17 of 17 people found the following review helpful
on October 2, 2003
Book Review - Come Into My Trading Room by Dr Alexander Elder
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
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.
7 of 7 people found the following review helpful
on February 8, 2004
Alexander Elder gained well-deserved prominence for his first book, Trading For a Living. It's one of my favorite books on trading. Out of this classic came such new indicators as the Force Index, which is one of the indicators I use regularly in my chart software. I read Elder's follow-up, Come Into My Trading Room, in hopes of learning additional insights of the Force Index. While I found some new information here, I was even more impressed by the following lessons Elder shared:
1) "Some of the best trading opportunities occur after false breakouts" - I'm finding this more and more these days, which is why I actively use my Momentum Divergence indicators to separate the fakeouts from the real breakouts. Elder does a great job showing numerous charts throughout his book, laying the groundwork for the divergence examples he explains in great depth when you step into his trading room in the final chapter with many actual trading examples. You need to understand the concept of divergence to trade today's markets more profitably, and this book will be a great help in showing you how to trade divergence setups.
2) Triple Screen - Elder explains the important of using multiple timeframes, though he advocates two to no more than three time frames. The key concept is that whatever timeframe you use, you need to go up to the next longer timeframe to get confirmation. This provides the bigger picture trend to define the nature of your trades, and then you can return to the shorter timeframe and make more tactical decisions with this broader trend in mind as well.
3) Grade Your Performance - Elder actually quantifies trading effectiveness by defining the width of the channel for a stock, and what percentage of the move the trader actually captured to determine his grade. Regardless of how a trader measures his performance, it must be tracked in order to make improvements and experience constant improvement.
4) The SafeZone Stop - While I have not tested this indicator in my systems yet, Elder's SafeZone Stop looks like a more effective way to place a trailing stop than standard moving averages. The SafeZone Stop appears to adjust more rapidly to trending versus flat periods for a stock, compared to moving averages. This new technique should easily be worth many times the price of this book by itself.
5) Chapter 9: Trading for a Living - This chapter was my most highlighted chapter, as Elder covers the stages of growth from beginning to professional trader, covering a wide range of topics on trading discipline, time management, organization and developing a viable trading plan, to highlight just a few.
All in all, Come Into My Trading Room is an excellent follow-up to Elder's Trading For A Living, and I think you'll also find it a quick and thought-provoking read.
6 of 6 people found the following review helpful
on January 3, 2004
I had read and gained great insight from his first book called Trading for a Living.
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.
5 of 5 people found the following review helpful
on June 1, 2004
The book is very well written and drives home the three Ms over and over. You can't hear it enough because when your finger is on the trigger, this training will help you execute with confidence. You will not be a loser if you follow the plan. The problem is, very few have the discipline.
I have long been and investor, but I wanted to improve my exit strategies. I knew successful traders had to have great exit strategies or they could not survive very long. Consequently, I actually bought a book on trading. The book helped me with exit strategies, but also completely opened up the world of trading. While I still invest for the long term, I have set up an account for short term trading. I read the book and worked through the workbook in about three days. I already had much of the preliminary work established from my investing experience.
Within about a month, I had a trading plan that I liked and a sound money management and trade evaluation system. While I still primary invest in longer term trends, I have had a blast making numerous small short-term trend trades.
This book will help any trader who reads it with an open mind and strictly adheres to the Three Ms - Mind, Method, and Money (Management). If you are and investor, then this book will expose you to what else is going on with your markets.
4 of 4 people found the following review helpful
on January 31, 2004
Dr. Elder holds nothing back. The author shares with you a method, a system, and a technique for trading that can be applied to all markets.
This book and the study guide will take you step by step through the process of trading. If you don't have a trading plan this book will show you how to develope one. Also the author nudges you to awareness of the all important step of making the trading plan yours. If you are a novice this can be a huge hurdle to overcome without guidance. If you are a more experienced trader and can admit to yourself your result could be better, buy the book, its worth it.
Dr. Elder includes step-by-step guides for risk control, money management, record keeping and many more trading essentials that cannot be touched on in this review.
