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The Three Skills of Top Trading-Book Review

24 June 2013 - 15:35 pm

This book is written about how three mutually reinforcing skills make a complete

trader.

1). Pattern Recognition and Discretionary Trading.

Using the Wyckoff method you will see chart representations of how hot growth

stocks are accumulated in bases for long periods of time. They eventually have pull

backs then break out to new highs and trend. You will also see how they eventually

have exhaustion tops on high volume that fail to rally and they begin to break down

in distribution with lower lows and lower highs. The author encourages discretionary

trading through experience by being able to identify market action through the

models from past stocks. This work ties in nicely with the school of thought from

legendary traders William J. ONeil, Jesse Livermore, and Nicolas Darvas.

2). Behavioral finance and systems building.

The book teaches that readers must be flexible in their trading. We are merely a ship

on a sea of market participant opinions. Follow the prevailing sentiment during the

middle of the the trend, and go contrary to it at the extreme tops and bottoms.

Hope, fear, and greed are the dangers and the movers of the market that cause

support and resistance, trends, and chart patterns. The action of the stock market is

nothing more than a manifestation of mass crowd psychology in action. The Pruden

model shows a chart of how accumulation, mark-up, distribution, and markdown

works in the market tied to price, volume, sentiment, and time. It truly explains how

the price pattern and charts in growth stocks generally play out historically.

3). The ten tasks of top trading:

Daily self analysis

Daily mental rehearsal

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Developing a low risk idea

Stalking

Action

Monitoring

Take profits or abort

Periodic review

Daily briefing

Out

The book covers all the aspects of trading psychology in depth, I found this

information to very useful at the time I read it to carry me along in my evolution as a

trader. The psychological insights in this book is worth the price of the book alone.

The book also discusses the principle of the Composite Man, it is much like

Benjamin GrahamsMr.Market. It explains that you must think of the market as

one person you are trading against and your job is to understand how he is trading to

adjust your trading accordingly to the markets price action.

This book is geared toward traders who rely on trading patterns and other traders

psychology as their primary edge, and will appeal to traders interested in these

styles. This book is a key book for all traders who truly want to be successful.