Download PDF book- the art of trading refined

Rating details. More filters. Sort order. Start your review of The Art of Trading Refined. Oct 10, Jude rated it really liked it. Jul 19, Bokamoso Aphanee marked it as to-read. Oct 21, Linda Junius rated it it was amazing Shelves: forex. Powerful book. Apr 10, Solomon rated it it was amazing. Dec 04, Whitney Adams rated it it was amazing.

Life changing into financial freedom. Sep 15, Munyaradzi D rated it it was amazing. Jul 18, Segi rated it it was amazing. Good and easy. May 15, Oompoppy D marked it as to-read. View 1 comment.

Dec 05, Umthandazo Billiton added it Shelves: ref-wayne. Aug 18, Brha Kofi added it. Massive book. Oct 25, Oratile added it. So so much readable and incredible language. Oct 26, Edward Mumo rated it it was amazing. This review has been hidden because it contains spoilers. To view it, click here. The best book ever.. Journey to financial freedom.

Sep 11, Cairo rated it it was amazing. Jan 06, Emmanuel Konyeha marked it as to-read. Its going to be an amazing book. Jul 31, Yandisa Ndzimande marked it as to-read. I guess they deserve what they get. As you will learn, I deserved what I got, but for different reasons. Second, trading is an intensely personal and subjective endeavor. There is nothing else like it on Earth.

I thank God I was born at a time in history when this kind of trading exploded onto the world financial stage and I got to be a part of it. It truly is an art form. And like all art forms the result is clearly observable, but the hidden part of the artist is never fully revealed.

I wish there were some way to really do that. But I know that because no one was there, that too is part of the story. I used to think that way and probably read every book ever written on price action. If there were a Ph. But I think we all know how much most Ph. As I said, I think it has already been done. There is no easy way.

As you might discover, trading is really not about price action anyway. Lastly, I hope you experience everything that I have—all the pain, the glory, the money, the broken dreams, the unexpected joy, all of it. The markets are the absolute best place to find what you are looking for. If you truly and completely desire to become what you could be, very few places will give you such a perfect and lasting opportunity to do so.

It took me a long time to accept the lessons you could learn in these pages. It takes a lot of effort to swing a dull axe. Be wise and sharpen the blade. Each part contributes, some more than others, and they must be understood in the context of the whole. This book is not in any chronological order; it all relates to the whole picture. While reading it, feel free to skip around and take the material in any order you like.

When I was younger I would sometimes skip to the last chapter of a story to see how it ends and then go back to discover how it got that way. That is certainly one way to look at life. You might learn more that way. The raw material of your trading art is the unique part of you found within the context of the whole. No one can fully see things the same way you do. You will never see things exactly as I do. No one can take from you or me what we have paid the price to know. The only reason I have achieved what I have from the markets is because I discovered the right questions to ask and eventually had the courage to answer them.

What are those questions for you? Let me say this before getting started. Some who are close to me asked me why I wrote this book under a pseudonym. I think the answer to that will also shed some light on my experience. Some of those who are on pleasant terms might recognize themselves in these pages. Some clients might even recognize themselves. The worst part is that everything here is completely factual; I tell it like it is and how it really happened to me.

Parts are dirty. Some will be angry. Some will think I stretched the truth. Some will say its outright fabrication. I hate to say it, but trading is a brutal world. Open a trading account. Become a broker. Take heed and see ye do nothing in vain.

It began in the spring of I answered an ad in the Chicago Tribune and interviewed with the sales manager1 of a commodity-trading firm. I was very impressed. They had a beautiful office in Oak Brook, Illinois, a very affluent Chicago suburb. Everyone there wore expensive suits, the parking lot was full of German and Italian cars, the whole scene reeked of high finance. The interview was brief. They just wanted bodies.

I was given a start date with the rest of the new hires. I really believed I had scored the job of my life.

It was largely from my initial experience with this brokerage house that I chose to keep trading as a career no matter how it turned out.

