The following is a book review by Stephen Burns.
Know Your Competition and Find Your Edge For Profitable Trading
Trade The Trader (FT Press) is very basic, and the author didn’t deliver any solid trading tactics that one could apply in his/her trading. Tatro’s trading has evolved into trading traditional pattern failures, as opposed to trading the traditional patterns themselves.
The premise of the book sounds great: trade at a different level, seek to understand the movement of others and how to profit from their trades. He suggests perfecting a trading system then adjust your style to fit a variety of markets. I was never sure what this “style” meant. On one hand he suggest trading chart failures on the other taking breakouts that were unexpected.
He gives good advice: “The sooner you realize you are trading against other traders and not just the stocks or the market, the better off you will be.” I thought he was right about the unexpected 2009 rally being caused by wave after wave of short covering. Each breakout to new highs forced shorts to cover even though the fundamentals of the economy continued to deteriorate. It was caused by running out of panic sellers and having panic short sellers forced to buy back. Great observation. But how much did he profit from it? What were his real trades?
Tatro discuss how to find your trading edge:
“At the core of every successful trader lies a defined trading strategy, which ultimately provides a statistical and proven edge. The reality is that you simply need a slight edge and the patience to exercise that edge over and over again.”
Also regarding market sentiment:
“..charts graphically represent other traders’ emotions.”
The author gives traders the great advice of removing much of their emotions from trading by following a predetermined plan and not having to guess what to do next in a trade. The author covers trend lines in a chapter and both how to use technical analysis and at the same time to trade against conventional technical analysis when the pattern fails. He also recommends taking gains a third of a position at a time when he is in a winner.
Many new traders will really like this book, the author has written an easy to read book that covers a lot of very important principles that can help traders be successful, but I believe some of the principles are confusing and do not clarify a method or style to consistently have an edge. Experienced traders are going to be disappointed with this book being far to simple for traders that have traded millions and have already read Alexander Elder, Market Wizards, Michael Covel, and Van Tharp. Not much new here, new traders will rate this book 4 or 5 stars, rich traders will rate it 1 or 2 stars.
Stephen Burns a trend follower and break out trader that specializes in the Darvas System. To learn more about him and his trading style you can pick up his recent book at Amazon.com
Related Book Reviews
Micro-Trend Trading for Daily Income
