Tuesday, September 4, 2007

You Were Born Rich Book Review

It's been almost a month since I have written another book review. In this time, I have read 5 more excellent books, which means I better get my act together before things get seriously backlogged.

You Were Born Rich, while having nothing to do with trading or investing, does belong in this section nonetheless. Bob Proctor, the author of the book, explains some ideas and concepts that you may have never heard before, that may seem far fetched, but will help you motivationally and financially.

This book is in the same category as the new book, "The Secret", which seems to be gaining popularity, and is a book you may have heard of. I have read this book as well, and I prefer Bob Proctor's book, personally.

The basic premise behind this book is that thoughts affect things. In other words, what you think of in your mind has a physical effect on the outside world. Bob Proctor calls this The Law of Attraction. Bob Proctor quotes Andrew Carnegie to help illustrate this idea:

Any idea that is held in the mind
that is either feared or revered will, begin at once
to clothe itself in the most convenient
and appropriate physical forms available."

Whether or not you believe in this law, this book is highly motivational and inspiring. This book will discuss how to set goals, develop a winning attitude, and how to develop a personality that is conducive to getting what you want.

Bob Proctor writes in a simple easy to read way, and provides many intriguing anecdotes and examples to get his point across. I highly recommend this book.

I will provide you with a electronic version of this book, legally and free, if you write a comment on this blog. Be sure to include your email address in the comment, or send it to: DannyMerkel@hotmail.com

Overall Rating:

Monday, August 6, 2007

Rogue Trader Movie Summary and Review

After watching the movie Wall Street years ago, I thought that it would remain my favourite movie of all time. Although I still feel this way, this movie, Rogue Trader, is a very close second. The movie tells the true story of man named Nick Leeson, a man who single handedly broke Barings Bank, which was one of the most venerable financial institutions in England.

Nick Leeson, who is played by the excellent actor Ewan McGregor, starts off working in Indonesia for Barings Bank, but eventually works his way up, and becomes a trader on the floor of SIMEX, the stock exchange in Singapore.

Nick's job is to trade futures and options on behalf of Baring's clients. These contracts, are traded in what is called a pit, where floor traders yell and gesticulate at each other in a large open area of the exchange. Nick hires a bunch of people to be floor traders for him, and he has to train them.

Nick explaines that futures contracts "are about timing, they're about
buying and selling at the right time."

The contracts that he and his team are trading are based on the Nikkei, the stock exchange of Tokyo. As the movie progresses, Nick accrues a relatively small loss from a trading error, and tries to rectify it by trading futures basically under his own account.

Unfortunately for Nick, the trades he makes only exacerbates the problem, and the losses only mount. Nick then begins selling options on the Nikkei, hoping to generate enough premium to conceal his losses. He sets up a short straddle, which means that he is betting that the market will not experience much volatility in the near term.

However, to Nick's chagrin, Tokyo experiences a major earthquake the next day, and the volatility on the Nikkei explodes, which means that the losses on his short straddle would have been immense.

After the earthquake, stocks did not fall that much right away. There was a sort of time delay, a sort of calm before the storm, before the Nikkei really started to plunge. This, by the way, was the exact same thing that happened to stocks in the United States during the 1904 San Francisco earthquake.

Anyway, as Nick's losses mount, he keeps betting that he will be able to trade out of them. In a desperate and futile attempt, he tries to buy enough futures contracts to actually move the market in his favour by himself.

"Come on, let's move this market!"

The market continues to move against Nick, and the losses are now in the hundreds of millions of dollars. Despite this, Nick Leeson manages to keep a straight face when talking to his superiors at Barings Bank, who at this time are oblivious to what is going on.

However, as the market slides further against Nick, the management at Barings start to clue in to what is going on. Nick now realizes that it is game over, and he and his wife try to escape Singapore, and head back to Europe.

On the flight home, Nick is spotted by the police, and apprehended. Ultimately, he ends up spending nearly five years in a gang infested prison in Singapore for unlawful trading and forgery.

