Book review: Trading in the Zone
Trading in the Zone is an excellent book. I have finished reading Trading in the Zone fourth time and highly recommend the book as Mark explains why trading is so difficult and what approach you should use if you want to be successful. My only quibble with the book is that it would have been an even better book if it was edited properly. One of the favorite parts which I read today was where Mark explained why leaving money on the table is more painful than taking a loss. If you agree with the statement, you ought to buy the book and understand the psychology behind this effect.
Armed with this knowledge, I am going to give trading another shot. Before I place another trade, I am going to improvise my list of trading rules which I follow.
Here are a few:
1. Define and accept the risk for each trade before I execute it. [The book explains what it means by ‘accepting’ the risk.]
2. Never trade without a stop loss in place. Depending upon the trade, I have decided to keep 5% as my maximum stop loss amount.
3. Never add to a losing position
Though writing is sometimes repetitive, Mark has done a great job of identifying some of the psychological blocks which hurt traders. He explains what it means to take responsibility. Traders should not be biased and try to understand probabilities. New traders generally do this mistake. They usually trade on their beliefs, gut feel, and news. This is what the TV analysts and media make full use of in manipulating the stocks. I would say this is the most practical book on trading psychology. I have read this book several times but every time I read again, I learn something new.
That’s it for now. I have a few more thoughts and I will write about them as I explore the trading world again.
List of best books on Trading and Investing.