This book “Come Into My Trading Room” is a must-read for all traders and now almost a bible in the trading community. In the book, Alexander Elder has thoroughly described in trading techniques and even a newbie if follows his steps can groom himself as an established trader.
Excerpts from Chapter – 1 of Come Into My Trading Room
Are traders born or made? There is no simple answer. Both aptitude and learning are important, but in different proportions for different people. At one extreme are born geniuses who require very little learning. At the other are gamblers and dunces, whom no classes are likely to help. The rest of us are in the middle of the curve, with some aptitude but in need of education.
A genius has little need for a book because he has a fantastic feel for the market. A gambler is too busy getting high on adrenaline. This book is written for the trader in the middle.
A newcomer to the market faces three paths that lead into a forest full of treasures and dangers. The first path, for investors, goes through the sunniest areas. Most of those who take it come out alive, if not much richer. Another path, for traders, leads into the heart of the forest. Many travelers disappear, but those who come out look rich.
The third is a shortcut that takes gamblers into the swamp. How can you tell which path is which? You must choose your way carefully because if you don’t, you’ll end up on the gamblers’ path, especially since it crosses both investors’ and traders’ trails. We’ll return to this question in the chapters on trading psychology.
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Excerpts from Chapter – 5
Will this stock rise or fall? Should you go long or short? Traders reach for a multitude of tools to find answers to these questions. Many tie themselves into knots trying to choose between pattern recognition, computerized indicators, artificial intelligence, or even astrology for some desperate souls.
No one can learn all the analytic methods, just as no one can master every field of medicine. A physician cannot become a specialist in heart surgery, obstetrics, and psychiatry. No trader can know everything about the markets. You have to find a niche that attracts you and specialize in it. Markets emit huge volumes of information. Our tools help organize these flows into a manageable form. It is important to select analytic tools and techniques that make sense to you, put them together into a coherent system, and focus on money management. When we make our trading decisions at the right edge of the chart, we deal with probabilities, not certainties. If you want certainty, go to the middle of the chart and try to find a broker who will accept your orders.
This chapter of Come Into My Trading Room on technical analysis shows how one trader goes about analyzing markets. Use it as a model for choosing your favorite tools, rather than following it slavishly. Test any method you like on your own data because only personal testing will convert information into knowledge and make these methods your own.