Trade Your Way to Financial Freedom

What Hacker News says

1. ScottBursonJun 2015
   BTW, the above is a very very brief summary of Van Tharp's book Trade Your Way to Financial Freedom [0], which I highly recommend to anyone interested.

   [0] http://www.amazon.com/Trade-Your-Way-Financial-Freedom/dp/00...

   thread
2. brcFeb 2015
   I once set down this path but stopped.

   Your big problem is that the future market doesn't look like the past market. There is a statistical error inherent in excessively curve fitting past data. You could develop a system which says you'll return 25% per year and then lose 100% in he he first six months. So don't fall into that trap of excessively back testing.

   What you should be spending time is your money allocation algorithms - the very same set of trades can return high amounts or wipe you out depending on what % of your trading equity you allocate. This is something you can test - by simulating actual trading returns - both upside and downside.

   I'm not sure if you're looking for trading advice or development advice, but I woudo recommend these books while you are doing system development:

   - http://www.amazon.com/Trade-Your-Way-Financial-Freedom/dp/00... - trade your way to financial freedom by Van Tharp

   - the entire 'market wizards' series (http://www.amazon.com/Market-Wizards-Jack-D-Schwager/dp/0887...) - there are three (or four?) books in the series, all are worth reading.

   The final problem is designing a system which you truly understand, which you are sure gives you an edge. And which you are willing to stick with if there are periods of high drawdowns.

   Also remember you are up against people with very deep pockets and huge computers and phd guys working on there same thing.

   It's a great intellectual puzzle and a worthy challenge, but make sure you know what you are getting into.

   Show morethread
3. rl3Feb 2015
   This is spot on.

   Like the parent commenter, I was also on the same path and stopped. Despite diving into the topic for over a year, I came to the sobering realization that I had insufficient starting capital to properly manage risk.

   Standard commission fees will eat you for breakfast trying to exercise a 1% (position) risk model on an insufficient amount of capital. Things like Robinhood[0] unfortunately didn't exist back then.

   As far as books, Trade Your Way To Financial Freedom cannot be praised enough. Though I usually refrain from mentioning it because the title has this get-rich-quick vibe, it's nothing of the sort. Van Tharp was (and for all I know, still may be) the world's premier trading psychologist. The book drives home the concept of risk management in automated trading systems like no other, especially remarkable considering when it was written.

   The Market Wizards books, at least the first two, are pretty much required reading.

   The only book I might add to the list would be Reminiscences of a Stock Operator[1]. While admittedly I didn't find it as useful as the other books, it's still a good read and widely considered to be the seminal book on trading.

   [0] https://www.robinhood.com/

   [1] http://www.amazon.com/Reminiscences-Stock-Operator-Edwin-Lef...

   Show morethread
4. brcApr 2010
   The first thing to do is decide whether you really want to invest the time and effort into learning. Realise that the people you are playing against are professionals who do it all day every day. That's not to say you can't develop an edge and beat them, but don't assume you can walk in with no experience and set the world alight. Nobody here would expect a novice programmer to sit down and write the most awesome web app in a weekend - the same principle applies.

   In this thread I've seen 'day trade', 'don't day trade', 'index funds' , 'don't do index funds'. Realise that all this advice is contrary, and only applicable to the specific people providing it. What matters is finding something compatible with your belief system, not twisting your mind to try and accept somebody else's belief system. Because when the pain and stress arrive, if you're not fully aligned with your strategy, then you're going to make the wrong choice.

   Once you've decided you're going to put some effort in, then you need to work out a strategy that aligns with your personality. This needs to evaluate things like:

   - your risk tolerance

   - your expectations of returns

   - your starting capital

   - your analytical skills

   Everyone is different, and the only people who succeed are ones who find an approach that works for their personality, and then take the time to get rid of their mistakes.

   As for books, here's what I recommend:

   - Intelligent Investor by Ben Graham - the take away in this book is the 'margin of safety' concept

   - Trade your way to Financial Freedom by Dr Van Tharp - the take away in this book is that active management by position sizing and risk setting dictates more of your return than your actual strategy.

   - Market Wizards, The New Market Wizards and the Stock Market Wizards, all by Jack Schwager. These books are all a series of interviews with top traders in commodities, currencies, funds, stocks and probably something I've forgotten. By understanding how an incredibly diverse set of traders have made astounding returns in the same markets should make you realise that there is no one approach that works, there are only approaches that work for specific people.

   Good luck, and pray your first trade is a failure, not a success. Because you need to learn the pain of loss and how to minimise it before you taste the sweetness of profit.

   Show morethread
5. steveplaceDec 2008
   There's a ton of financial blogs that would help you get started, and those can be more valuable than books. The ones I read are on my blogroll at investingwithoptions.com

   Read Van Tharp's Trade Your Way to Financial Freedom it's a must... teaches you that the entry is not important. It's the position sizing, risk management, and the exits.

   Also: - Options as a strategic investment

   - Mind over markets

   thread
6. wildwoodDec 2008
   Anything by Van Tharp. He trains traders at all levels for a living. My personal favorite is "Trade Your Way to Financial Freedom".
   thread