The Perfect Speculator: How to Win Big in Up Markets and Lose Nothing in Down Markets by Brad Koteshwar

Interesting trading book.

Score: 6/10

Short review: Pretty basic, but good lessons for beginner traders. Mostly about confirming signals, sitting on your hands when the markets go down.

Summary:

There is no such thing as a sure thing. And the market in its genius way sets us all up by offering crumbs once in a while so that we keep coming back for more. Every trading system works for some small duration of time at some point in a market cycle. That is just enough rope offered to the gullible public to hang themselves. Of course, nobody wants to hear this because then they have to accept that they cannot find a short-cut to riches. And who doesn't want a short-cut to riches?

My approach is very simple. As I said, I am a simple man. I keep my operations very simple. If something is not coming out and staring at me straight in the face, then in all likelihood it is the market trying to trap me with temptations.

More money has been lost in trying to make small incremental amounts of gains than people will ever realize.

This is where staying out of the market is just as important as getting in. There will be periods where nothing looks good from a price/volume perspective. And even if something looks good, market conditions make it impossible to be successful as the market does not offer decent odds of winning. In such periods, it is very important not be active in the market. It is very important to sit back and wait and observe the market action. This is very very hard for most folks. There is always someone hyping some stock all the time. To sit back and not fall for the hype is extremely hard for most folks.

I could wait for months on end without a trade execution. I could now easily brush aside the calls I got from brokers and tipsters and rumor mongers who would hype me on the next big thing since Cisco, Home Depot or Taser. I would just pass up all these great opportunities so that other unfortunate souls could make the big bucks. I was more interested in not losing.

When in doubt, do nothing.

The machinery wants the common folks to keep buying and buying through bull and bear trends because the machinery exists to sell stocks. If no buyers can be found, the machinery has to cease to exist and that is not acceptable. Therefore, the brain-washing goes on that the market cannot be timed.

While it is impossible to pick the absolute bottom and the absolute top of a significant trend, I can definitely catch the meat of a significant move. During such significant trends, odds of winning improve substantially and my test case buys prove to me when such improved odds come about. Once proven that odds have improved, I can then seriously and deliberately expose larger commitments to the market. And I keep moving my sell-stops along an up trending and moving stock up along with its price. This way, at some point when odds of continued trend start to diminish, my sell-stops start getting hit.

It takes time for the market to establish a trend. And it takes time for the trend to be reversed. Everything in the market takes time. Learning takes time. Making gains takes time. Even losing big takes time because the market will occasionally offer small crumbs as gains to remove the fear and instill hope, greed and over-confidence. The big knockout only comes about after landing some small, significant but withstand-able blows.