Van Tharp’s Definitive Guide to Position Sizing Released

August 21st, 2008

Dr. Van Tharp’s much anticipated new book on position sizing is now available. As good traders know, position sizing is everything, and if Van did anything close to the ever popular Trade Your Way to Financial Freedom I’m sure he knocked it out of the park with this one.

I’m pretty sure StockTickr is highlighted in the software section of this book, but I’m not positive – I’ll have to wait until I get my copy to verify.

Although it’s essentially the same as for manual trading, position sizing with the higher frequency automated trading I’ve been doing has presented a couple more variables to the mix which I’ll discuss in a future post.

I’ll post a review once I get my copy.

Update: I have received a copy of the book and it does mention StockTickr as a recommended service for improving trading performance! If you like Van Tharp’s ideas about trading, you’ll love StockTickr. Take a free trial now.

Great Advice from the Good Doctor Brett

July 26th, 2007

I’ve picked up Dr. Brett’s book again, Enhancing Trading Performance (the one with a picture of him on the cover) and ran across this nugget in a section called “The Best Piece of Advice You’ll Ever Get From Dr. Brett” on page 221.

If you are developing your trading expertise, do it in a steady, progressive manner that creates neither excessive emotional highs nor extreme emotional lows.  Do not traumatize yourself: The best treatment of all is prevention.

The best way to incorporate psychology into your trading plans is to ensure, through risk management, that you never expose yourself to outsized market outcomes.

It never really occurred to me that one should try to avoid outsized market outcomes that are actually too profitable, but this makes perfect sense.  It might be nice to have a few extremely profitable outcomes, but when you do always keep in mind the risk that you take on to get them.  As Van Tharp always says, there’s no mistake worse than one where you make money doing it.

This reminds me of some excerpts from the Market Wizards book series where some traders would actually revisit their trading plan if they ended up making more money that their backtesting had reasonably predicted because it often meant that there was probably more risk in their system than they realized.

These concepts are front and center in my mind as I try to find more opportunities to trade.  There will (should!) be more profitable days, but this necessarily means that there will be larger down days as well.

What Books Do Successful Traders Recommend?

July 9th, 2007

If you follow the StockTickr Interview Series (RSS feed), you know that one of my favorite questions to ask is what three books they recommend traders read.  I admit there are selfish reasons behind this question – I want to read what they recommend!

I’ve been meaning to tally up this list for a long time.  I had an idea which books were coming up again and again in their recommendations, but I had no idea that there were 75 unique books recommended so far.  It seems like a consensus has formed at the top – Trade Your Way to Financial Freedom is the runaway winner and for good reason, in my opinion.  It was also interesting to me to see books recommended that were completely unrelated to trading (or so it seemed).

Here’s the current tally with links to the interviews where they were originally recommended.

Read the rest of this entry »

Updated Edition of Trade Your Way to Financial Freedom

January 16th, 2007

Trade Your Way to Financial Freedom

Dr. Van Tharp has released a new edition of his popular book, Trade Your Way to Financial Freedom. I know many of you have read his first edition and it changed the way you trade – it certainly changed my outlook on the markets and trading systems. If you are creating a trading system for yourself, this book has some great information about how to do it and why some systems work for some people and not others.

Dr. Van Tharp was interviewed in the popular Market Wizards book and I had the honor of interviewing him in the StockTickr Interview Series back in May. I’ve contacted Dr. Tharp’s company about setting up another mini-interview about this new edition of the book and how it came about.

If you’ve already read the first edition and you’re wondering whether to get the second edition, here’s Dr. Van Tharp’s answer to that question:

I have the original edition – do I really need the new edition?

Dr. Tharp: In my opinion, yes. The 2nd edition is more complete, more understandable, and more current for the realities of the world we now live in. No book can keep up with events on a real time basis, so my goal for this edition was to capture the major changes that have occurred since 1999 and offer improved perspective on how to trade successfully in current and future markets.

