Stephen Gallup's Reviews > Trading for a Living: Psychology, Trading Tactics, Money Management

Trading for a Living by Alexander Elder
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Jan 15, 2010

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Read in January, 2010

I first read this classic in 1995, when I was more or less holding my own in commodity trading (a dangerous pasttime I eventually gave up because the modest profits I saw did not justify the emotional wringer I was going through every day). I remember being a little annoyed with Elder's way of restating fairly basic points again and again in choppy, repetitious paragraphs. That style is still a problem. At times it seems that he must have dictated his thoughts into a recorder and never took time to go through the transcript and clean it up.

On the other hand, simple though his points may be, they are worth learning. I particularly like his early chapter about gurus and the tendency so many of us have to put our trust in anybody but ourselves (and not only when it comes to trading, I've observed!). Likewise, he has a great analysis of crowd behavior. He's trained as a psychiatrist, so I guess it figures.

As far as actual guidance goes, what he has are mostly truisms that nevertheless need to be part of any trader's education. For example:
- "Your goal is to trade well, not to trade often."
- "You need to know exactly under what conditions you will enter and exit a trade."
- "You must not change your plan while you have an open position."

It does get a little more technical than that, but for a thorough treatment of indicators like Fibonacci sequences, moving averages, etc. another book would be needed. Elder is best simply at defining what every trader is up against ("The money you want to make belongs to other people who have no intention of giving it to you."). His book doesn't provide a clear path to success at that endeavor. On the other hand, no one should jump into the markets without knowing what it says.
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