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--

Brett

19 comments:

SSK said...

HELLO BRETT,As always, thank you for extending your insights so freely. There is not a day that goes by that i dont learn something new or refresh a concept that might have been forgotten. I look foward to you new book and your continuing education, Thank you agian, Best, SSK

Taichiseal said...

Thanks for sharing the wonderful material in your blog; it is right on top of my list of must-read every day. And I look forward to seeing your new series of posts.

Evan said...

Your site has been a wonderful resource for learning and thinking. I've been amazed with what you have shared with us so far. To have you open up another fire hose of information on us is yet another boon.

When I started researching stocks and reading everything in sight, it was hard to find the signal in the noise. I am sure it will be a phenomenal resource and new traders who find this will already be ahead of the curve.

I look forward to reading it as you write it! Thanks for the information past, present and future Brett.

Evan

eva said...

Thank you Brett, I have been lurking on your blog for a long time, as I am still new at this, and can use all the psychology there is. You material is top notch and I look forward to learning more about how to become my own trading coach and whenever your new book comes out, I will be adding it to my ever growing library.

JMJAtlanta said...

You have got to be the hardest working, most insightful trader I have known. Your frequent sessions are worth at least twice what we pay for them! :)

Thank you for your thought-provoking and clear writings on our psychology. I have no doubt that what I read here adds to the P and takes away a big chunk of the L of my P&L.

I look forward to reading your books.

Mani said...

Hi Brett
I am in the stage you were 30 years ago. This is the first time I am commenting on your blog.
I couldnt agree more with you on the fact that although everything is supposedly there on the net....I find it so hard to figure out what is useful and what is trash. And yes I an one of those who simply cannot think of spending thousands of dollars on costly books and seminars. Sometimes it is so overwhelming.....I just wish there were some place I could learn the basics and develop a strong foundation . Right now I am so confused I cant seem to think for myself.I sometimes start to question myself, if I really even understand the basics.
You cant imagine how thrilled I am to learn about this new project of yours. I would always always be so grateful to you for undertaking this initiative.Although there are so many blogs and websites on the net ,most of them seem misleading and confuse me even more.
Please keep up the good work

Firebird said...

UN-BE-LIEV-ABLE !

(Thank you so much) :)

Jorge

Joshua said...

As if your collection of blog posts aren't ALREADY the best intro to trading. I can't wait to see what you have planned.

William said...

A very noble endeavor, and I certainly look forward to reading these posts. Cheers!

Bryan said...

Brett, you are no.1 in quality and generosity.

Thank you

Cailin Yates 16785083 Arbonne International said...

well now, as I tend to disbelieve in luck and feel I end up in the right place at the right time - I still feel lucky to have stumbled across this today. Fascinating! I look forward to reading more of your posts and gleaning from your 30 years of experience. What a gift!!!

Michele said...

Wow - that sounds awesome. You are truly unique in the world of market commentary and analysis and I really appreciate the obvious time and effort you take in provigin your insights on a daily basis. I'll be looking forward to reading your new project.

cleon said...

I agree completely with your assessment of material available for the trading beginner. Everything out there is either so specific that it does not give you a complete picture, or so broad and 'high-level' that it's essentially useless.

After reading the multitude of core books that we all read when we get started, I've always been surprised when I stop and realize that I wouldn't recommend any of them for someone to really get started from. Elder and Carter came the closest to having a 'holistic' book for a beginner that covered all the important concepts (although I didn't consider Elder's information as pertinent to intraday trading).

Anyway, kudos to you for taking this on, and I look forward to reading this developing ebook!

garyasdf said...

This has potential for automated trading.

From
http://www.networkworld.com/news/2008/090208-open-to-watch.html

Company name: Marketcetera

What does the company offer? The company has developed the financial industry's first open source platform for automated trading systems. (To be released end of 2008)

...2RT said...

Hi Brett:
I always read your blog and nice to know you're going to share lessons for beginners like me. Fact is, been long searching a blog that caters for newbies like me who can't afford to attend expensive seminars, and your service is a God given gift, especially for me who rely mostly on resources that are availbale in the net.
Thanks
RagsTrader

otterby said...

Brett, there is no one like you..you are more than a trading coach..your have become a mentor..as a trader & a human being...thanks,

David said...

Hi Brett,

Posting your thoughts on getting started in trading sounds like a great idea, and rolling them all up into an e-book is a very logical and generous way to share your insights. Look forward to reading your future posts!

PW said...

This is also my first time commenting. I look forward to hearing more on this subject.

Brett Steenbarger, Ph.D. said...

To all,

I am overwhelmed with the positive response to this new project. Thanks so much for the feedback and the support--

Brett