As most of you know, I have signed with Wiley to write a book on Technical Analysis that will be published sometime next year. I want to share some of my thoughts and plans for the book, and also ask you, the trading community, an important question.
Here’s what I can tell you about the project at this point: I think this will be a unique book that will fill a real need in the literature. First and foremost, it will be a practical trading book aimed at the professional or sophisticated retail trader. If you are looking for a book you can simply pick up and get some new trading ideas or some twists on some old friends, this book will do that. (I also will work very hard to make it useful and accessible to the learning/developing trader, based on my experience as a teacher and trading coach. If you’re early on in the process, I think this book will be able to shorten your learning curve.) It also will be a book targeted primarily to discretionary traders, though the research sections of the book may also be interesting to system traders.
However, the really exciting thing is that it will be a book backed up by a ton of research and studies, and I will give you the tools to continue this kind of research on your own. The basic premise is that many of the things people spend time on are probably a waste of time because they simply don’t have an edge, and I’ll give you literally millions of data points to support that claim. After showing you the statistics behind these things, I will also build a statistical framework to support the practical trading tools I give you in the second half of the book. Trading is art as much as science. We won’t be able to reduce it to a simple set of formulas, but it is always helpful to know what kind of plays actually have a statistical edge.
I’m currently redoing that research and nailing it down across about 1,500 different instruments. (The book will be agnostic in respect to timeframe and instrument.) I have a guy doing the research with me who volunteered… I responded “oh great, I’ll make up a research schedule.” (I’m sure he was thinking, “schedule??”) We currently have about 160 different test runs planned, and I just told him we would get to candlesticks “if we have time”. J At any rate, it should be interesting.
So, my question to our readers is this: what would you like to see in a trading book? What do you find missing in your favorite books? What do you want to see more of? What do authors avoid that you would like to see addressed? I can’t promise I’ll incorporate all of your suggestions, but I’m open to any ideas and would like to hear what you have to say.
26 Comments on “A question for the trading community: what do you really want?”
I like that youre gearing it towards professionals/experienced retail…my request would be that you keep that consistent throughout the book. I know its good to brush up on the basics, but thats not usually the reason I buy a book on something that is supposed to be new to me.
besides that, it sounds pretty good so far!
In creating a book geared toward the professional discretionary trader, I suggest you include a chapter (or at least a valuable chunk of content) on the minefield of ‘black boxes’ in markets. This is something every trader battles with in almost every market now, and it’s here to stay. What are the algorithms? Where are they? What are the most common? How can they be identified? The list of questions could go on and on, as you can imagine. Great blog and good luck with the book.
Please dont write 50 pages about how do develope a mental edge and such. There are billions of such materials for free at the internet.
Write about your standard deviation strategy and such. Explain detailed trades such as the nikkie futures one´s. Thats interesting
I have the feeling that your book will be (almost) perfect. In what I am more interested, as a retail trader who doesn’t have access to a prop trading floor, is to learn from your trading habits and experience. What I mean is that I will be very grateful if a chapter in your book will be dedicated to ‘5 days in a week – my day moment to moment from 7am to 7pm’. Because ‘seeing’ you effectively to work, with good and bad, will give a ‘3D impression’ and I can copy the healthy habits of a professional trader as well as to put my mistakes into a different light.
I am sure that you will offer some pages to randomness, probabilities and high level technical approach, hence I am very happy and anxious with your new book 🙂
1. Markets are different year on year. Most books write about bull markets only. 2008 crashed, 2009 boomed, 2010 (in Aus) went sideways all year, 2011 has boomed and crashed. Talk about these differences and the need to have multiple plays or an edge for all market types – this is one of the most valuable things I have got from this site.
2. Simple charts and trend lines in detail as you have done in your blog. Importance of 2 legs up or down and retests as described by Al Brooks of which you’ve mentioned you agree with.
3. Agree with bagenga – psychology has been done to death and is written as the be all end all. As you mentioned finding an edge I think is the hardest challenge. I’ve been able to pull the trigger, stick with my trades and blow off losses for years but I still struggle for consistent profitability and an edge.
4. Something different than just follow the trend – oh god please ! 🙂
5. False breakouts – very few authors tackle how to deal with these.
6. Trapped bulls and bears – again not covered very often.
7. The importance of understanding market direction in relation to your trades.
8. Playbook
9. The importance of stops (always worth re-enforcing for novice traders)
10. Trading the market with the time you can give it. Day trading for day workers is unrealistic. Finding a style that suits your personality
11. Really detailed discussions challenging and discussing support/resistance as you have discussed numerous times in your blogs.