What I liked about this movie was the excellent acting by Ewan McGregor, and also by the actors who played Nick's management. Furthermore, the movie is really fast paced, and really well directed.

This movies delves deep into the emotional aspects of trading. You can certainly learn a great deal by watching this movie. It will show you the danger of letting fear and greed cloud your judgement, and it will show you the price you pay for fighting the trend, and not cutting losses.

If you are interesting in trading stocks or futures, then I would say that this movie will interest you as well, in all likelihood. If you wish to see a trailer of this movie, then please refer to the following post.

Overall Rating: 10/10

Rogue Trader Trailer

Wednesday, July 25, 2007

Intermarket Analysis: Profiting from Global Market Relationships

With this ground breaking book, the author, John Murphy, has made an everlasting contribution to the field of technical analysis. After reading this book, it is clear that John Murphy is nothing less than a financial genius, which is why this is one of my favourite books of all time.

Intermarket analysis is a fairly new branch of technical analysis, so you may not have heard very much about it. However, I believe if you want to truly comprehend what moves the markets, you need to become familiar with this new field.

John Murphy begins his book with a review of an earlier book he wrote on the topic. He then discusses the significant events that happened in the markets during the 1980's, and how various markets events during that time, that seemed move independently from each other, were actually interconnected.

As you move deeper into the book, John Murphy discusses the 1997 currency crisis, and the global ramifications that had. From there, John goes into the Nasdaq bubble, and how there were signs of a peak beforehand.

The next section, which was the section I found most interesting, is about how the intermarket scene began to favour gold and hard assets after the the Nasdaq meltdown. John makes some daring predictions in his book that now, looking back, were spot on.

The thing I liked the most about this book was that it gave me a more comprehensive understanding of the markets work, and I feel that I am a better investor because of it. It made me realize that if I was not looking at intermarket analysis, many market movements would seem random, and to come out of nowhere.

Unlike most other books, there was really nothing that I didn't like about this book, which is why I give this book such a high rating.

Overall rating: 10/10

The Investor's Guide to Active Asset Allocation

The first book I read by this author, Investment Psychology Explained, was probably one of the best investment books I had read. So, when I heard that Martin Pring was coming out with a new book, I naturally went to Amazon and ordered it.

In a nutshell, the 370 pages of this book covers how the business cycle affects different market sectors, and how you can use ETFs to profit from it. This book starts off like more traditional investment books by talking about the benefits of diversification and the power of compounding.

From there, Mr. Pring gets right into the business cycle, and other cycles, such as the Kondratieff Cycle. The author then discusses how you can use government statistics to determine what stage of the business cycle you are in. Some of these statistics include: unemployment insurance claims, money supply, and industrial production.

Once you get deeper into the book, Martin Pring will introduce you to his business cycle barometers. He uses proprietary formulas derived from all sorts of government data, to help predict bond, stock, and commodity fluctuations.

Even though I think Mr. Pring's method made sense, and I can understand the rational behind this, what I didn't like is that the average person could never come up with a barometer like he has. To get this barometer, you would basically have to sign up for his newsletter, and this I did not like one bit.

The book finished off with a discussion on ETFs, and the author gives a list of all ETFs available at the time of writing. I thought this section was good, as I have always thought that ETFs made a lot of sense, and had a lot of advantages. However, all in all, I would not recommend this book.

Overall Rating: 6/10

Tuesday, July 24, 2007

Secrets to Becoming A Samurai Trader DVD

After reading Steve Nison's first book on Candle Charting, and realizing how much sense he made, I naturally started looking around to see what other work he had done. This led me to find the DVD set entitled, "Secrets to Becoming A Samurai Trader."

In this 2 DVD set, Mr. Nison states that he will go into greater depth, and cover material not shown in his books. In addition, I found out that this set covered over 5 hour of material, which made me even more excited. The only down side was the price. At about $500, I had to do some thinking before I made a decision, but I eventually decided to go ahead with it.

