Part I
Dr. Tharp is essentially a “trading coachâ€. Much like Tiger has a swing coach, traders have coaches as well. So far, I think this is an excellent book and I would recommend it to anyone who wants to improve his/her trading game. The book is divided into 4 parts. This review will cover part I which includes the first 3 chapters.
Chapter 1 talks about the most important aspect of trading: you. Trading is about psychology. It is not about picking the right stocks, options, currencies, or commodities. It is about the ability to control risk, allow profits to exceed losses so that you can make money even if you are right only 40% of the time. It is about accepting the fact that losses will occur and not holding on to a losing position. It is about moving on and moving forward.
Chapter 2 talks about biases that affect one’s ability to develop trading systems, test these systems, and trade these systems. This is a good chapter that is thought provoking especially as Dr. Tharp discusses the biases inherent in charts. Simply presenting data in a chart format will introduce various assumptions and bias that can affect your trading and system.
Chapter 3 ties the first two chapters together and asks you to look inside yourself, put aside your biases, and look at your objectives. This involves evaluating your beliefs regarding the market and investing, your motivation and goals, and what you might feel given certain scenarios (eg how you might handle loss and draw downs).
Dr. Tharp is essentially a “trading coachâ€. Much like Tiger has a swing coach, traders have coaches as well. So far, I think this is an excellent book and I would recommend it to anyone who wants to improve his/her trading game. The book is divided into 4 parts. This review will cover part I which includes the first 3 chapters.
Chapter 1 talks about the most important aspect of trading: you. Trading is about psychology. It is not about picking the right stocks, options, currencies, or commodities. It is about the ability to control risk, allow profits to exceed losses so that you can make money even if you are right only 40% of the time. It is about accepting the fact that losses will occur and not holding on to a losing position. It is about moving on and moving forward.
Chapter 2 talks about biases that affect one’s ability to develop trading systems, test these systems, and trade these systems. This is a good chapter that is thought provoking especially as Dr. Tharp discusses the biases inherent in charts. Simply presenting data in a chart format will introduce various assumptions and bias that can affect your trading and system.
Chapter 3 ties the first two chapters together and asks you to look inside yourself, put aside your biases, and look at your objectives. This involves evaluating your beliefs regarding the market and investing, your motivation and goals, and what you might feel given certain scenarios (eg how you might handle loss and draw downs).
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