The Finance Book Club

You certainly may, in fact it was already on the secondary list but I'll add it to the first one as it's been requested a couple times.

Ok, front page has been edited to reflect what I personally believe. Please let me know if you disagree, and more importantly, why.

I'm going to go ahead and do the forexhero pamphlet summary as it will be quick and then I am going to create a new book list poll. Then I think I might take another break. Not sure of the dates, maybe all summer, maybe not. Either way - thanks for tuning in and see you in September, God willing.

The Ultimate Handbook of Forex Trading Basics & Secrets

by Forex Hero
vol. 3.0

VIP Edition!! (oooh)

My personal comments, as always, in green.

First of all, you can view and download this booklet for free from Slideshare. Is this copyright infringement? I would guess not. Forex Hero wants you to have this thing so that they can sell you products and services or get affiliate income from the products and services they recommend.

 

1. There's lots of beginner forex info spread over the web but lots of it is out of date and most of them contain only a fraction of what you need to know
   1. true!

2. Everything you need distilled into a 45 minute read
   1. partially true; its only 45 minutes to read; but it's not nearly all you need

3. Choose a reputable broker (how?), register (how?), open the terminal, choose leverage (how?), make a deposit (how?) and trade the currency pairs by anticipating (speculating if you will?) if they will go up or down. Price changes generate profits.
   1. If you're reading this I assume you already know the solution to most of these beginner hurdles, but I have always been annoyed by beginner guides that aren't even willing to hold your hand that much. Show me how to open an account. Show me which buttons to push! Warn me to save a scan of my passport somewhere since I'm going to have to go through authentication every time I open a new account, etc.

4. Invest in a country currency that is growing faster and fund with the currency of a country growing slower
   1. not important especially in this era of nonexistent interest

5. Basic info on terms and currency pairs. The EUR/USD is the most traded pair, the five majors and EUR/JPY, etc.
   1. Do you still remember which one is the base and which is the quote? If you don't that's OK because none of this stuff matters. It's always taught to newbies out of a sense of tradition, as with many things.

6. Why trade Forex?
   1. Make money in times of crisis! (rubs hands in evil glee)
   2. Work while lying in a hammock (never done this. you?)
   3. Start with only $300!! (true, but no, don't; actually is this even true anymore?)
   4. 'Easy' rules (I disagree? I guess it depends on what you mean by easy. I haven't used Robin Hood so maybe it is complex in comparison.)
   5. Withdraw at will (ideally)

7. Three reasons not to trade Forex
   1. 99% of traders lose money (made up stat is made up, but even if it's 91% what does it matter? Trading is hard)
   2. High risk
   3. Not for the undisciplined - instead you should 'copy' other traders (but how can you know who to copy?!)
      1. The authors shill for platforms like Etoro and Tradeo[1]
      2. "Learn" and profit (mostly learn what it feels like to lose all your money at the rate of 1-2% per trade)

8. Advice from Warren Buffett
   1. Put 10% in short-term gov bonds
   2. Put 90% in a low cost S&P500 index fund like Vanguard's. "I believe the index's long-term results will be superior to those attained by most investors." (And in fact the index is now outperforming Berkshire Hathaway so Warren should have followed his own good advice from about 2016 to present time. I should have followed this advice. You should have followed this advice. Why do boomers have all the money? Because this is what they do.)

9. A chart with a bunch of news events (As JM Hurst points out, big news events really don't push the needle much. We make up reasons after the fact)
10. Leverage and lot sizes (remember this? Not a bad idea to brush up if you don't)
    1. Average stock market leverage 2:1
    2. Forex (up to 400:1) still?
    3. Lots
       1. standard=100,000 units, vol=1.0; pip value = $10/pip (for usd base)
       2. mini =10,000 units, vol = 0.1; pip value = $1/pip
       3. micro =1,000, vol = 0.01; pip value =$0.10/pip ( don't forget you can still be overtrading with 0.01 if you have a small account. Your broker will never warn you)

11. Spread
    1. the difference between the bid (bottom line) and ask (top line)

12. Leverage
    1. means borrowed funds (not exactly, but, who cares)
    2. Margin calculations. (remember how to do these? Liar! )
       1. EURUSD example
       2. Leverage 1:50
       3. Divide 100k by 50 = 2000 EUR
       4. 2000 x 1.41 = $2,820 = margin