After watching the DVD for the first time, I knew that I had spent my money wisely. Just like with his books, Steve Nison does not disappoint. What I liked about this DVD is that Steve does not waste time covering the basic formations, but gets right into the advanced concepts.

Basically how this DVD is setup is that Mr. Nison shows candle charts through what seems to be a PowerPoint presentation, and then discusses his interpretation of the chart. From there, members of the small audience occasionally ask him questions. Steve moves through the charts fairly quickly, so once the 5 hours are up, he has gone through an awful lot of examples. To date, I have watched this DVD set about 7 times, and each time I watch it, I learn something new.

Steve Nison focuses quite a bit on gaps, or as what the Japanese call them, windows. Prior to watching this DVD, I had not fully realized how powerful gaps can be. Other terms that Steve covers include: southern doji, rising three methods, 3 advancing white soldiers, piercing lines, high wave candles, and the rickshaw man.

All in all, I have no complaints about this DVD, as I feel that it was money well spent, and that the knowledge acquired will last a lifetime.

Overall Rating: 10/10

(I have a video clip of this DVD in my blog archive)

Day Trading the Currency Market

In my previous book review I mentioned a book that was ideal for those new to the FX Market. Now, if you are more experienced, or if you have already read Profiting with Forex, then it may be time to move on to something more advanced.

That brings us to this book, Day Trading the Currency Market by Kathy Lien. This book has some similarities with Profting with Forex, but is more in depth, longer, and covers more sophisticated topics.

One of the first topics covered is the history of the Forex market. Kathy Lien goes into detail, and discusses Bretton Woods, the Plaza Accord, and some interesting stories about George Soros.

Much of this book is on fundamental analysis, and this is evidenced by Kathy's long discussion of each Country's central banking system, how different news events, such as inflation readings or GDP growth, move the FX market, and the effects and causes of capital flows. Personally, being a technical analyst, this section was not very interesting to me, but I read it anyway, since I also try to keep an open mind. Understandably, there are many people who do look at the fundamentals, so I can't blame the author for including this section.

Luckily, once you get further into this book, the author does cover technical strategies as well. This section is covered in sufficient detail, and I found some parts interesting, such as the fading the double zeros strategy.

This books wraps up by talking about the unique characteristics of each currency. Kathy Lien does not spare any details, as this section takes up about 60 pages. I found this part interesting, and I learned some new things, however, I thought this section was too long, and got monotonous after a while.

Overall Rating: 7.5/10

Sunday, July 22, 2007

Forex Trading Education Video

Since my previous post was on a book that talked about the FX market, you may find this clip interesting. Once the video is complete, you will be able to select other videos to watch. Most of these are also quite good.

Saturday, July 21, 2007

Profiting With Forex

The Forex market offers traders many advantages and opportunities that never existed before. Some advantages include: 24 hour trading, guaranteed stops, no commissions, the ability to go short with the click of a mouse, and the use of leverage without having to pay interest.

However, there are many risks involved with trading currencies, and it can be a dangerous market if you don't know what you are doing. This is why it is essential to learn as much as you can before you actually start trading.

To learn as much as you can, I would start off by reading this book. Profiting with Forex is probably the best book out there for those who are new to Forex. John Jagerson and Wade Hansen, the authors of this book, give you the information you need to know before you enter this market.

The authors start off with the history behind the Forex market and how it developed. From there, they explain all the essential lingo that make up the Forex lexicon, and then go on to describe the advantages and disadvantages of the currency market.

Once you delve deeper into the book, you will learn about the fundamental forces that drive the Forex market, such as the actions of the US Government, the behaviour of the stock market, and how gold and oil affect the currency market.

After running through the fundamentals, the book discusses what technical analysis is, and the basics you need to know to survive in the Forex jungle. Support and resistance are defined, and the authors even mention how to use Fibonacci retracements.

Finally, the authors wrap it up with some sound risk management strategies, which is actually the most important part, in my opinion. The key really is not how much you can make, but also how much you can prevent from being lost.

