5.0 out of 5 stars
Profiles of some of the best traders in the business
Reviewed in the United States 🇺🇸 on August 7, 2011
How much is one good idea worth to you and your account? Or ten good ideas?
This book will teach you something that most do not...the Psychology of winning traders, the actual rules they use to buy and sell, and rules to maximize gains, limit losses, and control risk.
If you don't have a rule to sell, lock in your gains, and protect your capital, this book will give you answers.
The Little Book of Trading, while small in size, is loaded with key insights into the "whys" and "hows" of some of the most successful traders and money managers in the business. People who have been at it successfully for decades in many cases, including legends Larry Hite and David Harding.
Michael Covel is the leading authority on Systematic Trend Following, a rules based approach to markets which eliminates the traders emotions, and predicates that all decisions to buy and sell are dictated by simple, yet very specific rules. He goes into specific details of how and when they enter and exit markets, rules they use to maximize gains, limit losses, control risk and eliminate emotions from the trading process. He does this with very clear, easy to understand writing, no technical jargon.
Two of the traders profiled started with $5,000 in their accounts, David Druz and Kevin Bruce. They are both worth 10's of millions now.
A huge advantage to systematic trend following is that it can be applied to stocks, ETFs, mutual funds, bonds, commodities, all asset classes.
The book is loaded with specific examples of the all-important thought process that goes into a winning rules-based system. The most successful traders have very simple rules, which may surprise many. This is not 100's of Phd's in a room using super-computers. These are rules that the smart trader can employ...
example, if the price of SPY, or AAPL, or GLD, or whatever you follow, makes a new 60 day high, then buy. If it makes a new 30 day low, sell. Or,
if the price of any stock or ETF you follow closes below the 200 day moving average, then sell, or go short. If it closes above the 200 day, then buy or go long.
Those entry and exit rules are just a sampling of what some may use, and are only a small part of the equation. This book outlines it all.
An excellent read, very highly recommended.
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