Best of luck, let me know if you need a proof reader 🙂
What types of oscillators work consistently so one can smooth out their equity curve and manage risk better. Explanation how to know what type of oscillators work on the different trading days before the day begins so one doesnt have to lose first to find out. How to know what times to trade to capture best risk reward.
Tape reading.
There is nothing out there about this topic. Obviously I understand that it’s hard to teach this skill and it has to be acquired on your own by spending enough time by the screen. However there as to be some things that can be pointed out to help a developing trader.
I would like to know about the journey towards finding your niche in the markets and any original insights you discovered along the way.
ps I’m still waiting for that post on $TICK you promised!
Lots of creative ideas, loads of back testing. Very little standard TA, please. Looking forward to it.
Include how to read level 2! and how to control your emotions while trading
Just keep it simple. You seem to be one of those really smart guys that is a little too smart. If you could write like you were training a puppy that would be awesome. Maybe have two versions, one for super nerds and one for dumbshits like me. Good luck with your mission Mr. Grimes.
The quant bloggers cover the swing trading time frame very well. Backtested strategies geared toward intraday trading is a niche market that has not received much attention, esp. incorporating market internals. Since you’ve signed with Wiley, please attend personally to organization and flow.
As I’ve said before, you’re writing is detailed and effective, and so it was a natural progression to authoring a book.
I would like to see a treatment of position sizing in the book. This subject is glossed over in most trading literature and/or overly simplified such as “if X = established risk of the trade and Y = your established max loss in $, then share size = Y/X, now hold until you can’t believe how much upside you’re catching.”
I am interested in seeing objective mathematical examples showing the progression of the risk profile while scaling in and out of positions.
Some of the type of questions to be explored:
If you’ve set a max downside of $200, how can that risk be contained while actively scaling in/out at different prices in terms of position sizing? This is beyond a simple single entry, stop, and target plan.
What are the figures that enable you to track the risk profile at any moment while the trade progresses? Should you be concerned with average cost or first-in first-out?
Although you will produce boatloads of data showing that every indicator does not hold up over rigorous backtesting, that all seems rather basic. Is it possible that 2 or even three indicators need to be combined in order to produce a reliable trading signal, even one that may only work in certain market conditions? Although you may protest that this hypothesis involves too much number crunching, this is the kind of thing that is closer to how a discretionary trader makes decisions in real life. In that sense, all of your backtesting for each indicator seems like the beginning, rather than the end, of a project that will be interesting. You guys always talk about having multiple checks in your favor- maybe indicators themselves can each be thought of as a check as well. Combinatorial explosion I know but otherwise the topic will be rather mundane.
I hope you keep this book very advanced- there are way too many books covering the basics.
I wouldn’t spend much time on showing what doesn’t work. I’m not interested in that. I am not very much interested in seeing a bunch of indicator studies, either. I think you should focus on your own record and your real trades. Show how you make your decisions. I like books with a story behind them. Show how you dealt with trades that went against you. I, also, agree that showing the intraday frequency is more relevant. It should, of course, be backed with your own trades but including something from Forex may be relevant for most retail traders versus equities.
I agree about the algorithms. Somebody needs to address that. Maybe they make many kinds of indicators irrelevant now. If this can’t be done in book form then I hope you guys put together an Algo 101 class like GMan promised with lots of tape.
LOL
I received some emails answering this question. I’m likely to use these comments as a reference for a while, so I want to put those emails here:
In response to your question in the blog of what is missing in Tech analysis books, here are few thoughts;
1. Tech analysis books usually present themselves or imply indirectly they are a science and a prediction tool and not emphasis enough on the balance of other aspects of the trading such as risk management, choosing the right plays and stocks for you, discipline, etc (like you said, its a science but also an art, or vice versa). So it is advised to use the appropriate balance on this issue.
2. In my thinking, since tech analysis is built on supply and demand which in turn is built on psychology of people, it is an evolving art/science (“never ending story”). For example, tech patterns that were good 3 years ago, might be obsolete or less good now but maybe they will be good again in 2-3 years from today (all depends on a lot of factors). So I think that most tech analysis books in the market today are only defining the patterns/concepts that are good for the time they were written. I did not find a book that gives you the tools to build an analysis and then re build another one in the future as needed. Namely something that goes deeper into understanding what really drives the market and how to find such driving forces. I think that your lectures in SMB training are so right on and a perfect example to what is needed. The simplified way you define the 4 cycles of the market is the exact tools that a person can use to identify what kind of plays are suitable for this market. So if your book, beside showing many examples and patterns that have an edge, will really provide the tools to understand behind the scenes and understand what is the building blocks of a correct/suitable way of thinking when one comes to analyze the markets, then this is really an added value and a book which is eternal.
