{"id":20188,"date":"2012-07-23T14:10:07","date_gmt":"2012-07-23T18:10:07","guid":{"rendered":"http:\/\/www.smbtraining.com\/blog\/?p=20188"},"modified":"2013-02-11T14:14:30","modified_gmt":"2013-02-11T19:14:30","slug":"how-to-tell-if-a-trading-book-is-useful","status":"publish","type":"post","link":"https:\/\/www.smbtraining.com\/blog\/how-to-tell-if-a-trading-book-is-useful","title":{"rendered":"How To Tell If A Trading Book Is Useful"},"content":{"rendered":"

As part of your desire to learn more and improve as a trader, you have probably checked out some books on the subject. Some of them, like Market Wizards<\/a><\/em>, are truly inspiring and excellent reads.<\/p>\n

Maybe some of them have been helpful but most likely a lot of them were bad. Similarly, if you go to a bookstore or browse online, there are innumerable books about the markets and investing out there. How do you save yourself the precious time and effort and thereby avoid a bad read ? How do you find a trading book that\u2019s useful and informative and will leave you better off for having read it? Come to think of it, why are most books about trading so bad?<\/p>\n

The core of the problem is that people who possess a profound amount of trading knowledge have almost no incentive to share it. If you were a star like Paul Tudor Jones or Warren Buffett, then you would have no financial or business incentive to write about what you knew and had learned over the years. After all, your whole reputation is built upon being an expert, with skills that are far more developed than the average investor. If you were to divulge how you do these things, that would dent the aura of invincibility that you had carefully cultivated, deflating the mystique. You might also give your competitors insights that they could use to overtake you. Furthermore, if you\u2019re a billionaire, then the potential sales for any book are hardly worth making the effort. So given that the most knowledgeable or insightful investors have little financial incentive to lay their thoughts down for all the world to see, who, in the\u00a0financial\u00a0community, would want to write a book and reveal “trade secrets” (pun intended)?<\/p>\n

For journalists or professors, the financial incentives can certainly matter. For someone who heads a start-up hedge fund, they’ll want the press or \u201cguru\u201d status that can emanate from writing something intelligent about trading. Sometimes it’s a person who has been relatively obscure but wants to reach a new audience and get his name out there. Brett Steenbarger comes to mind in this regard when he published his first book, Psychology of Trading<\/a><\/em>. It\u2019s certainly the case that people can write books because of direct personal incentive.<\/p>\n

However, most people who do end up writing excellent books about the markets do so because they get some emotional reward out of the whole exercise<\/strong>. They could be gratifying their own egos by seeing their name in the press; letting everyone see how smart they are; or they think that they\u2019re helping the world. For instance, George Soros has been quite public that he wrote Alchemy of Finance<\/a><\/em> and all of his subsequent works because it lets him indulge his desire to be a successful philosopher, something he\u2019s always wanted to do. William J O\u2019Neill wrote his books and publishes Investors\u2019 Business Daily<\/em> because he wants to help people chart a better financial future for themselves. Some renowned investors, like Martin Zweig, have written books to extol subtly their excellent returns and to explain how they did it.<\/p>\n

It\u2019s easy to take their motives skeptically. George Soros is not about to displace Immanuel Kant or Rene Descartes in the pantheon of great philosophers. Some people probably did write books just to let the public that they are that\u00a0smart. They get their emotional need satisfied at the same time that the public gets a useful read about markets.<\/p>\n

In these cases, their emotional gain is our overall gain as traders.<\/strong> For the most part, the best books written are indeed books written by the greatest investors, people like Soros, etc, who possess true mastery and insight into the subject\u2014and who have no rational incentive to share it under typical circumstances. They certainly don\u2019t need the money. In this case, their scratching of some subconscious itch is what allows to benefit. We can think of numerous examples. Let\u2019s run through a few that fit these criteria:<\/p>\n