High Probability trading
by Marcel Link
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Book Summary Information
Author: Marcel LinkEdition: Hardcover
Audio: English (Unknown); English (Original Language); English (Published)
Published: 2003-03-17
ISBN: 0071381562
Number of pages: 288
Publisher: McGraw-Hill
Book Reviews of High Probability trading
Book Review: One of the top five trading books you should own and read regularly
Summary: 5 Stars
Different trading books cover different aspects of trading, like risk, execution, or psychology. This book covers all of that and more. It is one of the few complete books on trading I have read so far. I don't think you can read this one book and become a great trader, but I do think it starts you in the right direction and if you follow what Marcel is saying you will be a better trader.
I also think if you are already a successful trader there are many things in this book that can help you to become even more successful. I first read this book about two years ago. Learned some good things from it and then put it on my shelf of trading books. I pulled it back off the shelf about a week ago and started reading it again. I am glad I did. There are so many pearls of wisdom in this book that I had forgotten, or just stopped using over time. Sometimes we need to be reminded so we can continue to improve.
Marcel appears to be a real trader. That's a good thing because there are many trading books out there written by real authors, not real traders. The wisdom he lays down in this book are the bits and pieces he learned through his trials and errors over years of trading.
Here are some of the things I took away from this book.
-Trading is the hardest job you will ever have. If you think you are going to just walk over to your computer, turn it on, and then buy or sell your way to riches without any preparation, you are sadly mistaken. If someone tells you it is easy, ask to see their audited statements for the past few years.
-Be realistic about the time it will take you to become successful. It will probably be 2-5 years of diligent work before you can become a successful trader. Some people can do it in less time, others will need more time. A doctor, lawyer, or other professional cannot become an expert in their field in a couple of months. Why would you think you can do it in a field like trading? Something else to learn from doctors or lawyers, the really successful ones specialize. You cannot trade every market, so find the ones you are good at and specialize in those areas. That's the way to happiness and profits.
-Learning to trade is a timed race. You need to become successful before you run out of money. Its just like a new business, you need to make money before you go broke. Treat trading as a business and you will be more successful at it.
-In the beginning it is much more important to learn how to not lose money than it is to learn how to make money. If you keep from losing money you lengthen your learning time. No money means no trading. You have to preserve your precious capital. Plus once you learn how not to lose money, you start getting better at realizing how to make it.
-You need to have the proper capital to succeed, or you need to have realistic expectations for the capital you currently have. You should not be trading four e-mini futures contracts on a $10,000 account. It would put your risk level way too high and lower your chances to succeed. Proper risk levels are vitally important.
-Never take a trade that you cannot explain. You need to understand why you are getting into a trade. There are tons of trades every single day. This book is about taking the high probability trades. Why take a low probability trade when all you need to do is be patient and a higher probability trade is right around the corner.
-Trading against the trend is a low probability trade. Why not place the odds in your favor by trading with the trend?
-Trade the market, not your P/L. Trade what the market is showing you. Do not trade because you need to make a mortgage payment or car payment. The market is very generous and gives you many opportunities each and every day to transfer some of its money to your account. Wait patiently and be prepared to act when those opportunities arise.
-Always have a stop-loss. That means a hard stop you place the second after you put on the trade, or a mental stop that you will execute without fail if the market hits that number. A stop-loss just lets you know the trade is not what you are expecting. A small loss is part of the game. Do not let it turn into a large loss. Some of the best traders are only right about 30-40% of the time. And they make millions by only taking a small loss when they are wrong and letting their profits run when they are right.
-Risk. You need to set proper risk levels and always follow them. You will never know ahead of time which trades will make money or which trades will lose money, so you need to have proper risk levels at all times. Improper risk levels are one of the most critical reasons that new traders fail. By risking too much they never give themselves a fighting chance to be successful in the markets. New traders have not figured out their edge, they have not dealt with their own psychology, they have a dozen reasons why the trade is wrong, but with improper risk levels they get too few chances at learning the correct way to trade.
-Psychology. Whole books have been written on this subject. Marcel hits many of the important ones in his life, they will probably help you out too. This is a very important subject that you must conquer to be successful. For some it is easy, others will work on it until the day they die. I once read somewhere that "The market is an expensive place to learn about yourself". It's very true.
I can easily say that this book is in my list of the five best trading books. It deserves to be read more than once. Maybe once a year if you are actively trading. I would like to be able to give a brief description of the highlights of this book, but this is an all-encompassing book on trading. It covers everything that the majority of traders need to know and understand. If you follow what Marcel talks about in this book, you will have a high probability of succeeding in your trading career.
Summary of High Probability trading
A common denominator among most new traders is that, within six months of launching their new pursuit, they are out of money and out of trading. High-Probability Trading softens the impact of this "trader's tuition," detailing a comprehensive program for weathering those perilous first months and becoming a profitable trader.
This no-nonsense book takes a uniquely blunt look at the realities of trading. Filled with real-life examples and intended for use by both short- and long-term traders, it explores each aspect of successful trading.
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