How I Trade for a Living / Edition 1 available in Hardcover
- ISBN-10:
- 0471355143
- ISBN-13:
- 9780471355144
- Pub. Date:
- 11/09/1999
- Publisher:
- Wiley
Hardcover
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Product Details
| ISBN-13: | 9780471355144 |
|---|---|
| Publisher: | Wiley |
| Publication date: | 11/09/1999 |
| Series: | Online Trading for a Living Series |
| Pages: | 272 |
| Product dimensions: | 6.24(w) x 9.35(h) x 0.98(d) |
About the Author
Read an Excerpt
During the early to mid-1990s, I was a full-fledged member of the vendoring establishment. I wrote and marketed several manuals on day trading stock index futures. But unlike a lot of vendors, I actually knew a thing or two about trading and had been successful at the game for many years prior to my stint as a marketeer.
My day trading materials were well received within the trading community. As a result, I received numerous invitations to speak at trading seminars and was profiled in several national trading publications. Much of the notoriety resulted not so much from how much money I made as a trader, but from my trading consistency. Over a 10-year period, I rarely encountered a losing month. I garnered additional publicity for my willingness to provide years of real money-trading statements to document my trading prowess-- a practice almost unheard of in the vendoring business.
It was never my intent, though, to seek fame and fortune as a seller of trading-related products. Instead, I wanted my reputation to be that of someone who successfully traded for a living. So in early 1996, I turned over my trading manuals to an outside marketing company and walked away from the limelight. I had no intentions of ever returning to Vendorland.
Once out of the spotlight, my trading thrived as never before. I was perfectly content in my life as a private trader. Then one day I opened my mail and found the following letter: "I'm a desperate trader, desperate to succeed. I left my job about eight months ago and was pretty optimistic. I have tried to do everything right. I bought the best computer, the best software, the best data feed, had a mentor, and paid $2,500 for a trading system. . . . I can honestly say that there isn't another trader that works harder than I do. I have completely dedicated myself and all my power and energy to learning and becoming successful at trading . . ."
The letter writer went on to say how he had worked two jobs for eight years to save $100,000 for his opportunity to trade. But everything had fallen apart. The system didn't work, his mentor turned out to be a crook who was fined by the regulatory authorities, and his $100,000 had been reduced to less than $10,000. At the end of the letter he asked if I could help him become profitable. He was frustrated that he had worked so hard and learned so much but couldn't seem to get his arms around it.
Although not particularly noted for my altruism, I was, nonetheless, affected by the letter. I truly felt the pain and frustration of this desperate and losing trader. That's probably because, for more years than I care to remember, I, too, desperately sought the answers on how to succeed in the trading game. So to help the desperate letter writer and others like him, I decided to return to Vendorland by writing How I Trade for a Living. During my struggles, there were many trading books that I looked upon as inspiration in my quest for trading success. Hopefully, many of you will regard this book as your inspiration for becoming a winning trader.
my trading credentials
Since you won't ever find my name among those of the elite hedge fund managers or trading advisors, you might wonder what my credentials are for writing a book about the realities of trading for a living. I'm a professional home-based trader whose trading passion is the stock market. Trading for a living was a dream of mine ever since 1961 when I was 14 years of age and read Nicholas Darvas's book, How I Made Two Million Dollars in the Stock Market.
The road to successfully trading for a living was bumpy and filled with numerous potholes. I stumbled blindly for 19 years as a part-time and break-even trader with a trading account that fluctuated between $2,000 and $4,500. My epiphany as a trader came in March 1985. After nearly 20 years of dreaming, wishing, and praying for trading success, it finally fell into place for me.
Since the spring of 1985, my trading capital has steadily increased without interruption. At the time of my trading epiphany, I had only $2,200 in my account. Today, despite withdrawals along the way for taxes and living expenses, my trading account is valued at over $650,000. Over the past several years I have averaged in excess of $10,000 in monthly trading profits. My hallmark as a trader is consistency. Losing months over the past 14 years have been a rarity, averaging about 1 per 20 months, and no monthly loss has exceeded $2,000.
I trade according to the philosophy that wealth accumulation involves a systematic and disciplined compounding of trading capital over time. As capital accumulates and compounds each year, so will trading profits. Never in my wildest dreams did I ever imagine my capital would compound to such a degree that I would be cranking out $196,000 in annual returns, as in 1998.
