MoneyAccumulator.com

by Das Brain

I just finish reading the book “The Electronic Day Trader” for the second time. I bought this book back in year 2001 when the whole day trading thing during the dot com boom was hot and read over it once back then but it didn’t really stick. What I mean by that was what I read kinda just went through my eyes and out my head, I’m sure everybody has read a book before but forgot much of it shortly after. I guess at the time I did not treat it seriously, I didn’t take notes.

Six years later, I am reading it again as I will be in the process of building another personal computer from scratch strictly for stock and option trading with a real-time quote and chart trading platform. I needed to re-familiarize myself with day trading principles again, so that was why I re-read the “The Electronic Day Trader” but this time I took detailed notes, so I can easily refer back to my paper notebook.

Although “The Electronic Day Trader” is outdated, the principles of trading pretty much remains the same then as it does today. For example the following are still generally the best indicators of where the market may be going before market is open:

S&P Futures

30 Year Bond futures

The rule is stock prices always follows future prices.

Other rules in the book includes:

1. Take position only when you perceive that you have an edge, otherwise don’t get into the stock.
2. Act frequently on initial instincts.
3. If you find yourself hoping or wishing, get out and go on to the next trade.
4. Think independently
5. Don’t get married to a stock position. Don’t try and win a game you keep losing. Recognize that every minute there is another opportunity to make money in the market.
6. When losing money with a position, take loss by the end of day.
7. Don’t let an eighth get in your way.
8. Assume responsibility for your actions.
9. Play smallere when things are going bad.
10. Study reasons for your success and your failures (profitable versus losing trades)
11. Discipline! Discipline! Discipline!

All of the above are listed under the “Habits of a successful trader” section and all sound very easy, but they are extremely difficult to apply. As humans our emotions always comes into play and screw everything up and this book unfortunately does not go further into the psychological analysis of day trading which I feel is very very important. Taking emotions out of trading is something that has to be learned over time and experience.

In short, “The Electronic Day Trader” is outdated however it does have some important rules that can be extracted and used to apply to your trading habits. The book is however a good start for someone who is familiar with the stock market and is interested in getting into short-term trading of stocks. You can get this book for $14.78 USD brand new or used at Amazon.com from $1.25 USD and up.