The full title of this book is “Trading for a Living: Psychology, Trading Tactics, Money Management” and the book does a wonderful job of explaining what it takes to be a trader. While I found s some parts of the book outdated and a little boring, I really enjoyed when Dr. Elder delved into the psychological aspect of trading.
Who is Dr. Alexander Elder?
Dr. Elder is a professional stock trader who wrote this book in 1993. He was born in the Soviet Union and entered medical school at the age of 16. By Age 23, he was working as a doctor on a Soviet ship in Africa when he defected and received political asylum in the United States.
Key Takeaways From The Book
One of my favorite quotes in the book is “Trade not for money but to hone your skills”. When you take away the money aspect of trading there is just trading. If you perfect your trading style and your discipline, the money will take care of itself.
The psychological aspect of trading that Dr. Elder touched on were definitely the highlights of the book for me. Things like “your feelings impact your equity”. The author talked about that if you are fearful/upset/arrogant you will suffer. Stop trading when you feel a “gambler’s high” or feel fearful of trading. You need to control your emotions. The top traders are like robots who, if you saw them, you would not know whether they were up big or down big on any given day.
Another key point was that you have to take responsibility for your trades. Only you decide when to buy and sell. Don’t fall into market temptations of greed and fear. Stick to your plan as deviating from your rules leads to self destruction. Many traders have a rags to riches to rags story because they don’t take responsibility for their trading and their emotions, they instead blame outside forces.
All in all, this book was highly influential and it has to rank in the upper tier of all time stock trading books.
Confessions of a Street Addict is an autobiography written by Jim Cramer, former hedge fund manager, co-founder of TheStreet.com, and host of the popular TV show Mad Money. Published in 2002, the book precedes all the hype revolving around Mad Money and paints a pretty honest self-portrait of the man.
First and foremost I have to say that I’m not a big fan of Cramer’s latest two books (Real Money: Sane Investing in an Insane World, Jim Cramer’s Mad Money: Watch TV, Get Rich). I find those two books to be more catered towards newbie investors, they ramble on too much about numbers, definitions, examples etc. I guess that’s to be expected since they are intended to be more instructional than biographical. On the other hand, Confessions of a Street Addict, was just a fantastic read that I enjoyed very much. So much in fact, that it would have to rank pretty high on my list of market related books.
The book was written shortly after Cramer quit his hedge fund and was in semi-retirement mode (I say “semi” because he focused his professional efforts on writing for TheStreet.com). With this in mind, it has the feel of a man who was recounting his life and trying to justify the route he took. He appears proud of his accomplishments, wears them as a badge of honor, but at times you get the feeling that scenes from The Family Man are playing out in his head. There are many references to how he didn’t devote enough time to his wife and kids because of his obsession with the market. There are many references to how he didn’t act too nicely to those around him. After being removed from the daily hustle that is the market, he apologizes for his actions.
In the book, Jim recounts his life from childhood on. He does so in a manner that is very entertaining, amusing, and self deprecating. One highlight that sticks out is stories about his early days as a reporter in California where he, at one point, was living in his car. Other highlights for me included the stories about how he landed the Goldman Sachs job and the creation of TheStreet.com.
The best part of the book (and the largest) is about his days at the hedge fund. It’s just filled with fantastic stories and memories that give the reader a sense as to the ups and downs that a money manager feels. One thing that I would have liked the book to include more of is stories about his life outside of work during the hedge fund days. I’m sure there must have been lots of great material there when you factor in Jim’s personality in a city like New York.
Overall, when reading the book you get the sense that Jim was never the stereotypical Wall Street guy. He was a middle class fellow who used his passion and drive to become a self made success, achieving great wealth in the process. I would like to see a sequel to this book, picking up from where this one left off to the present time. For now, however, I suggest you pick this one up.
Timothy Sykes sent me an advance copy of his new book, “An American Hedge Fund”, which came out on October 1st, 2007. The book is about real life trading experiences and the journey of setting up a hedge fund.
Timothy started out with $12,000 and turned that into $2,000,000 trading tocks from 1999 to 2002, then went on to start his own hedge fund. He has also starred in a documentary about traders called Wall Street Warriors.
Now on to the book review. I found An American Hedge Fund to be an compelling and easy read containing many experiences that most traders can relate to, in one form or another. Most of the book is devoted to Timothy’s journey trading micro cap stocks and recounts crazy stories of $100,000 up and down days.
The other prominent story featured in the book is Timothy’s struggle to start up his hedge fund and attract capital. This gives readers a glimpse into the behind the scenes aspect of the business.
Overall I found this book quite interesting although at times it did drag on when recounting trades. If you like real life stories about this business than this one should be on your ‘to read list’.
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