More investors: Buffett, Livermore, O'Neil, Soros
Best known for Market Wizards : Interviews With Top Traders and The New Market Wizards: Conversations With America's Top Traders he also wrote a good introduction to technical analysis, Getting started in Technical Analysis and other books.
The New Market Wizards
Included in this book are Stanley Druckenmiller, Al Weiss and Mark Ritchie. The interviews printed in this book provide excellent advice from top traders. Examples include:
- Schwager: "Are there any other less obvious examples of popular stop points."
Monroe Trout: "Round number. For instance, when the Dow Jones starts creeping up toward 3,000, I'll start buying some in anticipation of it going through 3,000. The 3,000 level acts like a magnet." This behavior was also reported in Reminiscences of a Stock Operator and shows that not all trading techniques are complicated. (page 154)
- Schwager: "What else have you learned from Soros?"
Stanley Druckenmiller: "I've learned many things from him, but perhaps the most significant is that it's not wether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong." (page 207)
- Schwager: "What are the major misconceptions people have about the market?"
Richard Driehaus: "They tend to confuese short-term volitility with long term risk. The longer the time period, the lower the risk of holding equities." (page 223) "One market paradigm I take exception to is: Buy low and sell high, I believe far more money is made by buying high and selling at even higher prices." (page 224)
- Schwager: "Why do most people lose money in the market?"
Victor Sperandeo: "I know this will sound like a cliche, but the single most important reason that people lose money in the financial markets is that they don't cut their losses short." (page 269)
- Schwager: "Perhaps Yass's most important point is that it is critical to focus on maximizing gains rather than the number of wins" (page 408)
Getting Started in Technical Analysis
This book is a great reference book to consult for questions on technical analysis.
- "Some technical analysts treat prior highs and lows as points endowed with sacrosanct significance...This is nonsense. Support and resistence should be considered approximate areas, not precise points." page 63
- "In my opinion the standard definition of reversal days is so prone to generating false signals that it is worthless as a trading indicator." (page 80)
- Island Reversals - "The sequence of a climactic gap up (or down) without any follow-through and a subsequent gap in the oposite direction is a potent combination. Island reversals can often signal major trend transitions" (page 107)
- While the traditional countertrend approach of selling when the oscillator is overbought and buying when the oscillator is oversold may provide excellent entry points in trading ranges, it is a recipe for disaster in trending markets" (page 119)
- "A failed signal is among the most reliable of all chart signals. When a market fails to follow through in the direction of a chart signal, it very strongly suggests the possibility of a significant move in the opposite direction." (page 153)
- "There is an inverse relationship between the popularity of an indicator and its efficiency... In fact, it now seems that price reversals following breakouts are more often the rule than the exception." (page 176)