What I liked most about this book was the plain, and easy to understand way that it was written. Many other books on the markets fail, I believe, because they are so esoteric and recondite that the general public cannot understand them. In other words, I feel that this book ideal for those new to trading and who want to learn more about this fascinating market.

One thing that I did not like was the authors fail to really mention how dangerous currency trading can be. The leverage that is available in this market is frightening, and if you don't know what you are doing, the currency market will eat your money.

Personally, I opened an account to try it out, and within 1 month, my account was blown out. Even though I read this book, and other books on trading currencies before I started, I still lost.

I know now that the main reason for this was because I only invested $250, which was the minimum needed to open an account. This means that my $250 was controlling $10,000 (the smallest contract you can get) of investments. This was 40:1 leverage, which is way too much.

In summary, if you are interested in learning about the currency market, I would recommend this book, as it is a great place to start. But remember, learn from my mistake, and don't use too much leverage!

Overall Rating: 8/10

Trade Stocks and Commodities With The Insiders

Experienced veteran trader Larry Williams has done everybody looking for a book explaining the Commitment of Traders report a great favour. Personally, before I read this book, my knowledge of the COT report was limited to what I had learned from a Technical Analysis of Stocks and Commodities magazine article I read last summer. This book helped me expand my knowledge on the topic more than I would have imagined.

One of the first things I noticed when I read this book is Larry William's style of writing. Larry writes as though he is speaking to you in an everyday conversation, which means the book has a less formal feel to it. I liked this style of writing, especially after reading so many books that were unbelievably dry and mundane.

However, it's what the book contains that is most important, and this book contains a great deal of precious knowledge. Larry shows how you can see what the large financial institutions are doing, and how they affect the market. Larry shows many charts showing correlations to what the COT report shows and price action of commodities.

More importantly, Larry shows you how you can see what the commercials are doing. The commercials are the guys who actually use or produce a commodity to conduct their business, such as a gold miner, for example. Larry's analysis of these guys is ingenious, and I thought he made perfect sense.

One drawback to this book is that it will not help you, in my opinion, to predict stock fluctuations. This book will be more helpful to those who are concerned with commodity prices. Larry attempts to use his own proprietary method for analyzing individual stocks, but he does not share how it is calculated. This was the book's weakest section. In addition, I felt that the price was too high for a book that was only 207 pages.

All in all though, I would recommend this book to anybody interested in the gold, currency, or commodity markets.

Overall Rating: 8/10

Wednesday, July 18, 2007

The Definitive Guide to Point and Figure

After becoming very proficient in candle charting, I was a bit hesitant to learn a whole new form of charting. However, I felt that I might as well try to add another tool in the tool box, which is why I bought this book.

After reading it, I realized that I did not get another tool in the tool box, but I got a whole new box! This book, weighing in it at 1.5kg, and covering 515 pages, lives up to its title of being definitive. For the price, you get a plethora of material, as well as many full colour charts.

Du Plessis, the author, starts off by introducing the history of point and figure charting. He goes through this form of charting's evolution, and how its name came about. I thought this section was fascinating, and helped build a solid foundation before he moved on.

From there, the author goes on to describe how the charts are constructed, and he goes through numerous examples, so that it's impossible not to understand once he is finally done. Mr. Du Plessis differentiates between the various forms on point and figure charts, and explains the benefits and draw backs of each.

The section I found most interesting was the one on the interpretation of buy and and sell signals. This is the part of the book that can be used to make money in the stock market. After reading this section, I came to the realization that this form of charting can show you things that will not be evident in candle charting. It is this fact that made the purchase of this book worth it for me.

There were some downsides to this book, however. Some of the sections were just too long, and I did not believe in some of the concepts such as using counts to determine price targets. I just don't see the rationale behind this concept. Besides that, this book is very well written, and I would recommend it.

Overall Rating: 8/10

Friday, June 29, 2007

Steve Nison in Action

This is a scene from Steve Nison's educational DVD called Secrets to Becoming A Samurai Trader.