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Tuesday, August 30, 2011

Book: The Little Book of Trading

The Little Book of Trading is reviewed in this website

Here are some excerpts from the review:

This book is mostly about inspiration from successful (Trend Following) stories. This latest Covel instalment revolves around some famous Trend Following personalities. And successful stories are one of the best ways to get inspiration and motivation.
Below are the personalities/firms covered with chosen quote(s) from each chapter.
Sunrise Capital (Gary Davis, Jack Forrest, Rick Slaughter)

Trend Following can be simple, but sticking with it is the hard part.

Make sure you never miss a potential big trend. You always want to put some kind of trade when your system says enter as your price trigger hits. If you are wrong, you have stops to protect your capital, to protect your downside. After all, you never know which move is going to be the mother of all moves.
Kevin Bruce

There is great truth in the idea that if you take care of the downside, the upside will take care of itself.

Larry Hite

Hite has two basic rules about trading and life:
 1) If you don’t bet, you can’t win.
 2) If you lose all your chips, you can’t bet

Eric Crittenden and Cole Wilcox

Wilcox, for example, has a constant process of asking, “Am I wrong?” while he sees everyone else asking, “Am I right?” If you don’t ask the correct probing question with genuine curiosity, like a scientist, you cannot arrive at the correct answer.
 The scientific method doesn’t allow you to prove anything. All you can do is disprove theories, and then, with a preponderance of evidence still left, you can accept and keep the remainder as long as you can’t disprove it.

A few key lessons from Basso helped Crittendedn and Wilcox from the beginning. Basso was blunt, “It really is simple. You hold your winners, have discipline and cut your losers. You take what the market gives and you’ll be successful in this business”. Crittenden added: “One. Don’t over-bet. Two. Diversify across markets.”

My Notes: Please read the original post at the website given in the first paragraph for the full review.

1 comment:

Nikhil said...

In the book 'Market Wizards' by Jack Schwager, Larry hite said his two rules which you've written
In the same book, Ed Seykota said 3 basic rules of trading. Those are
1. cut ur losses
2. cut ur losses
3. cut ur losses