Ian Murphy - Way of the Trader

Contents

1. 1. The Job
      Is Trading a Job or a Business?
   2. The Relationship
      A Trader and The Market
2. 1. One Rule
      The Preservation of Capital
   2. Two Choices
      Keeping it Simple
   3. Three Styles
      Trend Following, Swing Trading and Day Trading
   4. Four Legs
      The Attributes Which Support a Successful Trader
   5. Five Stages
      The Path of a Successful Traders Career
   6. Six Edges
      The Psychological Tools of a Successful Trader
   7. Seven Records
      A Look at the Records a Trader Should Keep
   8. Eight Checks
      A Comprehensive Pre-Trading Checklist
   9. Nine Filters
      Selecting Which Stocks to Trade Using Filters
   10. Ten Tools
       An Introduction to Technical Indicators and Orders
3. 1. The Strategies
      Perfect Imperfection

The Introduction

L ife constantly provides wonderful opportunities. If the opportunity you seek is financial, the markets are the place to be. Every trading day, trillions of dollars flow through the global financial system and, if you are prepared to take a calculated risk, some of it ca n be yours.

A private trader is someone who uses their own money to trade the markets. There is no other activity like it. Trading offers the unique ability to make serious amounts of cash from anywhere on the globe with just a laptop for company and, best of all, its to tally legal.

Not surprisingly, the promise of wealth and freedom has attracted many to trading over the years and continues to draw in new traders. As we all know, there is no such thing as a free lunch, not to mention a free buffet. In fact, most people who attend a free lunch in the markets end up having to pay for br oken dishes.

Sources of revenue that require no physical effort are quickly identified and soon become saturated. Trading is particularly difficult because the markets are populated by some of the brightest minds on the planet. I have been fortunate to meet some of them and can assure you they were up early this morning and know exactly what the y are doing.

In many respects, a trader is like a stand-up comedian . Both professions make their living by observing society and leveraging its anomalies. More importantly, both activities revolve around a single issue. The comedian is either funny or not; everything else is irrelevant. A trader can either pull money out of the market or not; nothing el se matters.

In order to do that consistently, training is required and thats where this book comes in. There are three parts:

• Part A will take an honest look at the job of a trader and explore a traders relationship with the market.
• Part B has ten sections. These provide a complete foundation for traders, including a look at various trading styles and the path a trader must follow in order to be successful, followed by an edge and how to use it. While each is a complete lesson in its own right, there is a natural progression to these ten chapters and its assumed readers have already dabbled in the markets. Accordingly, some chapters will demonstrate how risk management and record-keeping deal with the issue of gambling, while others identify the procedures used by professionals. Along the way, there will also be an introduction to technical and fundamental analysis.
• Finally, in Part C , Ill share some profitable trading strategies which can be used by anyone.

New traders share a common fault: they over-complicate trading by submerging themselves in technical indicators. Successful trading boils down to just a handful of basic things and for the most part theyre not technical in nature. The psychology of trading is especially important. Hence, the style of the book is pithy and personal with as little financial jargon as possible. Its also quirky and unexpected because thats how the market operates. But dont let the light-hearted anecdotes fool you everything you need to prosper as a trader can be found in the pages that follow.

Ive done my best to write it all down, the question is can you pick it up?