Thursday, September 04, 2008

An Introduction to Trading

Dear Readers,

A little over 30 years ago, I placed my first trade in the financial markets. With only a little over $2500 in my account--my fellowship stipend as a graduate student in psychology covered my basic living expenses--I traded 100 shares of stock in an effort to learn the ropes. Back then, I taught myself to read financial statements and to select companies with good earnings. (Value Line was a favorite resource). I taught myself some rudimentary technical analysis and began following the work of Joseph Granville in an effort to learn market timing. Many of my basic ideas about trading can be traced back to those early days of learning the ropes.

So now here I am three decades later, finishing my third book on trading and working with trading firms on three continents. I've written over 1700 posts for this blog alone and blasted over 3300 Twitter messages. It's been a fun ride, tracking the psychology of traders and the psychology of markets. But now it's time for other challenges. I'm developing and testing a trading system, with plans of going live within the month. If that works out, I'll be developing related systems, with the aim of trading a basket of ETFs across different asset classes--a kind of personal hedge fund. I look forward to sharing those findings online.

As I develop these systems, I've had to think and rethink my ideas on trading and markets. It's always healthy to examine assumptions and clarify your logic. There are so many more resources available to traders and investors today than 30 years ago: more books, more seminars, and--of course--the online medium. Despite the flood of material, however, I'm not sure that the guides for beginning traders are any better now than they were when I was a graduate student. And many of the decent guides out there are well beyond affordability for someone who is in the situation that I faced during my earliest phase of learning.

So I'll be starting a new series of posts on this blog and aggregating them on my trading coach site. The posts will be on the simple topic of "An Introduction to Trading". My goal will be to explain, as best I can, my approach to markets and my understanding of them. Over time, these posts will accumulate and become a free electronic book that explains trading for new and developing traders. There will be no hype, no promises of get-rich-quick, no pretenses to guru status, and no sales of coaching or seminar services. I'll just share what I've learned over 30 years. Readers will be free to comment and add to the posts and link other resources, so that the book can be a truly collaborative effort. Over time, I'll illustrate principles from the book with examples from the current markets.

As a graduate student, I would have loved to have read a primer on trading that explained and illustrated basic concepts, emphasizing patterns and principles of supply and demand. Thirty years later, I'm getting around to writing the text as a wholly online, Web 2.0 production. I look forward to this new challenge. Thanks as always for your interest and support--