Average Reviews:
(More customer reviews)The book is written in a clear, direct language - the author speaks to you, not at you. While leafing through a pile of trading books, I was stopped it in my tracks when I opened this volume. I got out my yellow highlighter and read attentively from cover to cover, taking notes. The author's unique approach was to combine traders' psychology with different types of trading; this book showed me something new about myself and other traders.
Weissman begins by explaining why "...natural and comfortable trading, using entry levels as reference points, ensures small profits and large losses. We need to reprogram ourselves to be comfortable with the unknowable and uncertain future. It helps to remind ourselves that the entry level is significant to us alone and that the sense of discomfort we feel as the market moves into previously unknown territory is entirely subjective and illusory."
Weissman outlines the three basic trader personality types: trend-following, mean-reversion [counter-trend], and day-trading. You need to be comfortable with yourself to trade well. You need the right system for your trading personality - and the author offers a rich menu for every type of trader. The author's practical, shrewd observations hold up a psychological mirror for traders. He points out that with trend-trading, just a few trades account for the bulk of profits, which means you cannot take time off from mechanical trend trading. Mean-reversion traders capitalize on temporarily unsustainable levels of euphoria or panic; they need an especially strong discipline not to overstay positions. Day-trading is labor-intensive, demands quick-mindedness and frequent vacations to avoid burnout.
The author shows how to test trend-following and mean-reversion (counter-trend) systems, as well as day-trading systems. He deals in depth with the benefits and pitfalls of system development and price risk management.
"Successful trading entails fighting natural inclinations toward comfort, security, impatience, perfection, fear, and greed. We can never control the markets, only how much risk we will assume in them." Weissman stresses the importance of keeping a trading journal. He confirms something that very few people appreciate - that at a very high end systematic and discretionary trading have a great deal in common.
Weissman's gentle but persistent insistence on both knowing yourself and stepping out of your comfort zone can have unusual results. In my case, it led me to develop a semi-mechanical system for day-trading e-minis!
Click Here to see more reviews about: Mechanical Trading Systems: Pairing Trader Psychology with Technical Analysis (Wiley Trading)
A wide variety of flexible trading systems that combine sophisticated technical analysis with trading psychology theoryMechanical Trading Systems examines the development process for choosing and using mechanical trading systems in conjunction with trader psychology. This book discusses the advantages and disadvantages of mechanical trading systems; the dangers in system development and how to avoid them; the optimal methods for back-testing trading systems; position sizing and other risk quantification tools; and methods of improving rates of return on investments without significantly increasing risk. Most importantly, through a detailed examination of various types of unsuccessful trader personality traits (e.g., fearfulness, greed, and impatience), the book recommends different types of trading systems for a diverse array of trader types.Richard L. Weissman (Port Richey, FL) has seventeen years' experience as a trader and developer of trading systems. He currently provides independent consultation an d training services to traders and risk management professionals in the areas of technical analysis, risk management, and trader psychology.
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