This is the trading bible for the new millennium. In "Come Into My Trading Room", noted trader and author Dr. Alexander Elder returns to expand far beyond the three M's (Mind, Method, and Money) of his bestselling "Trading for a Living". Shifting focus from technical analysis to the overall management of a trader's money, time, and strategy, Dr. Elder takes readers from the fundamentals to the secrets of being a successful trader identifying new, little known indicators that can lead to huge profits. "Come Into My Trading Room" educates the novice and fortifies the professional through expert advice and proven trading methodologies. This comprehensive trading guide provides a complete introduction to the essentials of successful trading; a fresh look at the three M s, including a proven, step by step money management strategy; and an in depth look at organizing your trading time. "Come Into My Trading Room" reviews the basics of trading stocks, futures, and options as well as crucial psychological tactics for discipline and organization with the goal of turning anyone into a complete and successful trader. By showing traders how to combine the elements of mind, method, and money, "Come Into My Trading Room" gives readers the knowledge and insight to enter the market with confidence and exit with profits. Unparalleled depth and a wide range of coverage will keep all levels of traders engaged, informed, and returning to "Come Into My Trading Room" again and again. Dr. Alexander Elder (New York, NY) is a professional trader, technical analysis expert, and practicing psychiatrist. He is the founder of Financial Trading Inc., providing intensive trading camps to traders all over the world. Elder's first book "Trading for a Living" (Wiley: 0471592242) and the companion study guide have sold over 160,000 copies.
It was with a great deal of curiosity that I began to read Come Into My Trading Room. Elder's first and classic book, Trading for a Living, was the second trading book I ever read and even 40 or so books on from there I still rate it in my top five. I frequently recommend it to others who want a considered and honest introduction to trading.
I was interested to see how the themes and emphasis had developed in the nine years since the first book was published. I had read a couple of reviews that said it didn't add much to the previous book but I was eager to make up my own mind.
So the first question I asked myself was, "What hasn't changed?" Firstly, the style of writing is as clear and engaging as in the first book. The layout is logical. In all key areas he suggests further specialist reading to take you deeper into the subjects that may interest you. As in the first book, for its size (only 313 pages), it is very comprehensive and covers the three main areas of competence for a trader. Psychology, Technical Analysis and Money Management. Therefore the three pillars from the first book are still very much standing.
"What has changed?" A great deal in my opinion. The psychology section is greatly improved. I thought psychology was the main weakness in the first book. Elder relied too heavily on the Alcoholics Anonymous Model. (My previous professional background in treating addictive and compulsive behaviours is the basis for this observation.) He draws the title of the psychology section "The Disciplined Trader" from another excellent book by Mark Douglas. This gives me the impression that Elder himself has been learning a lot over the last nine years.
The technical analysis section deals less with basic TA than his first book, instead Elder focuses more on the practical applications of TA to trading. It also includes an update on a method first described in the first book the "triple screen" and a section on systems trading and system testing. As someone who is toying with developing systems at the current time I particularly liked his discussion of the distinction between systems and discretionary traders.
The book is not aimed strictly at day traders. In fact he suggests that a trader accomplish at least a years successful experience with end of day trading before moving to intraday trading. He asks his readers to answer tough questions and if you are able to give honest answers you will profit from this book.
Elder also concurs with one of my prejudices. He stresses that traders should take their first trades in inexpensive markets, So with futures for example trading the Eurostoxx50 at 10 euros per point is a better starting point for the new trader than Dax at 25 euros. He also provides a helpful method for working out which markets you can afford to trade. It is this applied aspect of the book that makes it so valuable. There is no irrelevant padding here, every paragraph has relevance.
The overall balance of the book is about perfect now. In the first book the basic TA took up a large percentage of the volume. This time the sections are much more equitable with quite rightly money management and record keeping getting a more through treatment.
One change in this book (and I did wonder if he had read Tony Oz’s wonderful "The Stock Trader") is the inclusion of some actual trade examples. I always like seeing these because following them through gives a real insight into the traders mind in a way simple chart examples can’t.
I think there is a more cautious/warning tone about this book than the first. I suspect this might be because Elder runs' trading camps and has had lots of experiences with wannabe traders since writing Trading for a Living. He's very aware of the main reasons why people fail and makes these very explicit in the text.
There is a good basic description of the major trading instruments. Elder clearly states the advantages and disadvantages of each. This is a welcome addition as it was missing from the first book.
The section for new traders (or "babes in the wood" as he calls them) covers the basics of setting up to trade from home. He discusses which instruments and markets to look at and the issues of commission, slippage and expenses. Elder stresses the importance of the bottom line and the need to keep trading expenses such as commission under control.
Conclusion
This is a book written by a mature trader and educator, who has seen and done it all and can now give the most balanced, practical and honest description of learning to trade you will find anywhere. I highly recommend it to new traders and improvers alike. W Vinall
Contents of Come into My Trading Room
Dedication
Introduction
How this book is organized
Male or female?
PART ONE: FINANCIAL TRADING FOR BABES IN THE WOODS
1. Invest? Trade? Gamble?
An intelligent investor
An intelligent trader
An intelligent gambler?
2. What markets to trade?
Stocks
Futures
Options
3. The first steps
The external barriers to success
Getting your gear
Analysis and trading
PART TWO: THE THREE 'M's OF SUCCESSFUL TRADING
4. Mind - the disciplined trader
Sleepwalking through the market
A remedy for self-destructiveness
The mature trader
5. Method - technical analysis
Basic charting
Indicators - five bullets to a clip
6. Trading
System testing
Triple screen update
Day-trading
The impulse system
Market thermometer
Exiting trades
Choosing what to trade
7. Money management formulas
No math illiterates
Businessman's risk vs. Loss
The 2% solution - protection from sharks
The 6% rule - protection from piranhas
Position sizing
Money management steps
PART THREE: COME INTO MY TRADING ROOM
8. The organized trader
Trader's spreadsheet
The equity curve
Trading diary
Action plan
9. Trading for a living
Discipline and humility
Have you got the time?
The decision-making tree
Beginner, semipro, pro
Going pro
10. Come into my trading room
Excerpts from the diary
Your next trade
Acknowledgments
Sources
Index
About Alexander Elder
ALEXANDER ELDER, MD, is a professional trader, an expert in technical analysis, and a practicing psychiatrist. He is the founder of Financial Trading Inc., a firm that provides intensive trading camps for traders worldwide. Dr. Elder's first book, Trading for a Living, and its companion Study Guide have sold over 160,000 copies in English and were translated into nine languages. Dr. Elder's Web site is www.elder.com.