    3. Let's be real, most traders let the terminal figure everything out and they watch the percentage or look for the pink bar to show up before they even concern themselves with margin
    4. Use stop loss orders (so the broker can steal your money more efficiently!)
    5. Leverage fluctuates between countries, trading times, etc. you don't care about any of this, c'mon.
    6. use 10:1 leverage or less

13. How to read candlesticks
    1. Seriously if you don't know this yet, this thread is the wrong place to start your journey
    2. Attached Image (click to enlarge)

       
       
       Dojis, etc

14. Get ready to laugh

[1]I actually got started trading with Tradeo back in 2016 at the height of Brexit. They are as buckety a buckets shop as you could wish to find. I had a 'helpful' account manager calling me every day to give me 'helpful' advice designed to get me trading as much as possible so I'd lose my deposit. I was smart enough to ignore him but I still figured out how to lose my deposit!

Top 5?! Based on what??? Your affiliate marketing fee?? LOL

Section 2- Key Drivers of Currency markets (stop, my sides are hurting)

1. Currencies move based on supply and demand (do they though?)
   1. interest rates! (then why are they moving at all in this low interest environment?)
   2. 'strength of the economy'!

2. Geo-politics, economics, market psychology
   1. Central bank policy
   2. Top 9 from Kathy Lien
   3. Attached Image (click to enlarge)

      
      
      1. I love the little guy sleeping under a newspaper

      
      

   4. Example of the greenback driven higher by Fed policy that is likely to tighten and other central banks that are still easing
   5. Trade deficits - differences in export/import
   6. Traders should know when news is being released
   7. For sure some people do trade like this and this is a big glaring hole in my knowledge base. What I do know is if you're going to drink from this knowledge fountain you had best drink deep or not at all. This little booklet is telling you nothing about fundamental analysis.

   
   

3. Key indicators (how do you keep them all straight? how do you prioritize data?)
   1. Stock market conditions
   2. Foreign investors convert their capital to buy foreign equities, pushing the demand higher and making the currency appreciate
   3. During recessions, foreign investors tend to flee, pushing the domestic currency down

   
   

4. GDP is no longer a big deal
   1. correct! But is ANY of it, even NFP? a 'big deal' anymore?

   
   

5. Attached Image (click to enlarge)

   
   
6. Economic indicators
7. Economic calendars
8. Not all economic indicators can move markets (can any?)
9. Watch for the unexpected (how could you know - you'll always depend on a talking head to tell you what's 'expected or unexpected' or 'priced-in')
10. Don't get caught up in details (but is fundamental analysis anything but details?)
11. Doing your homework can help you make better decisions (can it though?)
12. Buy the Rumors, sell on the news
    1. A common phrase (actually it's 'buy the rumor, sell the fact')
    2. The idea is market players will expect something to happen
    3. In anticipating of that thing happening they will move price one way
    4. Once that thing is confirmed by a news report, the price may paradoxically move against the recent move, as traders 'cash in'
    5. If traders are surprised then price might move even more wildly
       1. Attached Image (click to enlarge)

          
          
          Let me tell you a story about the old Covid plague of 2020.

    
    

13. Attached Image (click to enlarge)

    
    
    These things do move the market, but not as much as everyone expects

Section 3 - Forex Timing
Hmm, maybe because they aren't actually what's moving currency rates?

1. Top 3 volatility events
   1. Overlap between 2 sessions
   2. News release
   3. Central bank governor's speech

2. Forex market is not a 'fairy tale place' where you can trade 24/7
3. the 'magic time' is 10:00 am London session
4. Thin markets offer smaller movements so smaller potential profits (a little thought will reveal this to be questionable; if I don't have to fear volatility I can trade bigger positions, no?)
5. Chaos happens before important news events
6. Exercise caution:
   1. Friday afternoon & weekends (true)
   2. Trading session closing time (New York? true, otherwise, nah)
   3. Important news events (true - but define 'important')
   4. Bank holidays (true)
   5. End of December (not Christmas eve, but otherwise false - it's often brilliant)
   6. Primetime TV events (??haha, no)
   7. Asian sessions (no way)
   8. When angry or frustrated (true)
   9. Overnight (depends on where you live - you may have no choice)