I have also incorporated feedback and suggestions from the thousands of people who benefited from the 1st edition. They have been generous with their insights about topics that needed a bit more clarity, concepts that needed more detail, and which sections were especially useful just the way they were.

If you already have the 1st edition – thank you! I am confident that you found it interesting, enlightening, and most importantly, empowering and profitable. The 2nd edition of Trade Your Way To Financial Freedom offers even more information and guidance to help you improve your trading and financial performance. You will benefit tremendously from this updated and improved edition.

StockTickr Recommended by Brett Steenbarger in Enhancing Trader Performance

November 8th, 2006

I was ecstatic to see my copy of Brett Steenbarger‘s new book Enhancing Trader Performance arrive last week. I was even happier to see StockTickr Pro listed as a recommended resource in the book.

I knew from reading Brett’s blog that he regularly exercises, but I didn’t realize the kind of shape he’s really in. Take a look at the picture of him on the cover of the book:

Cover of Enhancing Trader Performance

I’m a little over 50 pages into the book, and I can already say that it’s very good. Here’s a nugget that I hadn’t thought about before, but it makes perfect sense. Brett’s referring to a trader that can’t muster the discipline to stick with a certain trading style:

Their losses of discipline are intuitive gravitations to their natural trading styles.

… and a little bit later…

When you have found your niche, you don’t need discipline to do the right things; you won’t want to do anything else.

I’m getting a lot out of this book and I’d highly recommend it. I was also happy to read that his first book (review) is still selling well.

Congrats, Brett!

Updated Version of Trade Your Way to Financial Freedom

August 31st, 2006

I noticed on Dr. Van K. Tharp’s site a few days ago that he’s coming out with a new version of the book that changed the way I look at my trading forever, Trade Your Way to Financial Freedom. I emailed Van and company and wanted to get the scoop on the changes that were in store. Here’s what Melita from the IITM office wrote back:

Basically Van has changed about a third of the book to reflect the beliefs that he has now compared to what he thought 7-8 years ago when the other book was written. He discusses the big picture and why it’s important. Shows a much easier version of expectancy, has included information on evaluating your system as R-Multiple distributions, does an analysis and review of other people’s newsletters, and added some revised position sizing material and gotten rid of some parts that are no longer relevant.

Sounds great. I’m a buyer. I actually saw the updated cover on Amazon the other day, but I can’t seem to find it now. Here’s the current version’s cover:

Trade Your Way to Financial Freedom

Unemotional Trading? Impossible.

July 15th, 2006

The Psychology of Trading: Tools and Techniques for Minding the Markets

I picked up a copy of The Psychology of Trading after meeting Brett Steenbarger and following his blog for a while. You might remember that I interviewed him on this blog a while back after I read a few of his articles via TraderMike‘s link feed.

Brett’s book is chock full of great advice for trading. I won’t tell you that it is a quick read because it’s certainly not. I’m only partway through and am enjoying it, although I find myself alternating between this book and a couple other trading books. Brett has an interesting style of drawing parallels between stories of actual patients from his Psychiatry practice and the emotions of trading.

One section that struck me is called Using Emotion to Make the Contrary Move which talks about using emotions rather than ignoring them. He states that many traders have come to him wanting to rid themselves of emotion and fear. Ridding yourself of emotions during trading (namely fear) would be like placing a piece of electrical tape across your check engine light when it comes on, he says.

From the book on page 67:

I cannot make the point strongly enough: Successful traders do not eliminate emotions. Indeed, they experience emotions fully, so fully that they become consciously aware of what they’re feeling. At that point, however, they don’t become lost in their emotional state. Instead, the adopt the vantage point of the Observer, standing apart from the feelings and making sense of them.

This struck me as a point to ponder since we’re told by so many to rid ourselves of emotions during trading. It reminded me of this article I came across yesterday titled Self-Control is the Key to Success. It’s not directly related to trading but, like so many lessons we learn in life, it can be applied to trading.

If anyone else has read Brett’s book, I’d be interested to hear your comments. I’m also eagerly anticipating his upcoming book Enhancing Trader Performance scheduled for release this fall.