Rhody Trader

One of the many things I have on my plate (probably too many things, to be honest) is  the development of a new book project aimed at answering all the most common questions new traders ask. I answer a lot of questions on my trading education blog, on the forum sites I hang out at, via email, and in seminars and other discussions. While some of them are specific, many are variations on the same basic set of questions that most folks have at one point or another during their development. A while back I decided to put them all into one place as a handy reference source, with answers of course.

I’m most of the way through collecting the questions and providing answers to them. My hope is to have the book completed early this fall.

This is not a solo project, though. While I can answer all of the questions I intend to include, I’m not necessarily the best source for many of them. Also, I only have my own perspective based on my own experience in the markets. It might not be quite the right one to best answer the question on the mind of a specific individual. With all this in mind I’m bringing together a group of additional contributors to provide additional depth and expertise to the question answers. I’ve got several commitments to take part already, but will continue to look for others who can add value to the project. The more the better, as far as I’m concerned. If you are someone with a goodly amount of experience in the markets, and would maybe like to take part, let me know.

Here are the questions I have put together so far. If you have suggestions for any additional ones, definitely leave your suggestions via comment below.

Staring Points

How is trading different from investing?

Why should I trade rather than just invest?

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The Biggies 

How much money can I make trading?

When do I know I’m ready to start live trading?

What books should a new trader read?

Should I quit my job and trade full-time?

Only professional traders make money, right?

Do I have to accept some big losses in the beginning?

How long does it take to make a stable income from trading?

How do I start trading?

How difficult is it to trade?

What is the percentage of people who succeed in trading?

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Trading Education

Is it worth spending money on educational resources when there’s so much free stuff available?

If you know so much, why don’t you just trade?

How do I avoid scammers?

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Markets & Instruments

What is the best market to trade?

What’s the safest market?

What should I trade?

Is forex trading a scam?

Is it better to trade spot forex or currency futures?

Should I avoid trading over the holidays?

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Mechanics

What is leverage and margin in trading?

How much money do I need to start trading?

Is live trading different than demo trading?

What’s the difference between a stop and a limit order?

Where does the money I make in the market come from?

Do I have to pay taxes on my trading gains?

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Analysis

What’s the best indicator?

Which type of market analysis is better?

What is technical and fundamental analysis?

Why didn’t the market rise on the positive news?

What is Support and Resistance?

What are the differences between discretionary and system traders?

What timeframe charts should I look at?

What charting package and/or data feed should I use?

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Trading Systems

How can I create a good trading plan?

How do you backtest a system?

Where should I put my stop?

Should I buy this system?

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Trader Psychology

How important is psychology in trading success?

How can I overcome my fear when trying to pull the trigger on a trade?

Why can’t I follow my trading system?

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Brokers

What’s the best broker?

How should I select a good broker?

Is my broker trading against me?

Is my broker running my stops?

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Jobs

How do I get a job trading?

What types of trading jobs are there?

What’s better, an MBA or a CFA?

What kind of program should I do at school to get a trading job?

Yeah, right!

What we have in common is that we are both Wiley authors. I’m quite sure, however, that he’s a top tier guy that Wiley is willing to put some weight behind in terms of marketing and promotions. I, on the other hand, am basically left to plug my book entirely on my own.

But I have been invited to David’s book signing:

Come hear “And Then the Roof Caved In” author David Faber of CNBC speak on July 30 at the 5th Avenue Barnes and Noble. Stick around for a book signing following the talk.

The event begins at 6:30pm at:

Barnes & Noble 5th Avenue
555 Fifth Avenue, New York, NY 10017, 212-697-3048

Find out more at http://store-locator.barnesandnoble.com/event/61998

About the Book:
And Then the Roof Caved In skillfully explores the causes and consequences of the recent financial collapse. Written by David Faber—the award-winning CNBC correspondent—this compelling account is filled with the candid reflections of the people who brought the crisis to life. Expanded from the CNBC documentary that the New York Times called “broad, comprehensive, and compelling,” and that Frank Rich noted as “superbly done,” this book is a must-read.

I haven’t read the book myself – at least not yet. Maybe Wiley will send a free copy to one of their authors. I’m not holding my breath, though. Interestingly, the reviews on Amazon are barbelled – meaning there are a lot of 5s and a lot of 1s. I’m sure part of that is the usual celebrity bashing, but I’ll leave you to your own judgements.

I was provided with a free copy of Broke: The New American Dream by it’s director, Michael Covel last week. Last night I gave it a look and figured I’d provide my thoughts.

Overall, I’d definitely call the documentary an enjoyable view. There are a lot of very interesting folks interviewed through the presentation – some very well-known names and some others who are perhaps not quite so well known in the public, but who are very noteworthy anyway. Interestingly, Peter Borish is one of those included. He was also featured in the Trader documentary working with Paul Tudor Jones.

The film starts off with a focus on the real estate market and what’s happened there. It then discusses gambling, Social Security, and the popularity of lotteries. The final part of the production focuses mostly on trading and investing.

Let me make two initial comments of a critical nature.