   
   

7. Why do spreads widen/tighten?
   1. higher liquidity, lowers volatility, tightening spreads
   2. the real reason? Your broker is protecting itself

8. Widen stops before news
   1. amusingly, the 'source' doesn't even use stops

Section 4 Time Frames

1. The authors argue in favour of multiple time frame analysis
   1. One of the few things I agreed with Al Brooks about is his stance against MTFA. For most beginners using multiple time frames is overwhelming. Every chart is telling a different multifractal story on different timeframes. Plan and execute on one chart, one timeframe, as long as your system doesn't require it.

   
   
   

2. Use daily charts to identify overall trends even if trading on 5-minute charts
3. Is it possible to analyze and trade forex using a single time frame?
   1. A: It's possible but it requires 'a very good amount of skill and practice'
   2. My take is exactly the reverse

   
   
   

Section 5 Funadamental and Technical Analysis

1. Fundamental analysis
   1. studies the economy to predict price action

   
   
   

2. Technical analysis
   1. studies charts to predict price action

   
   
   

3. Analysis Paralysis
   1. paralysis by analysis
   2. The authors recommend looking for fundamental drivers then using technical analysis to pull the trigger
   3. The 'best' strategies combine fundamental with technical. Proof? No proof.
   4. As always I ask how do you know what's important at any time and how do you remain consistent doing this manually against the algo tide? Maybe some can do it.

   
   
   

Like this guy?

I'm not skeptical because of the simplicity of this approach but look what it says later.
It seems like you would get whipsawed constantly reacting to 'local speculation'.

First of all, you made your own experiences on the market and subsequently built your own beliefs on trading in general. We may argue about these beliefs but that would be a pure waste of time. The only question is : do the strategies based on your beliefs give you an edge ? If you proved yourself that the answer is YES (check your equity curve if you have any doubt), then keep trading according to them. With proper money management and solid discipline, you're on the highway to success !

Some traders say books are useless and I couldn't disagree more. You have to start somewhere and if you don't have a clue about financial markets, the study of a good beginner book is an excellent way to learn the basics. I would recommend Toni Turner's Beginner's Guide to Day Trading Online to a wannabe trader who starts from scratch, but there are many other excellent publications in this category.

If you are an experienced trader, finding good books is more difficult. Most of them are not worth your time, either because they are repetitive, defend questionable trading truths or present strategies that don't even work in the long term. But sometimes, a book will make you reconsider your whole trading on a different angle or give you a strategic idea that you can successfully implement on your own trading. Those books are valuable and can really bring you at a higher level.

Indicators, patterns, etc... don't have the power to anticipate anything with a 100% accuracy. All of them are perfectly accurate to tell you the past but not that reliable when it comes to predict the future. But calling it "fool's gold" is a little bit harsh, in my opinion. I personally don't like lagging MA's but love RSI and candlestick patterns. I think such tools can give you an edge as they may help anticipating a rise or a decline of the momentum. Once again, this is my belief and your belief may be on the opposite side. It's perfectly OK if it makes you a winner.

So true. Sometimes, the markets goes crazy and can't stop rising or falling . Such big moves are where you can make your profits because randomness factor is reduced to its minimum : provided that you trade with the trend, the odds are on your side. That leads us to other questions. How do you identify the beginning of a trend ? How can you make sure you are not entering at the end of the trend ? As a trader, your job is to build your own beliefs on the best way to catch these trends. Nobody can do that for you : what works for one trader may not work for another one.