And another, shorter, but valid point:
Imo, the world does not need another book to help newbies, unless it will be so good it’s the very last.
Lots of good ideas here, folks. Thank you very much. Many of these comments are surprisingly on target with the direction I was going, but I did find some new things to think about and will adjust some sections based on the feedback here. There may be a thing or two in these comments that won’t make it into the book, but I’ll address them on the blog.
Thanks again. (and, for anyone just coming to this discussion, please feel free to contribute!)
I’d like to see a book that is the play book of the successful trader. Real life play book of what works and why, more than what doesn’t work (what works for one person doesn’t for another and v v). including examples of entries, exits, where you added, lightened up all with rationale. how to find stocks to trade and what to do, when. A true advanced trader play book that can be a snap shot of a traders week or days here and there. actionable ideas and setups that you use everyday.
Sounds great!
For index futures traders (discretional and mechanical) who are busy with trend following on 5min, 15min, 30min, 60min and EOD timeframes:
How to properly test trading ideas – Development and implementation of steps for proper back testing procedure. (How good is the work of Prof. Aronson? – Evidence-Based Technical Analysis)
Detailed information on proper techniques to be used on closed and open equity curves to decide when to trade normal size; increased size; decreased size or to temporarily abandon discretional approach / trading system.
Same for mean-reversion traders who are busy on same kinds of instruments and on same timeframes.
Thanks!
Take up 10 instruments, gold/S&P/Crude etc, write your thought process for the future,what is going to happen,how you analyse,write your mind…
Please don’t write as though your audience are beginners. I have been at this for so many years and am bored how every Trading book I pick up begins from the start. I’m not knocking the importance of the basics, but do you have to waste half your pages explaining what a candlestick chart is, MACD, etc when every book out there has already done that? You should assume yours is not gonna be peoples’ first trading book. Beginners have loads to choose from already. Cant we get a book that is written for more advanced traders (most of us reading will be struggling to become consistently profitable) and rather than start all the way from the beginning we need insight on how a professional ACTUALLY operates – how he turns those basics into profits. For example, how you scan for stocks/indexes, how you zero in on the “best” candidates to trade, how you spot a potential setup coming, how you decide all the scenarios in how to attack it, how you cut a losing trade and why, how you decide the trade is working and add size to it, how much size do you add, what warning make you start exiting, etc etc. Be different – write about what YOU do. In fact, just by asking what we want in a book is a bit backwards. Would a pilot ask a student how he wants to be taught to fly a plane? If you are the expert then don’t think of pleasing us – show us what works for you!
Please don’t write as though your audience are beginners. I have been at this for so many years and am bored how every Trading book I pick up begins from the start. I’m not knocking the importance of the basics, but do you have to waste half your pages explaining what a candlestick chart is, MACD, etc when every book out there has already done that? You should assume yours is not gonna be peoples’ first trading book. Beginners have loads to choose from already. Cant we get a book that is written for more advanced traders (most of us reading will be struggling to become consistently profitable) and rather than start all the way from the beginning we need insight on how a professional ACTUALLY operates – how he turns those basics into profits. For example, how you scan for stocks/indexes, how you zero in on the “best” candidates to trade, how you spot a potential setup coming, how you decide all the scenarios in how to attack it, how you cut a losing trade and why, how you decide the trade is working and add size to it, how much size do you add, what warning make you start exiting, etc etc. Be different – write about what YOU do. In fact, just by asking what we want in a book is a bit backwards. Would a pilot ask a student how he wants to be taught to fly a plane? If you are the expert then don’t think of pleasing us – show us what works for you!
Would like to see something like the following:
1. Technical analysis in the context of market psychology. Charts don’t occur in a vacuum. What is happening in market mindset to create chart patterns?
2. High Frequency Trading-What does that look like on a chart? How to navigate thru it.
3. Other institutional behaviors that impact market—tell us their dirty little secrets.
4. Intraday wiggles, jiggles, tricks and traps set by the pros, including characteristics of open, close, window dressing, etc.
5. Inter-Market correlations, i.e. stocks, bonds, currencies, commodities
6. How global mkts affect US mkts
7. Seasonal factors