The first is the “How Wall St. Sold Out America” sign that shows on the front of the DVD, the site, etc. I think it’s a pretty blantant attempt to generate public interest through controversy, and nothing more than that. There is no discussion of any consequence in the film about Wall Street causing the mess we’re in.

Secondly, after watching the DVD I couldn’t actually tell you what the singular point of it was, if there is one. Covel definitely didn’t go the tried and true route of blaming the Fed or blaming the banks or blaming any of the others the media has loved to target up to this point. He seems to have been been placing the general blame on society for a combination of greed and a lack of understanding of risk, but I’m not entirely sure.

Now, that said, I did find the video entertaining and thought-provoking (some really funny outtake stuff in the closing credits). In particular, there’s a discussion of state-run lotteries which could very well have you thinking about some things in a different way. How does a government which seems so bent on protecting you from yourself justify promoting something which is a losing proposition in a worse way any Vegas casino?

The best part of the whole film, to my mind, is the discussion of trading. Granted, trading is major focus, so that’s probably a predictable thing. There were some great comments about developing as a trader and managing risks, though, from some folks who know a thing or two about it. If you were only to watch that part of the DVD I think it would be entirely worth it.

The webcast video of my LA Traders Expo presentation has finally been posted. You can find it here. Watching the video requires being registered with the MoneyShow.com site, but that’s free.

What I find interesting is that while my presentation was an hour long, the video was cut down to only 39 minutes or so.

Hmmm….Methinks there’s been some editting. I’ll have to give it a look to see what got left on the chopping room floor when I get some free time to go through it. My guess is several of the questions asked were cut.

While I was at the Expo I was also interviewed seperately by Tim Bourquin of Trader Interviews. I’m not sure when those segments will get posted at MoneyShow.com.

By now I’m guessing that if you have any interest at all in World War II that you’ve seen the HBO mini series Band of Brothers created by Tom Hanks and Steven Speilberg. If you haven’t then I strongly encourage you to do so. The series was based on the Stephen Ambrose book of the same name. I have seen the film several times and recently read the book. It’s worth doing both.

One of the primary sources for the Band of Brothers book was Dick Winters. In the aftermath of the mini series he penned his own version of events in the book Beyond Band of Brothers. There’s a lot of overlap between the Winters book and the Ambrose book, of course, but Winters offers a different perspective on some of the Band of Brothers events. Ambrose focused on the enlisted man’s view mostly. Winters brings in the wider picture he had as an officer and unit commander. To my mind it adds some nice depth and color to the story of Easy Company.

At the end of Beyond, Winters has included some of his thoughts on leadership. He was very highly regarded by those who served under him, so clearly there is something worth absorbing. To that end, Winters presents what he calls “Leadership at the Point of the Bayonet - Ten Principles for Success”. Those principles are:

1 ) Strive to be a leader of character, competence, and courage.

2 ) Lead from the front. Say, “Follow me!” and then lead the way.

3 ) Stay in top physical shape – physical stamina is the root of mental toughness.

4 ) Develop your team. If you know your people, are fair in setting realistic goals and expectations, and lead by example, you will develop teamwork.

5 ) Delegate responsibility to your subordinates and let them do their jobs. You can’t do a good job if you don’t have a chance to use your imagination or your creativity.

6 ) Anticipate problems and prepare to overcome obstacles. Don’t wait until you get to the top of the ridge then make up your mind.

7 ) Remain humble. Don’t worry about who receives the credit. Never let power or authority go to your head.

8 ) Take a moment for self-reflection. Look at yourself in the mirror every night and ask yourself if you did your best.

9 ) True satisfaction comes from getting the job done. The key to a successful leader is to earn respect – not because of rank or position, but because you are a leader of character.

10 ) Hang tough! – Never, ever, give up. 

Based on my own leadership experience, I can’t disagree at all with anything said here.

One of the great blogging resources out there is ProBlogger. I’ve got the blog in my RSS feed reader and almost every day find something of use. Articles they’ve published have given me loads of ideas and tips for improving my own blogging, both here and on my trading education blog.

If you’re blogging, or even thinking about blogging, definitely give ProBlogger a look. And don’t feel like you have to be trying to blog for a living either. There’s plenty of stuff for “amateur” bloggers.

Yesterday I finished a very good little book that I’ve been reading during my daily commute. It’s Reward Systems, by Steve Kerr, which I picked because I have been involved in managing groups and organizations for several years now from a variety of perspectives.

Reward Systems was a fantastically enlightening, though concise and quick, read. I can see myself referring back to this book again and again. I found a great deal of valuable information and insight throughout the text, giving me all kinds of thoughts about ways to better motivate people and teams, and effectively reward them for performance.

The one little disagreement I had with Kerr, the author, was in regards to negative reinforcement. He is generally against it, but my experience is that in certain organizations, if handled the right way in conjunction with a reward system, a negative reinforcement approach can provide real benefit. I think most successful athletic coaches will tell you the same.

Aside from that, though, I found Reward Systems to be a fantastic management resource. I’m going to strongly recommend it to colleagues and contacts.