Trading Bunkum, Myths & Illusions

[timsk]

During my lunch hour at work, I munch my way through a round of Cheddar Cheese and Patak's Aubergine Pickle sandwiches which help to sustain me through the afternoon. For cerebral nourishment, I invariably log on to T2W to check out the latest posts. Today, I read two posts in different threads from different members, both questioning the usefulness of books written about trading. Some peeps maintain that at best, they aren't much use and, at worst, they are full of bunkum, myths and illusions. The quote below is from FXSCALPER2:
"OK, you are starting the very long road in trading and you are making it very long by reading books. When I first started trading, I read so many books that I didn't know WTF was happening. Here is a guarantee: you will have so much wrong information from reading books that you will then need a lot of time to unlearn that stuff before you can trade with profits consistently."
Powerful stuff. And 'wasp', everyone's favourite 'Legendary Member', claims never to have read a single book on trading. This got me wondering . . . exactly what is all this false information which, deliberately or otherwise, will lead the aspiring trader further away from his/her goal rather than help them to reach it? The purpose of this thread then is to try to identify the trading bunkum, myths and illusions that, as FXSCALPER2 asserts, has to be unlearnt before one can trade profitably or, better still, avoided in the first place. Hopefully, this thread will become a useful resource for newbies and inexperienced traders to help them spot quickly that which only serves to muddle, confuse and mislead.
Tim.

 

[Charlton]

The return of simplicity

During my lunch hour at work, I munch my way through a round of Cheddar Cheese and Patak's Aubergine Pickle sandwiches which help to sustain me through the afternoon. For cerebral nourishment, I invariably log on to T2W to check out the latest posts. Today, I read two posts in different threads from different members, both questioning the usefulness of books written about trading. Some peeps maintain that at best, they aren't much use and, at worst, they are full of bunkum, myths and illusions. The quote below is from FXSCALPER2:
"OK, you are starting the very long road in trading and you are making it very long by reading books. When I first started trading, I read so many books that I didn't know WTF was happening. Here is a guarantee: you will have so much wrong information from reading books that you will then need a lot of time to unlearn that stuff before you can trade with profits consistently."
Powerful stuff. And 'wasp', everyone's favourite 'Legendary Member', claims never to have read a single book on trading. This got me wondering . . . exactly what is all this false information which, deliberately or otherwise, will lead the aspiring trader further away from his/her goal rather than help them to reach it? The purpose of this thread then is to try to identify the trading bunkum, myths and illusions that, as FXSCALPER2 asserts, has to be unlearnt before one can trade profitably or, better still, avoided in the first place. Hopefully, this thread will become a useful resource for newbies and inexperienced traders to help them spot quickly that which only serves to muddle, confuse and mislead.
Tim.

Tim

I had also noticed these posts and am glad you have raised this interesting subject. I am in two minds about this.

A trader needs to learn some mechanics in order to trade - just simple things (or perhaps not so simple !) such as "what is a chart", what is support/resistance, what is meant by "going long/short" etc.

I have emerged from a background of books (not just trading books), so I do not underestimate the value of them. The problem with trading books is that most of them seem at first sight utterly believable and present a new way of looking at the topic. You read them, you say 'yes I can see that' and then want to incorporate it into your trading strategy.

However the next book arrives with a completely different yet equally believable set of strategies.

This phase is one that is passed through at, I would say level 2 - just beyond the beginners phase of knowing absolutely noting and into the phase of wanting to explore and incorporate everything.

It's a valuable exercise if carried out with "correct thinking". One needs to analyse and filter all those things read and see how they gel with your own style. Hopefully they will prompt self-discovery, but not be slavishly followed without further analysis. The quest for the Holy Grail should be internalised.

As time goes on experience, skill and contact with the market should enable one to develop "the eye" for the market. At this point the complexity and confusion of all those conflicting strategies and theories picked up during the text-book phase will be dispelled as simplicity reigns in. All will appear obvious. All will be screaming at you. The need for trading books will diminish and value.

As one member said recently (and I apologise because I cannot remember who it was) the circle will be completed. The simplicity that one started out with as a newbie will once again return, but based upon a foundation of knowledge, skill and experience that informs that simplicity.

Charlton

 

[Knyyt]

I to believe this. If you are new, most peeps will believe what is inside actually works. You have to admit, most books contain "facts", I.E> medical books, school texts, etc etc. So i think when someone buys a book on trading that states" The trading rule that can make you rich" ( real title i fool you not, it is by edward d. dobson) people tend to believe that what they read is true.

My experiance was the same, i spent $$$$ on a new book about 1 a week for about 2 yrs 10 years ago. Now, most have been given away, and the rest sit in my closet in a box. After You learn the basics, save your money for something or someway to test out 'your" original idea's, and give up the search for the one tidbit you think will make you successful, because you will not find it in a book.

Regards, Knyyt

 

[theasxgorilla]

Something else to consider is that many trading books contain quite specific information on how to implement a particular trading system. Everyone is different and identifying a system that suits you is difficult to do if you don't even know what is available...this can mean many books read, much discarded.

The ASX Gorilla.

 

[new_trader]

I to believe this. If you are new, most peeps will believe what is inside actually works. You have to admit, most books contain "facts", I.E> medical books, school texts, etc etc. So i think when someone buys a book on trading that states" The trading rule that can make you rich" ( real title i fool you not, it is by edward d. dobson) people tend to believe that what they read is true.

My experiance was the same, i spent $$$$ on a new book about 1 a week for about 2 yrs 10 years ago. Now, most have been given away, and the rest sit in my closet in a box. After You learn the basics, save your money for something or someway to test out 'your" original idea's, and give up the search for the one tidbit you think will make you successful, because you will not find it in a book.

Regards, Knyyt

I agree. Experience is worth 1000 books. Reading a travel guide is nothing like visiting a place for yourself. Learning the do's and don'ts is important, but other than that, you must take the plunge and try trading your own way.

 

[Kallen]

Using books

I think all the points here are valid. My belief however is that books on systems/psychology etc are much more useful after the beginner stages once a trader has some experience of the markets. My advice for beginners would be to focus on understanding basic technical systems and essentially the fundamental effects of news and figures on any market at any given time. Advanced literature can then be very useful for the more experienced trader to better understand themselves and where they may or may not be going wrong.

 

[Glenn]

In the rush for gold it is the Picks and Shovels Merchants who make most of the money.

Glenn

 

[Kallen]

So the authors make more money than the traders? Or the successful authors make money than the successful traders? Or the successful authors make more money than the unsuccessful traders?

 

[new_trader]

So the authors make more money than the traders? Or the successful authors make money than the successful traders? Or the successful authors make more money than the unsuccessful traders?

I think Glenn means the book merchants.

 

[MasterOfTheUniverse]

My 2c worth: As mentioned elsewhere a lot of authors do write about systems that do work but just because it works it doesn't mean it is easy to implement, so they just write about it and advise others. I have read lots of books, I prefer to know rather than not know but they all say the same thing: stick to the rules, keep it simple, use only a couple of indicators but know them inside out, trade one or 2 timeframes, as Curtis Faith mentions in his book Way of the Turtle: even if a trader was given the perfect system he'd still struggle because sticking to rules is the hardest thing! My best advice is to trade with the tiniest amounts of money until you can see that the system is slightly in your favour..