Section 6 - Currencies

1. Greenback - USD
2. Sterling - GBP
3. Cable - GBPUSD
4. Fiber - EURUSD
5. Swissy - USDCHF
6. Loonie - USDCAD
7. Aussie - AUDUSD
8. Kiwi - NZDUSD
9. Barney - USDRUB
10. Betty - EURRUB
11. Guppy or Gopher - GBPJPY
12. Yuppy - EURJPY
13. Ninja - USDJPY
14. Chunnel - EURGBP
    
    Big debate about whether anyone uses the nicknames below Kiwi.
15. 'Beginners' should start with EURUSD, USDJPY, USDCHF and GBPUSD and then 'gradually' add AUDUSD, USDCAD and NZDUSD and then non-dollar pairs
    1. but no explanations given as to why and why this order
    2. These pairs often have lower spreads, but there are likely infinite reasons to trade other pairs or just one pair depending on your approach

    
    

16. Commodity currencies
    1. Ruble <> Brent Crude Oil
    2. The free-floating ruble follows the Brent price in almost perfect lockstep
    3. This is somewhat exaggerated but they have been correlated. Beware: such correlations can break down quickly!
    4. When Gold goes up, the USD often goes down (and vice versa)
       1. I mean, since gold is usually measured in USD, this is somewhat inevitable but you can see the correlation is far from perfect
       2. Attached Image (click to enlarge)

          
          

       
       

    5. When the dollar gains five %, oil falls 10-25%
       1. Attached Image (click to enlarge)

          
          
          Was true earlier but lately oil seems to be highly motivated by something other than a falling USD

       
       

    6. USDCAD <> Oil Prices
       1. Most of ForexHero's info about Canada's oil economy is out of date, for example Canada no longer sells much crude to the USA as they have their own domestic shale gas reserves
       2. Attached Image (click to enlarge)

          
          
          Still the loonie has been rising with the price of oil lately. Note that the movements in these charts rarely line up. We could say it's investors anticipating a return of high oil prices with the return of an overheated economy; but we could also say it's random chance
       3. Rising gold prices boost AUD and CAD
          1. Ah, I can say from sad experience that this is often bogus. Yes, commodities often move in a block, as a sector, and AUD and CAD are commodity currencies, but who can trade this way? Position traders, maybe.

          
          

       
       

    
    

Section 7 - How Forex Influences Business

This is an interesting read but at no point do the authors make it clear how traders can take advantage of this info

 

1. In 2003 inadequate hedging shaved approximately $1B EUR from VW's profits while DSM, a Dutch chem group reduced their profits by $7M EUR
   1. Gosh, do you think companies would have a vested interest in reducing currency volatility by say, 'protecting' traders with regulations reducing European leverage?! No, no, I'm sure they're mainly interested in protecting retail traders from themselves, those wacky helpless retail traders.

2. Russians pay lower prices for cars with a depreciating ruble so they re-export them for big vodka money. I'm sure this got shut down down quickly.
3. In the 1980s Aussies lost their farms when they took out loans in Swiss francs and the Aussie plunged in 1985/86.
4. When the Yuan weakens Chinese citizens buy properties abroad
   1. Crazy Rich Asians are buying properties abroad all the time, whatever the yuan is doing

5. Russian gem polishers benefit from weak rubles - really stretching now
6. China has invested heavily in the US. When you're rich what else is there to invest in? Oh, your own heavily manipulated market? Hahah, 不.
   1. The recent downturn in treasuries might be a cooling of relations

Section 8 - Risk Management

1. Most traders lose money because no risk management
2. Risk-reward ratio
   1. Pros recommend 1:2 risk-reward and not risking more than 2% of your equity on any single trade
   2. Pros say a lot of things. Note that having a trade target that is twice as big as your stop doesn't automatically mean you're 1:2 R:R.

3. Use stop-loss orders (gee, the second time they've reminded us to do that. They really care about us!)

Tools used by "Pro Traders"
1. Ransquawk
2. eSignal
3. Oanda News
This is a total joke.

1. Ransquawk is now newsquawk. I guess if you're a news trader you might use it. Do you?
2. eSignal is an overpriced data vendor. Who uses it? Why?
3. Oanda News is no longer available.

And that's it. Still better than BabyPips, as it's noticeably shorter, and does not make a lot of silly TA claims, but it's not going to prep you for a live account.

New book poll with all-new books! Please vote!Enjoy your summer, don't burn up.

Actually. its winter in half the known world. Maybe read some T S Eliot? Thankfully spelt different than that other bloke who could see magic patterns in price action.