2 of 2 people found the following review helpful
on August 9, 2011
"You can be free. You can live and work anywhere in the world, be independent from the routine and not answer to anybody" - Alexander Elder
That has to be the most inspiring phrase I've ever heard in my life. Dr. Elder allows readers to understand themselves and what markets they should be trading. This book allows readers to develop discipline and realize the risk in the market while bringing to light the different trading techniques one can use in the market. Dr. Elder also stresses the importance of working within your boundaries which is money management, managing costs, risks, and determining what type of investor you are. Being a psychologist, Dr. Elder connects with readers in a greater way than just other typical investment books. He looks at the individual investor and takes into account the emotions and psychology that goes into trading. This is a good beginner and intermediate book. I would not recommend it to investors looking to get a complex analysis or quick trading tips. Rather, this book will allow you to understand yourself and prepare yourself for trading.
Great book, I have recommended it to many people interested in trading and who want to get a good start. You will not be disappointed !!
1 of 1 people found the following review helpful
on January 19, 2004
This book is a great guide to market psychology and exposes what happens to your money when you experience a loss in the market. Who gets it?
When I purchased the book (a recommendation from a friend) I paid no attention to the author. While reading the book, I sensed this was written by a PHD. Sure enough, it was. He also mentions this well in to the book. I'm skeptical of PHDs due to their "I'm always right" nature, however this author writes with an air of humility which is quite refreshing. He definitely writes like a man who's been at the market for a while.
But enough of my idle chatter, this book is an awesome guide to any type of trading. Want to buy put options because you think the market is going to turn? Read this book first!
Awesome information. A definite keeper.
on October 11, 2003
It is an exciting and wonderful book I have ever read on stock
trading! Obviously the author have not only solid experience
and knowledge background in stock, but also great skills
in teaching. The three points he made made a lot of
sense to me: mind, method and money management. Another great
thing is that the author knows what kind of mistakes newbies
are likely to make. In many cases he compared how a newbies is
likely to do and how a professional is likely to do. These
comparisons are very helpful to me.
I practiced the princples in my trading. It helps, a lot!
Following one of the introduced pattern, yesterday I
successfully caught a stock rallied 17% in one day! I am a
newbie in stock, but made real money.
One thing I don't like is the book cover. It is easily slipped
away from the hard cover of the book. So finally I just put it
The language and wording is smooth, interesting, concise and
Overall, this book has great content, is very fun to read.
on September 10, 2003
I've been through many trading books and I can comfortably say that this book is an essential study for those thinking of hitting the markets. Making it in the markets consistently is no different from making it in any other business. Yet, so few people strive in the markets while the rest get burnt badly.
Those who get burnt might be smart and successful within their own careers, and yet they fail miserably in trading. This book will explain why. What differentiates this book from other trading books is that it provides the reader with a mature and coherent angle of view for taking on the markets and staying in for the long term. The author gives what I believe is honest advise regarding entering this field (some shouldn't be trading at all).
The emphasis on the fact (and I call it a fact because it is) that making it in the markets requires having the right MIND, METHOD and MONEY MANAGEMENT is a gem that I couldn't find in other trading books. It's so simple and logical, yet I bet so few beginner traders understand and apply it.
You might need some technical analysis background for the METHOD part. For this I would recommend "Technical Analysis of the Financial Markets".
The language is clear and actually fun to read. I couldn't detect any attempts to fill space with unnecessary material. I can see that the book was well researched and given enough time to develop into a classic.
on June 12, 2003
Once and for all there is an author that understands the difference between trading and gambling. For eleven years I have been trading futures as an investor and a broker. The three M's that Mr. Elder discusses, Mind Method Money, have been the cornerstone in my trading and the trades of my clients. Mr. Elder's psychology background puts to rest the antiquated "perfect market" theory once and for all by cleary showing the difference between theoretical preparation of traders and their actual actions. This is why everyone seems to get in at the top and out at the bottom, actions and poor psychology. ... Mr. Elder sites the primary issue at stake, discipline. Lack of discipline is the sole reason for money losses. If you have no other book in your investing library, this is the one you need to have.
Recently I was contacted by Mr.Elder and I was thanked for my reviews. He then went on to send me the companion workbooks for both of his books. This graciousness was impressive and I suspect that I am not the only one who has had that experience. This is a man who believes in his ideas and concepts, we should all have such faith in ourselves.