As part of a big set of questions submitted by a reader (I’ve mentioned how that seems to happen quite a bit) there was this specific inquiry regarding The Essentials of Trading.
What is the key or important concept(s) covered in Essentials of Trading (ET) ? Do you revealed any trading setups or methods for any specific markets? Can the concepts taught be applied into any trading system/methods etc.
If I were to put it into one sentence, I would say the key concept of The Essentials of Trading is developing a strong trading foundation.
Keep in mind that I developed the book based on my work teaching trading to college students. I needed something (at least conceptually) with which I could help them develop their basic knowledge and skills. Since I couldn’t know what market or methodology they would each end up gravitating toward, what I focused on instead was the base knowledge set which is applicable across all markets, timeframes and styles. That is, to my mind:
- Practical knowledge of trading mechanics
- An understanding of how and why prices move
- Introductory knowledge of market analysis methods
- A grasp of risk manangement importance and methods
- The ability to put together a personalized trading plan
- The ability to develop and evaluate trading systems
- A basic idea of the impact of trader psychology
I did not write The Essentials of Trading to present a specific trading methodology. The book does include a sample trading system which was exploring in the section on system development and evaluation, but that wasn’t intended as a suggestion in any way.
There is also an appendix which outlines the main structure of the plan I personally use for trading the stock market. Again, however, that was intended more as an example of a fully developed trading plan, not as a specfic recommendation.
The thing I repeatedly attempted to drive home in the book was the view that trading is a very individual thing. It’s not cookie cutter. What works for me will not necessarily work for you. Each trader needs to look at things from their own perspective in developing a workable trading plan. It’s that middle part of the book which I think is actually the most important.
By the way, The Essentials of Trading Course has as it’s foundation the contents of the book, but the video format allowed me to do some things (like provide real life in-action examples) that can’t be done in print. There are also several additional items added to enhance the overall education experience.
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About the Author
John Forman, author of this blog, has traded for more than 20 years, is a professional market analyst, and authored The Essentials of Trading. He is an active participant in trading forums, consults for trading related businesses, as published literally dozens of trading articles, and has been quoted in a number of books and in the media.
** See John’s full bio.
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