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Readers reviews of COME INTO MY TRADING ROOM

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Elder writes in a clear and engaging style. The first section of the book is an unabashed primer  of  what is involved in trading. It covers the basics of markets, the differences between traders and investors and the difference between analysis and trading. It is a tight, well written introduction  to the markets.

 

He then moves his  focus to the 3 M’s of trading – Mind, Method and Money Management. These are important issues. To the first he brings his professional experience as a psychiatrist. The psychology of the trader is an important factor which either contributes to success or undermines it. His focus is on self destructive behaviors.

 

The section on trading method covers the use of a variety of well known technical analysis approaches. New material includes the idea of a safe zone stop loss and the use of impulse highs to develop early warning signals. It is less clear how the selected indicators are combined to deliver a coherent series of confirming trading signals. This section is a good discussion of the construction and application of the individual indicators.

 

The third M – money management – takes 18 pages. The new concept is the 6% rule. Elder suggests that traders should stop trading  if their total portfolio losses exceed 6% in any month. Trading can start again only at the beginning of the next month. This is a sound approach used by many professional traders. Others scale back their position size, testing the market for successful strategies.

 

The final section of the book is inaccurately hyped on the jacket material as a ‘first in trading literature’ because  traders are shown how to organize their time and effort. It also claims this is the first time traders are taken through some actual trades by the author. A number of trading books published by John Wiley contain this type of information and in a great deal more detail than that provided by Elder.*

 

It is always interesting to examine how other traders manage their time and decision making. Elder’s approaches are no exception. He includes descriptions of a useful spreadsheet for tracking trades, and a brief outline of how to construct an equity curve. The spreadsheets are not available as a download so readers will have to spend time constructing them, or download similar spreadsheet templates from other web sites.  New material in this section includes ABC screening and the basic outline of a decision making tree. Readers can balance his steps against the steps used by other traders and detailed in their books.

 

Elder includes six sample trades at the end of the book. They are an example of diary notes which form an essential part of the planning and record keeping process. He includes entry and exit notes, but they lack the essential post mortem notes that help all traders learn from each trade, successful or otherwise.

Invariably this book will be compared with his earlier book, Trading For a Living. The new book repeats a great deal of material from the first . I feel readers of the first book will be disappointed at the lack of new material, new insights and techniques in the second book. It is a measure of trading success that the methods and combinations used for successful trading in 1993 when the first book was published are still successful today. Many traders believe markets have changed in the last decade and readers looking for guidance and insight or adaptations of methods best suited to trade these changes will be disappointed.

Review comment from Shane, StockCentral

If you haven't got either book by Elder then the latest version will do. Much of book 1, Trading Fot a Living,  is repeated in book 2, Come Into My Trading Room. There are some new chapters but nothing overly special. I suppose when you've written a classic such as the first book then its hard to top.  PS I own both books.

 

*Dr Elder has asked us to be more specific. Other books which include detailed authors trades are How I trade For A Living, G Smith, The Stock Trader, T Oz, The Strategic Electronic Day Trader, R Deel, Market Trading Tactics, D Guppy, amongst others. These are all reviewed on the web site. The Oz book is a complete analysis of around 30 real time trades, complete with planning, management and post trade notes.

 

 

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