My Favourite Book on Trading

The intention of this post is to give my point of view in a topic that I consider that there is not a clear guideline and that every pundit out there considers himself an expert and a master.

The book that I am going to recommend gave me a lot of value in one sense or another. No book is going to teach you a magical winning strategy, however, if you put together many lessons of various successful traders Schwager interviews, maybe you will be able to make your own profitable/winning strategy.

Market Wizards, New Market Wizards, Hedge Fund Market Wizards

Personally, these books written by Jack D. Schwager are my favourite. Why? Because the best traders of that time talk about their experiences and their trading methodology, rutines, personality, background, etc. In this particular area of knowledge is really hard to distinguish, especially at the beginning, what is really worth it and what is trash.

I have learned and reasured many ideas and thoughts reading (listening, I use Audible) these books. I will summarize the most powerful messages:

-The strategy is not a key factor. There are winning traders that use fundamental analysis, technical analysis, sistematic traders, discretionay traders, short term traders, longer term traders. It doesn´t matter, you need to find what best trading style suits your personality and make it your own.

-Money Management: There is a common pattern and trait in all successful traders, money management. Keep your losses small. Many of the traders in the book blew up several accounts before becoming profitable, keeping your losses small is the only way of surviving in the business. As human beings, we are going to make "mistakes" so it is important to assume as soon as possible that we are going to make lossing trades and that this ones have to be under control (small).

-Trade Management: Successful traders tend to have their own style of managing their trades that fits with their personality. Some traders scail in a winning trade other scale out. Others, tighten their stop loss and others don´t even use one. However each trader has their own way of managing a trading situation, especially the negative ones.

-Psychology: This traders do not let the emotions get in their way. Of course we are all humans and it is imposible to block our feelings. I think it is really important to think in percentages and always have the big picture in mind to control our emotions.

-Flexibility: Succesful traders tend to recognize very fast when they are wrong and they don´t hesitate in changing their mind. They don´t fight the markets, ego doesn´t get in their way. You have to be an open minded person to be successful in this profession.

-Creativity: As one of the market wizards said, trading is an art. Traders are artists, you need imagination to see the markets in ways that make you have and edge. Each trader will see the market with it´s unique perspective and that is one of the absolute greates things of this profession. Looking at a market and one trader sees one things and another a completely opposite one, however it´s posible that both make money with their own hypothesis.

-Confidence: Confidence is crucial. However to have confidence you need and edge. When you have your own strategy and you have and edge, confidence arises and you will be able to stay true to your approach even though you are having a loosing period.

-Resilient: It takes time. This time depends on each person, however no one starts and immediately makes money. There is a learning curve and it´s tough. But if you really want it you will be able to achieve your goals.

Maybe I am forgetting other important lessons. Please don´t hesitate to contact me and share your trading experiences and I will also add them to this post.

Thanks for reading.