A cold coming we had of it,
Just the worst time of the year
For a journey, and such a long journey:
The ways deep and the weather sharp,
The very dead of winter.

I had to get a new passport some time ago to open a futures account in the US. Fair enough. Never needed one previously to open up domestic accounts. Just an Aussie accent which cannot be learnt.

On real estate, folk from Asia love buying Australian stuff (what is known as off the plan) has been very popular. They need very scant ID, and can often pay the deposit on their credit card. That is 100% speculation. Real estate never falls in price, as everyone knows.

Yes, apologies for my insensitive Northern hemisphericentric viewpoint. This old dog still has a lot to learn about bias.
The situation re: real estate is very similar here in Canada. I don't know what the exact regs are but I'm sure they are few if you have the $$. And yes, as we know (and Shiller knows!) real estate has a history that often repeats just as everyone begins to forget it.

Only need to apologise to this possum if you accidentally hit my head with a heavy blunt object. I don't pretend to know anything real about Canada either. A friend works there as a teacher of sorts - she is French. Took her ages to get paperwork for residency etc. I did learn something about Canada the other day on our radio, an interview with Tanya Talaga who wrote a book "Seven Fallen Feathers". This is the link. It does not make for comfortable listening. I'm a master of understatement sometimes.

Canadian indigenous sorrows - Late Night Live - ABC Radio National

I found myself working in the conveyancing area of a busy (quantity, not quality) Oz law firm. Each day they'd get a few boxes of new applications for real estate purchases (off the plan - construction had often not even begun, in tall residential apartment blocks in inner city Melbourne, straight out of East Germany) from Asian dudes, primarily Singapore and Malaysia. Each had to be passed by the foreign investment review board, which was just a rubber stamp 99.9% of the time.

I can't recall any being interested in actual "dirt".

Yes, that's a terrible story that has swept up the country in recent months. Of course we always 'knew' in some way that things were very bad, but did not (at least I did not) realize just how bad. It's now clear that Canada was settled not in the comparatively 'friendly' British imperial way that we were taught in school (in stark contrast to the US way which was direct military clearance - think General Custer and Wounded Knee) but by a system of death camps masquerading as 'residential schools' where children were forcibly taken away from their parents and then starved, beaten, exploited or outright murdered, in addition to the ones who simply died of malnutrition or tuberculosis. It's hard to imagine this was all intentional (yet for some it surely was) but it's clear that it went on for a long time with much covering up. We are now removing statues of the first Prime Minister (who supported the schools plan) and are waiting for a 'mea culpa' from the Pope; the stain may never be washed clean.

I voted bIrd watching and Ryan Okeefe, I have recently moved to higher time frames so would be interested in seeing your analysis

Excellent, thank you! There is no clear leader yet, but I have already started doing some summer (aussie winter) reading of the main contenders.

The kids are playing video games, the wife is watching TV so I guess I'll take this time to do a mini book-review. This book is not on the current reading list poll, it was just something that I picked up for cheap on Amazon as it looked like fun and I thought might learn something in the bargain. My own thoughts, are as usual in green.

The book is called 'Hedgehogging' by Barton Biggs. Barton Biggs sounds like a nom de plume, but according to Wikipedia he was a real person, who spent 30 years at Morgan Stanley, founded their research division and managed the investment division while also serving as chairman for 30 years. I don't know how you can be chairman for the same amount of time as you spent with a company, but I'm going to chalk that up to Wikipedia, not braggadocio.

Biggs seems to be one of those people who led a charmed life. Born into wealth, and then making it into even bigger wealth by being at the forefront of 'emerging markets'. He is famous for calling the dot-com bubble, but got 'blindsided' by the 2008 financial crisis, so that makes his forecast record 50% which is exactly what I expect from all forecasters.

Anyway, most of the book is a litany of stories highlighting the massive egos, but also the deep insecurities of portfolio managers and 'hedge-fund guys'. The anecdotes are entertaining and make for a quick fun read but there aren't as many lessons that you can draw from them as you can with the 'market wizards' books for example.

