Article Review – Stop Reading Trading Books

Investor Monkey - Book of Investment

Came across this article on Yahoo! Finance today and since I feel that I find it useful, thought I should just share it with all of you here.

Just to summarize on what the article is all about. The article is written by Lionel Yeo with the title Trading Books: 3 Reasons Why You Should Stop Reading Them. In the post, Lionel had mentioned three points (obviously due to the title of the post) why he feels strongly that why people should stop reading trading books and here are the reasons.

  1. Trading does not work for most peopleAlthough trading is a quick way to earn big bucks and indeed it was a very attractive instrument to get-rich-quickly, trading does not really work for most of us. Why? In Lionel’s article, he mentioned that by trading in any markets (forex, commodities, bonds, etc), any traders are playing with big players who are out there, with all the information they will need to trade against you.Personally, I feel the same too. Ultimately, the whole trading system is just a system of “zero sum gained“. To earn money, some one has to lose it. Money is always transferred from one account to another.

    I do think that it is not just the big players that are trading against you. Psychology is also against you. To these big players, losing a few thousands is just peanuts to their account while to the small traders, it may be a tenth, half or even everything in their trading account. If the small traders makes a small mistake and loses the trade, psychology will kick in telling him that he cannot afford to lose more and stopped trading totally. Worst still, he will start to bet with his trades causing him to lose even more.

  2. Everything You Need Can Be Summarized Into a Few Broad TermsTrading books are not completely useless. They do teach the readers a few things, including human nature, psychology, fear and greed. These are very useful “teachings” everyone should pick up when dealing with trading or investing. However, the problem with majority of the people who pick up this kind of book will usually flipped, almost immediately, to the section where it teaches the reader the tactical aspect, hoping to find a holy grail in trading.
  3. There Are Better Ways to Get RichMost of the people who succeeded in trading right at the start will often think that they have found the correct techniques/skills they will need in their trading and will jump straight into trading as their career. Maybe they will find success? But most often, these people will tend to start giving up that career they had always wanted.Trading success does not equate to finding the right combination to success in the long run, and most often than not, luck usually plays a part in telling these people they can do it and they should do it.

    Truly successful people become rich by adding massive value to the world.

    I do agree totally with what Lionel had said in the article. To be successful in life, we have to excel in what we do that will add massive value to the world (condition). How many successful examples are there out there in this world we live in, who are purely traders? We can see from some of the big names, including but not complete, Warren Buffett (investor), Mark Zuckerberg (internet entrepreneur), Steve Jobs (entrepreneur), Li Ka-shing (business magnate) and the list continues… These people added massive values to the world, thus making them successful.

    One can be successful in their trading career (cannot name any not because I do not respect them but I really do not know any, apologies) but personally I feel, they are only successful in their own life. They do not add values to the world. Yes, there may be a trader who donates huge amount of money to make this world a better place. However, I would classify him as a philanthropist then.

Had once aspired to be one of the trader-wannabes, I had burnt my fingers trading different markets (forex and cfd) and learnt the hard way to start my journey to become an investor. I do agree with what Lionel had mentioned in his article and would highly recommend all of you to read the article for yourself.

A last quick quote from the article:

So stop wasting your time searching trading books for the perfect tactic. Get out there, talk to people, pick up a skill, put in the work, and above all, add massive value. Life will be way more fulfilling that way.

The article was posted on Yahoo! Finance and the author’s own blog, cheerfulegg.

Leave a Reply

Your email address will not be published. Required fields are marked *