Come Into My Trading Room: A Complete Guide to Trading (Hardcover)

It was with a great deal of curiosity that I began to read Come Into My Trading Room. Trading for a Living, Elders first and classic book was the second trading book I ever read and even 40 or so books on from there I still rate it in my top five and frequently recommend it to others who want a considered and honest introduction to trading.

I was interested to see how the themes and emphasis had changed and developed in the nine years since the first book was published. I had briefly read a couple of reviews that suggested it didn't add much to the previous book but I was eager to make my own mind up.

So the first question I asked myself was what hasn't changed?
The style of writing is as clear and engaging as in the first book. The layout is logical and in all key areas he suggests further, more specialised reading to take you deeper into the subjects that may interest you. For the size of the book (only 313 pages), it is very comprehensive and covers the three main areas of competence for a trader. Psychology, Technical Analysis and Money Management. So the three pillars from the first book are still very much standing.

What is different? A great deal in my opinion. The psychology section is vastly improved. I thought that to be the main weakness in the first book, with an over reliance on the AA model which (because of my professional background I have issues with) He draws the title of the psychology section from another excellent book by Mark Douglas, again giving the impression that Elder himself has been learning a lot over the past few years.

The technical analysis section goes much less into describing basic TA than the first book did and instead focuses more on the application of TA to trading. It also includes an update on a method first described in the first book the "triple screen" and a section on systems trading and system testing. As someone who is toying with developing systems at the current time I particularly enjoyed his discussion of the distinction between systems and discretionary traders.

The book is not just aimed at day traders, in fact he lays great emphasis on people examining their own motives to become day traders suggesting that you require at least a years successful experience with end of day trading before you move to intraday trading. He does ask his readers to answer tough questions about themselves and if you are able to give honest answers you will profit greatly from this book.

He also concurs with one of my prejudices, which I am happy to repeat here, he stresses that traders should take their first steps in inexpensive markets to trade. So with futures for example trading the Eurostoxx50 at 10 euros per point is a better starting point for the new trader than Dax at 25 euros per point. He also provides a helpful method for working out which markets you can afford to trade. It is this applied aspect of the book that makes it so valuable. There is no irrelevant padding here, every paragraph has relevance.

The overall balance of the book is about perfect now. In the first book the basic TA took up a large percentage of the volume, this time the sections are much more equitable, with quite rightly, money management and record keeping getting a much more through treatment than in the previous book.

One change in this book (and I did wonder if he had read Tony Oz's wonderful "The Stock Trader") is an addition of some actual trade examples. I always like seeing these because following them through gives a real insight into the traders mind in a way simple chart examples can't.

I think there is a more cautious/warning tone about this book than the first. I suspect this might be because Elder runs trading camps and has had lots of experiences with wannabe traders since writing the first book. He's very aware of the main reasons why people fail and makes these very explicit in the text.

There is also a very good and well referenced basic description of the major trading instruments their advantages and disadvantages something that was missing from the first book.

The section for new traders (or babes in the wood) as he calls them covers the basics of setting up to trade from home, which instruments and markets to look at and the issues of commission, slippage and expenses. He stresses the importance of the bottom line and the need to keep trading expenses such as commission under control

Conclusion

This is a book written by a mature trader and trader educator, who has seen and done it all and can now give the most balanced, practical and honest description of learning to trade you will find anywhere. I highly recommend it to new traders and improvers alike.

This new book did not add significantly to the content contained in the previous book hence I have given the book 2 stars. Minimal value added.

The essence of the book is to trade with the trend but to find value points within the trend. But as another reviewer has indicated, the example trades given in the diary section do not do this. Invariably these trades are of the bottom-picking variety, albeit with the technical rationale laid out pretty transparently. One is left with a feeling of confusion with respect to whether the author trades in accordance with the main part of the book, or in accordance with the example trades given in the trading diary.

The book is broadly split into 3 areas. Mind, Method and Money Management.

The section on trading psychology (Mind) is coherent, but for a more useful insight into this aspect of trading, I would strongly recommend Mark Douglas' books, for example Trading in the Zone or The Discipline Trader.

The section on trading methods (Method) is hardly revolutionary. As I have already alluded to, if you understand what a trend is and can identify pullbacks within it, this is all that you will gain from the book. The author does however have an interesting segment on multiple timeframe analysis (what he terms the Triple Screen).

The section on risk management (Money Management) is very weak and potentially dangerous in my view. The author recommends the "traditional" per trade risk of 2% of account size. Even a rudimentary Monte Carlo analysis would lead one to the conclusion that such an approach would result in an extremely volatile equity curve. As another reviewer may have indicated, a more prudent to risk management can be found amongst the works of Van K. Tharp, for example in Trade Your Way to Financial Freedom.

Sometimes the better path to a rounded knowledge is to gain it from several sources, rather than to attempt to squeeze it all into one book.