The Way of the Turtle

 
"This is one of the five best trading books ever written."  - foreword by Dr Van Tharp


If Dr Van Tharp says it is good , then it must be good!

I think the "goodness" of a trading book comes from the COMPLETENESS of the content in that it deals with both the software and the hardware of trading. Many books concentrate too much into the trading process ( the METHOD, as defined by Dr Elder ) .... and forget the emphasis on the other 2 legs... MIND, and MONEY MANAGEMENT....

This book has it all...

The EDGE ( Method)
The RISK ( Money Mangement)
The CONSISTENCY ( Mind)
The SIMPLICITY ( The Philosophy )

You will not regret buying this book. Dr Van Tharp was right... it is one of the best trading books written.... the COMPLETE book!

The otherComplete books I recommend :
(1) Trading for  A Living ( Dr Alexander Elder )
(2) Trading in the Zone ( Mark Douglas )
(3) SuperTrader ( Dr Van Tharp )
(4) Better Trading ( Daryl Guppy)


Some lessons gleaned from the book :

(1) TAMING THE MIND : controlling Fear, Hope, Greed, Despair. ( FHDIG..& Ignorance )
        Handling Biases : (1) Loss Aversion
                                      (2) Sunk Cost Effect
                                      (3) Dispositon Effect
                                      (4) Outcome Effect
                                      (5) Recency Bias
                                      (6) Anchoring
                                      (7)  Bandwagon Effect
                                      (8)  Law of Small Numbers

It is the existence of Human Bias and Uncontrolled Emotions that give rise to trading opportunities... to traders alert enough to spot the signs, and to exploit it ( as a business opportunity with the appropriate Risk and Rewards ).

"Human emotion is both the source of opportunity in trading and the greatest challenge. Master it and you will succeed. Ignore it at your peril" . Well said, by the author.


(2) THINK LIKE A TURTLE

 Forget The Past, Live in the Present, Avoid the Future Tense
    Think of Possibilities, Probabilities, and Not Predictions.


( 3)  TRADING WITH AN EDGE
   
 EDGE : exploitable statistical advantage based on market behaviour that is likely to recur in the future  ( breakout , trend filter )
       RISK : risk of ruin; controlled risk ( so that you can be around to see the benefits of  a positive expection system), expectation
       CONSISTENCY : consistent execution of the plan is necessary to achieve the positive expectation)
     SIMPLE : simple and easy to understand ( catch every filtered trend) , but not easy to execute

A simple ( 3R ) Chinese way to do this : (1) know the rules
                                                        (2) know the risk
                                                        (3) know when to run

(4) FALLING OFF THE EDGE
     1. Drawdown
     2. Low returns
     3. Price shocks
     4. System Death

(5) WHY TRADERS FAIL
     1. No plan
     2. Too much risk
     3. Unrealistic expectations

(6) A GOOD SYSTEM : complete and robust 

Lessons from a Turtle :
1. See your way around cognitive biases and make adjustments for them in your thinking
2.Risk is your friend. Don't be afraid of it. Understand it. Control it. Dance with it. Nothing ventured, nothing gained.
3. Failure is a neccesary prerequisite to success and learning.