I apologize for what some readers may construe as unseemly boasting about my trading exploits. I do this only because I'm a stickler for credentials. And after all, one reason to purchase this book is to learn firsthand the realities of successful trading from a practitioner, instead of from someone who merely pontificates. There are far too many personalities in this business who predict, promote, or peddle trading tools, yet can't trade their way out of a paper bag.
Table 1.1 and Figure 1.1 show my monthly trading performance for 1996 through 1998 and the first eight months of 1999. Since I've been so outspoken in the past against traders who make unsubstantiated trading claims, my trading statements (for all my accounts) documenting these results are on file with not only the publisher of this book, but also an independent third party, Courtney Smith, the publisher of Commodity Traders Consumer Reports. 2 Courtney was chosen because, like myself, he has a long background in trading stocks, options, futures, and mutual funds.
marching to a different beat
This is not a conventional book about conventional trading methods such as chart patterns, moving averages, and oscillators. I never found these overused methods to work very well. It is also not a book about arcane trading strategies or complicated and esoteric mathematical formulae. I don't believe successful trading has anything to do with waves, cycles, astrology, numbers, ratios, numerical series, cubes, or lines drawn on a graph.
Fasten your seat belts while reading this book. There will be places you'll find yourself vehemently disagreeing with me. That's because I march to the beat of a different drummer in my trading philosophies. My personality, whether you love it or hate it, is what makes me tick as a trader.
For instance, besides not believing in charts and oscillators, I think all the glitzy equipment and software so frequently advertised for traders are unnecessary expenses. All I've ever needed to trade successfully has been the CNBC business station and a telephone. I'm also a very emotional trader who operates with a complete lack of confidence-- losing trades eat away at me for days, sometimes weeks, at a time. That runs counter to the conventional wisdom of the psychological trading gurus on what it takes to be a successful trader.
Throughout How I Trade for a Living you will notice references to other trading books. I collect them and have accumulated a library of over 450 books. Many of these books aren't in the mainstream of trading literature and some are out of print. These books ingrained in me valuable trading principles, which eventually contributed to my trading success. In particular, the books from the 1960s and early 1970s are gems that reveal great insight.
Besides enjoying a reputation as a successful trader, I'm also known in the trading industry as a basher of vendors-- especially those vendors who misrepresent themselves as trading for a living, when, in fact, all their income is derived from vendoring. However, I will not use this book as a forum to trash any vendors personally.
How I Trade for a Living was not written as an autobiography. It would be presumptuous for me to believe anyone would be interested in the intimate details of my personal life or my political and religious views. Yet I believe it is important throughout the next few chapters to detail my evolution as a trader. To better appreciate my trading accomplishments, it is helpful to first understand my initial trading failures. Many of you will identify with my plight, especially in my early years.
Some people may dismiss these trading achievements by attributing them to a particular innate talent or ability. Poppycock! That's simply an excuse for believing they can't emulate my trading results. The years of adversity I endured prior to becoming successful should dispel the notion that I have any special trading skills.
A few caveats about the way I trade. Trading, for me, is a very simple process. However, it took many years of struggling with needless complexities before I discovered the simplicity of the game. Be forewarned that my trading style has evolved over time and through much practice. You aren't expected to grasp everything at once. I'm not here to try and make anyone a Gary Smith trading clone. Take whatever bits and pieces of these insights and strategies you feel most comfortable with to incorporate into your own trading style.
Trading is an evolutionary process in which you progress through various stages from novice to advanced beginner, to competent, to proficient, and finally for a few, to expert trader. Regardless of your present status, How I Trade for a Living should assist you in your journey to the next level.
Table of Contents
Help for a Desperate Trader.Dreams of Easy Money.
The Futures Market Beckons.
Almost Down for the Count.
Putting It All Together.
Why the Stock Market?
Trading is a Profession.
Perceptual Trading Filters.
My Favorite Indicators.
Technical Indicators.
Monthly Seasonality.
The Nitty Gritty of Trading.
Money Management.
Trading Mutual Funds.
Trading Junk Bond Funds.
Trading Stock Index Futures.
Epilogue: Strictly Personal.
Recommended Resources: Reading and Researching Your Way to Success.
Endnotes.
Index.