This review comes from stockineer.com which is why I wrote the review initially. It's worth sharing here as well to help others make their decision on the purchase of the book, so if the review sounds like it was written for another site, it was...just copied and pasted here.
Intended Audience (from the author):
"The three books in this series were written for people unfamiliar with the inner workings of the stock market, but will still curl the toes of professionals, too. Research is used to prove the ideas discussed, but is presented in an easy to understand and light-hearted manner. You will find the books to be as entertaining as they are informative and packed with moneymaking tips and ideas. Use the ideas presented here to hone your trading style and improve your success. Whether you are a novice who has never purchased a stock but wants to, or a professional money manager who trades daily, these books are a necessary addition to any market enthusiast's bookshelf."
Preface:
The preface describes a flailing trader trying to find his way in the world of investing, looking for the style that suits him best. He fails a few times but he eventually figures out what kind of trader he'd like to become. The intro reminds me a lot of an article I'd written several weeks ago: What Type of Investor are You? In fact, Trading Basics takes these concepts and makes an entire book out of it, going into a lot more detail than I could on a multi-page article.
Chapter 1
Tom shares his secrets to retiring at age 36. Well, his secrets are things that a lot of us bred on hard work already know. Things like saving your money, charting your finances and making wise decisions are big parts of the equation. A little luck here and there will set you on your way. A lot of successful investors have hit a grand slam or two in their day that really gives them the capital to grow faster. Tom shares his personal story and philosophy with Michaels Stores. I've personally had some big trades, the best being General Growth Properties that instantly (see years) created a portfolio of sufficient size to make some real money. Couple this luck with hard work and wise decision making, and you have a winning recipe.
Chapter 2
This chapter focuses on money management principles, specifically risk assessment, position size, cost averaging, leverage and the number of stocks to hold to name a few. Bulkowski offers examples with real numbers to support his position on each of the sub topics. I found myself skimming through some of the examples, taking his word, and not checking his math. For the average reader, his charts and summaries will get you to what you need to know. The chapter, as intended, is written to give good "rules of thumb" for investors that are just beginning to understand the market. More seasoned traders will point out exceptions to each "rule of thumb," but it is because they practice different trading tactics depending on the situation. Bulkowski points this out as different trading styles (Evolution of a Trader)) is the overarching theme. In the end, Bulkowski makes suggestions but leaves it up to the individual trader to pick his own method.
I did pick up a few new things myself. I specifically was interested in how some stop and buy orders are filled and at what prices.
Chapter 3
Everyone who invests in stocks needs to know when to cut losses and move on. New investors hear the old adage, "you only lose money when you sell" and they tend to let small losses become big losses. Bulkowski does the math and points out that if you lose 50% in a stock, it'll need to rise 100% to make your money back...for a 75% loss, it'll need to go up 300% to break even. Of course that's motherhood and apple pie, but the point is that the more you lose, the harder it is to come back from it....so don't lose money! The chapter focuses on how to not lose money while still gaining money through the use of stops. There are lots of stop types that are introduced here, all of which can be researched or found in other books, but in typical Tom fashion, he applies statistics to each type of stop and associates performances of each to back up his points. In the end, he makes recommendations but essentially leaves it up to the trader to pick his own path to fit his personality and investing style.
Chapter 4
Support and resistance, in my mind, is really the foundation of trading stocks. There are more likely locations that you should buy or sell, but how likely? Bulkowski offers well known types of support and resistance, but he takes it a step further and offers statistics and percentages of the likelihood of their effectiveness. This is something I haven't seen in any other book, making this a rather unique and valuable chapter. I found myself rereading sections multiple times to make sure I understood the point, reminiscent of looking over figures and numbers in my years of education. I am thankful that there are summaries and a final table at the end of the chapter to give me the key takeaways so that every time I wish to reference the material, I have a single page to study. The table then lays out the pages you can look for more information. The support and resistance levels discussed in this chapter are a cursory look at the concepts and are appropriate for the intended audience of the book. There are several books devoted to the subject if/when you decide to dig deeper into trading.
Chapter 5
This chapter is the largest of the book, containing "45 Tips Every Trader Should Know." This chapter introduces concepts that most beginning traders do not know and will likely spend some time rereading paragraphs over and over, cross referencing the charts and tables to ensure they get the point...or at least they should. A lot of it may be confusing at first and you may have to do some additional research on each topic so that you can interpret a physical reason for the chart squiggles, but there are footnotes where you can find more information on the subjects. After all, this is an introductory book, not a full reference set. It is, however, a great place to get started. After some time trading, these become second nature and you take them for granted, but I did pick up a thing or two as well as reminded me of things I'd forgotten or don't use on a regular basis. Some of the items discussed were divergences, Fibonacci numbers, failure swings, price gaps, pattern sizes, etc.. In standard Bulkowski fashion, he applies statistics to the "tips" and comes up with effectiveness and a recommendation. While I find the statistics useful, I also understand the large challenge presented to Tom in coming up with these statistics. Most ideas tested are a result of programming which will identify the desired situation, but it will likely ignore the art of technical trading which is putting multiple pieces of evidence together to enter or exit a trade, including the type of market, indicators, events, etc.. He does present the information for bull vs bear markets, wide patterns vs narrow patterns as well as many other situations, so he's not ignoring the additional factors. I just want to further point out to traders looking to learn the art of technical trading that we are aiming to gather lots of evidence to recreate the crime scene. As you read all 45 tips, consider each one a piece of evidence that you should remember. When the weight of the evidence is in your favor, do not be afraid to make the trade. As you trade, you will see the items presented in this chapter and it will be at that point when you truly begin to understand. There is no replacement for practice.
Chapter 6
When trades go wrong it is in your best interest to assess what went wrong. Did you enter too early, too late? Did you misread the signs. Chapter 6 identifies what could go wrong and how you can correct it.
Chapter 7
This is a final checklist from each chapter. It is a nice final summary or a location that you can use for a quick reference to double check that you didn't miss anything in your analysis.
Final Summary:
This is a good selection as a first read if you are trying to get into technical trading. It is a book that can grow with you for some time, but you will eventually need to do further, deeper research on individual topics to really understand the tactics and become proficient. That said, you need a place to learn what you need to research and how it can help you, presenting the information in a concise manner. This book addresses this need, and I enjoyed the book. It's very approachable and easy to read, and should be under consideration if you are looking to get into technical trading or are looking for something to quickly remind you of what you should be doing!
Product Details :
Hardcover: 208 pages
Publisher: Wiley; 1 edition (November 15, 2012)
Language: English
ISBN-10: 1118464214
ISBN-13: 978-1118464212
Product Dimensions: 6.4 x 0.8 x 9 inches
More Details about Trading Basics: Evolution of a Trader 1st edition
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