There are general lessons to be derived from young 'evidence-based' quants who have an arcane methodology ("stock selection to the third derivative and fifth dimension in color") based on illusory patterns or cycles that don't bear out in the future. They get depressed, or stressed out, lose their expensive houses, toys and trophy wives. The moral, says Biggs, is that "quant value investing works as long as too many people don't do it." I would generalize this to say, almost any method of trading works as long as 'too many people' don't do it. The problem is usually too many people do do it. Trading on observations or patterns formed in the past is foolhardy. "The stock market is a sadistic, contrary, changeable beast and nothing is forever."

Biggs goes on to point out that new funds are failing at higher rates (and keep in mind this is all pre-2008) and raising money for funds is increasingly difficult. Hedge-funding ain't what it used to be.

Biggs describes investment club dinners where everyone stands around with drinks, probing for weaknesses, and 'gilding' or 'sandbagging'. Gilding is when you pump up an investment you hold to try to raise its value. 'Sandbagging' is considered unethical, even by this group of 'oily' self-obsessed sharp dealers. That's where you pump up a stock with the intention of unloading it (pump and dump). To me it seems like there is no real difference. What value would there be in going to one of these things where everyone is motivated to be, at best, 'loose with facts'? It also seems like a terrible way to do business. Either you get a reputation for gilding or sandbagging or you are wasting your time fishing in shark-infested waters. Garbage data in, garbage out.

One guy in particular, 'Richard', tells "a stock story with great certainty and precision". Is this what people want to hear? I get the certainty part, all pack animals want to be led by confident alphas. However precision doesn't seem to be important at all.
Richard is a bad man. He cheats at golf and tennis. This doesn't stop some dummies (not Biggs of course) from taking one of his tips. The buy order is 'taken up quickly and with no difficulty filling a large order'. Recall Livemore! This is one of the warning signs of a stock that's about to sink. Of course, when they check the trade, the seller came from Richard's broker. Richard is caught sandbagging and he is warned off, forced to switch to the west coast.

The 'macro' guys complain about all the new players with 'too much rookie money' who 'confuse them with their stupidity' which sounds like code for 'aren't in the right price-fixing chatrooms'. 'Our nice old game is being played at faster and faster speeds by bigger and rougher guys'. Yeah, if guys == computers. "The violence level is soaring, it's like the NFL", etc.

Biggs though, thought the new money pool (alpha) was growing. "As all these new, naïve, trigger-happy crazies, long on aspiration, and short on experience, enter the business, a lot of them will get creamed." Their losses, Biggs argues will end up in the pockets of the less naïve. Are you paying attention crypto newbs? Haha, of course not.

The cooling off of a love affair with hedge funds is predicted (accurately). They just can't earn the excess returns needed to justify their fees. 1.5% of fixed assets and 20% of profits. The fixed assets don't cover their (lavish) overheads and the profits don't materialize. However when I look at a chart of this period it just seems like they would have been well served to be long-only managers. The problem is that clients don't want volatility and they don't have a way of avoiding it. Even funds that had not done too badly after the dot com bubble lost their investors because of impatience with a 10% return compared to an index's 12.5% (over 3 years). Most of the big winners, are the largest funds, of course. A network effect.

Biggs spends some time dismissing market-neutral strategies. Too crowded. Looking at the charts, I have to agree. The domestic equity market has not been neutral since the 1920s.

I'll finish with the case study of 'Ian' one of Biggs 'friends'. Ian is in his 'late 30s'. A colleague from Morgan Stanley. Biggs compares him to a character in an Ayn Rand novel. Friends don't do that.

Ian was lured to Morgan Stanley, and did well. Biggs goes to bat for him to get a compensation bonus so that he'll stay. Of course, he doesn't. He wants to be a 'true global investor'. Biggs tries to convince him to stay at MS. He doesn't. He sells his NYC apartment and his Hampton cottage. He does OK on his own, but doesn't attract 'substantial' investment because his returns are volatile. Biggs feels betrayed.

Ian is 'intense' and 'sleeps with his portfolio'. He grinds his teeth at night. He has 'discipline' and 'intellectual purity'. He struck out on his own because at Morgan Stanley "he was letting external sources dominate his time, rather than controlling it himself". Ian wants facts, not opinions, and most of his day is taken up with chatter. He wants "isolation, reading and solitary studying with the freedom to discard immediately what is junk or irrelevant to my investment thesis"

I mean, that sounds pretty good to me, but...

