business - but a different one 9

Cash is king 10

No barriers, no rigging 10

Trading and gambling 11

Gambling, insurance and trading 13

The Relationship: A Trader and The Market 15

The market mistress 15

Constant rebirth 16

The crisis crew 18

Dismal scientists 20

A trader's perspective 21

Part B 23

One Rule: The Preservation of Capital 25

A study of male and female traders 25

Conclusion 27

Two Choices: Keeping it Simple 29

1 Investing or Trading 29

2 Lost opportunity or lost capital 33

3 Fundamental or technical analysis 33

4 To use a protective stop or not 35

5 Whipsaw or Lag 36

6 Shares or something else 40

Three Styles: Trend Following, Swing Trading and Day Trading 47

Time frames in the market 47

1 Trend following 48

2 Daily swing trading 54

3 Day trading 56

Conclusion 58

Four Legs: The Attributes Which Support a Successful Trader 61

1 Reason 61

2 Risk 65

3 Responsibility 79

4 Routine 82

Conclusion 85

Five Stages: The Path of a Successful Trader's Career 87

1 Reckless 87

2 Recognition 88

3 Revival 90

4 Routine 107

5 Reward 109

Six Edges: The Psychological Tools of a Successful Trader 111

No box 111

Head office 112

A science of the mind 112

The Six Paramitas 113

Standing Aside 119

Conclusion 131

Seven Records: A Look at the Records a Trader Should Keep 133

1 Trading diary 133

2 Study notes 135

3 Eight checks 136

4 Trade log 136

5 Our equity curve 140

6 Trading strategies 143

7 Manually sourced data 145

Eight Checks: A Comprehensive Pre-Trading Checklist 147

Background 148

Day and date 150

1 Myself 150

2 Macro 151

3 Market 152

4 Methods 153

5 Money 153

6 Memos 154

7 Mentors and mates 155

8 Media 155

Conclusion 156

Nine Filters: Selecting Which Stocks to Trade Using Filters 157

Character reference 158

The filtering process 159

Step one: general filter 160

Step two: strategy-specific filters 169

Conclusion 172

Ten Tools: An Introduction to Technical Indicators and Orders 175

Five basic technical indicators 175

Five basic orders 195

Part C 203

The Strategies: Perfect Imperfection 205

Signals and triggers 206

Backtested results 206

The Tidal Strategy 207

Introduction 207

SPY 208

Indicators 209

Signals 210

Protective stop 210

Backtesting 211

Dividends and trading expenses 212

Sell in May? 213

Life before SPY 214

Trading the strategy in 'real life' 215

Patience and discipline 216

Interest rate yield curve 220

Tidal Strategy versus passive approach 220

Withdrawing cash 221

Geared ETFs 221

Conclusion 221

The Wilde Strategy 223

Introduction 223

Life in the gutter 223

Moving up in the world 224

Earnings 227

Scanning for stocks 228

In plain view 229

Discussion 230

The Help - Up Strategy 231

Introduction 231

New high-new low (NHNL) 231

HELP indicators 232

The three channels 233

The six signals 237

Trading the strategy 241

Protective stop placement 242

Price-reversal pattern 243

Risk management 243

Backtested results 244

Dividends, trading expenses and inflation 248

Analysis of the results 249

A closer look at the signals 250

The help indicator 251

The pessimism indicator 252

Trading in bull markets 253

Trading in bear markets 254

False positives as a market internal indicator 254

Hybrid trades and experience 255

Live trading and follow up 256

The Help-Down Strategy 256

The Beginning 259

The Acknowledgements 261

The Author 263

The Index 265

Editorial Reviews

The liveliest book on trading I have read in several decades … A breath of fresh air: real, humane, and genuinely funny. You’ll enjoy reading it” —Dr. Alexander Elder

“Overall, Way of the Trader is an ideal companion for those new to the world of financial trading, as well as an indispensable guide for more experienced traders who also might find a few new ideas to apply to their methods.” —Richard Gill, CFA, for Master Investor Magazine

“A must read for any beginner or intermediate trader. Ian Murphy explores the 5 stage path that a trader should take in a very clear step by step methodological way. He also states the six psychological tools that a trader must arm himself with for consistent performance. The thorough detail on the risk management section sets this book apart from others. All the essential elements for successful trading are put together in a practical way in the strategy section. Overall, a great book for anyone to become a better trader.” —Thiru Nagappan, Trader and Founder of Master the Markets

From the Publisher