How I Trade Stocks (ePub)

How I Trade Stocks is a distillation of everything I have done right and wrong under a variety of market conditions. During my lifetime, I have read at least a couple of hundred books on stocks and commodities in search of any kind of investment insight. Like many of you, I have been consistently disappointed. Having had this experience, I know with certainty that How I Trade Stocks is the first book of its kind. In essence, it is a financial ecosystem for investors who want to implement a prudent investment process for increasing wealth with less risk.

How I Trade Stocks was written for investors who want to take charge of their portfolios and are willing to spend the time to learn how to manage them. It will greatly benefit investors who have little experience and who currently do not possess an overall framework and analytical method for investment decision-making. It also will help investors who take a passive approach with investing but are concerned about performance and risk management.

The first goal of the book is to provide parameters, guidelines and rules to aid decision-making and create an organizational structure within an environment of 100% uncertainty. The second is to give readers (YOU) a realistic view of investing devoid of wishful thinking. Integral to this is to understand how many Wall Street platitudes work against investors'(YOUR) best interests.

Most books on investing tend to be chock-full of bromides and worn out generalities, a common complaint of books on the market. How I Trade Stocks is the exact opposite. It provides data, tables and charts to make points clear to investors. These provide a framework for making better decisions. When investors take control of their stock selection and position management, they increase the probability of outperforming. However, this requires dedication to the process set forth in the book.

One central premise: it is mandatory for investors to control losses to outperform. In short, the key to improving returns is by not losing, or losing minimal sums. Readers are shown how to do this. While the importance of controlling losses may be obvious, most investors don't, professionals included. Very few books address this critical topic with any specificity. However, there is much more to the book.

Equally important if not more so, is the understanding of psychological traps (behavioral economics) that cause investors to act against their self interest, e.g., "I will sell when the stock price moves up to breakeven" and the investor habit of buying stocks in downtrends. The book shows how to avoid these traps in the first place. It also cautions readers about the hazards of clinging to company narratives promoted by CEOs, CFOs and the financial media to justify holding losing positions. These have caused countless investors to lose money unnecessarily. In summary, the most effective way to counteract behavioral biases is for investors to have a system of trusted do's and don'ts to avoid making major mistakes. They are analogous to gauges on dashboards that flag navigational and maintenance problems.

How I Trade Stocks is a no-nonsense, practical method to achieve superior returns with less risk. It is supported by data, tables and dozens of charts which gives readers insight into the ever-changing dynamic of supply and demand for company shares, the key driver of price discovery. It details investment frames of reference to guide readers through market environments that are at times complex and confusing.