Fast-forward to April, 2005 and Ian has given all his money back to his investors. The market has been down for "11 straight days". He had been up 22% in 2004. But now he's down 16.5% for the first four months YTD of 2005. His investors were still up 10% since inception while the S&P was up 12.65%. Ian is quitting, not because it's hard to attract investment, but because "the pressure of living so intimately, so intensely with his portfolio, (and dying a little on the bad days) has become intolerable." Think about the wise words of John "Rambo" Moulton here. Divorce yourself from money. Focus on the next trade and nothing else. If you don't remember him it's because you're not following me over on my trading journal thread.

Biggs goes on to talk about Churchill's 'black dog' of depression, and how Ian is really a winner, which a friend has to say, but...

Here is a chart of the period in question.


The four month period that led to Ian's disgrace is highlighted. I have to wonder what exactly had to happen in Ian's worldview for him to have been successful at investing or trading? There is nothing there that could not have been weathered by any reasonable person. Ian might well be a 'winner' but not in this game. He is temperamentally unsuited to doing this work. Unsuited, at least with his current method, which it seems to me, is very discretionary, relying on private info, which wasn't able to tell him that, actually the market might not go straight up all the time! Ridiculous.

To think that people like this imagine themselves able to handle money much less other people's money. This is no trader. This is not a 'hedge fund guy' and it has nothing to do with depression or even watching the charts too closely. These fraternity bros pick people who look good, talk well, make themselves look good when they go out drinking and trolling for girls, but this guy is a complete nothingburger. There are a lot of people making big money decisions based on nothing more than how you make them feel when they look at you, and that's a poor policy for enduring success.

The ultimate moral of this book? You too can run a hedge fund and be at least as successful as 'Ian' if you're not trading on gut instincts and chasing whip-poor-wills.

Some, or all, of this (even though the quote is only the bit starting with the discussion about Ian) is actually pretty sad at some level.

I do query the bit about a "reasonable person". Its tricky, this reasonable person metric.

An article writing about a fairly wealthy Aussie bloke, James Packer (and I see you do the Wiki thing), and his struggle, and I copy and paste -

‘…the very rich have financial worries of their own, says [psychologist Joel] Curtis: while poorer people worry about paying the bills, and middle-class people are trying to get ahead of the bills to pay off the mortgage, the seriously affluent are preoccupied not with what they have done, but how to keep it that way.
‘Their entire self-esteem is tied up with money, so any downturn or the “business going south” can cause stress and depression.
‘Nothing is ever enough, there's always another goal. Everyone is striving for self-actualisation and unfortunately for high flyers, it is based on results, so they have to keep chasing the high, the feel-good factor.’

Not being a psychologist, I cannot endorse any of that, however it does seem to fit.

Andrew Swanscott, host of the 'Better System Trader' Podcast is now teaming up with a shill to sell a training package to teach you how to generate 'thousands' of breakout strategies for under $200. It's called 14 day breakout strategy challenge if you want to hunt for it.

Some thoughts

1. Everyone has to make a buck, but Swanscott had credibility having interviewed so many 'known' traders. Is this a wise cross-promotion?
2. Something that generates many strategies based on the same fundamental principle isn't going to be robust, it's going to be overtrading. I wouldn't want to trade that way or invest in a hedge fund that is a one-trick pony.
3. Just because you dress something up with fancy terms like "BOS smart code" doesn't mean you're actually doing anything smart
4. Just because you're using AI doesn't mean you have the I part (intelligence) down
5. Again, if this is so profitable, why risk your reputation and your systems by sharing them with the public for only $200?
6. A: Because it's not real. It doesn't work that well, and they will make more money selling courses than from trading.

It's a classic story, I'm just surprised to see someone like Swanscott dirtying his hands with it.

Still no clear leader in the book poll, but I am taking notes on everything that has at least one vote and may just start parcelling it out based on alphabetical order or something.

Taking a break from reading trading books to read some fiction. 'Feast of Crows by George RR Martin (Game of Thrones). It had this quote in it that reminded me of the principal danger of trading.