That first commitment had a lot to due with how my success was measured over the years. Over time, the pressures of the trading world gave me every opportunity to quit and do something else. In fact, my family tried everything to convince me that I was out of my mind for sticking with it during the rough years. No one saw what I saw except for my mother. One immutable thing was her absolute support of what I wanted to do. Suffice it to say, at that time when I first started, the lure of money was so strong that you could have promised me a ride on the Space Shuttle to quit and I would have turned you down.

I wanted it that bad. To put this in perspective, as an Air Force ROTC student with a good academic history, I earned an Air Force Academy appointment with a good shot at the space program according to my recruiter. As a side note, there is a commercial space tourism company selling rides right now aboard a privately built spacecraft just for people who want that thrill.

Sometimes life gives you a second chance at something. The markets will always give you another chance. My first day on the job at a Midwest brokerage office went something like this: I walk in. Your job is to convince people to send money for trading. Okay, no problem. I was so excited about what I was doing I really thought everyone I called would talk to me. I believed that everyone wanted to make big money.

What made this whole experience intoxicating was that what we were selling actually happened. We were suggesting that the public buy silver. The company I worked for was marketing call options. I had scored percent on the part of the Series III that covered option hedging and speculating. I had basically succeeded at everything I had done before; why should this be any different? There was no way you could convince me that I had anything to learn.

Besides, the company was making the recommendations; they were telling me what to do. Needless to say, as long as silver kept moving higher, the money rolled in.

I ate the phone. I thought it was always that way in this business. I was making more money in a month than some people I knew made in a whole year. I felt like I had arrived in a big way. Then I got fired. The company stole my clients of course. I was told that if I contacted any of my clients I would be sued. They refused to pay me my remaining commissions—something about being covered in case of potential lawsuits. Maybe they just expected them. As you will see, this happens every day.

As I found out later, the egos of people in this business are beyond belief. Never will you meet people, as a group, with absolutely c Still, I never found out what happened or why I was let go. Or his girlfriend for that matter. All I knew was that I no longer had a job and I really wanted to be in this business.

Believe it or not, it never occurred to me that maybe every other commodity company could be this poorly run as well. As any Series III broker can tell you, every retail commodity house is run like an accident waiting to happen. You would be absolutely amazed at the sheer chaos and complete lack of even the most basic business sense. The reason? My friend had been there for years and was a top producer. If the boss was that stupid, how well could he manage clients in the first place?

How long would a guy like that last as a manager at Microsoft? How long would that guy last in any business? The Equal Opportunity people would have a field day with a racial slur like that. In the case of my friend it really was easier and more cost effective to just find another brokerage house, forget the whole thing, and move on.

Retail brokerage houses are run without any common sense at all. Tell the cops? Forget it. The constant lack of integrity really got to me over the years, as you will see.

Boy was I wrong. They had a tiny office, with steel desks, quote systems everywhere, and they let you do whatever you wanted to do. There was no organized market research, selling effort, nothing.

You came and left when you wanted. Some of the guys, who were real traders, only had one or two clients and had had them for years. What was wrong with these people? Looking back, I would give my right arm to be working at a place like that today, but at the time I was so disgusted with that environment, which I perceived as apathetic to real opportunity, that I started looking for a new house. I should mention that that owner was one of the most respected men in the business at that time and had a reputation for fair and equitable treatment of his staff, customers, and support people.

I really thought I could find the best of both worlds. I found a new brokerage house about April. My timing to reinforce this misconception was perfect. Right about then the drought of hit. My new firm was selling call options on corn and soybeans. A book of equity is the slang term used for the customer list a broker has that includes the current cash balance of each customer. A book can be any size number of customers or account deposits.

This is also called money under management or an equity run. So after my book of equity went to almost a million dollars, I took a few days off. Of course, that was the top. I absolutely believed that commodity trading was huge moves, high profits, lots of sales hype, all that Gordon Gecko stuff. Not an easy thing to do when the market is lower every week.

As the market kept moving lower, I started asking the boss what was happening. When would the market turn up again? He told me to keep selling. What about the clients who are going to lose? At that time, I just agreed because these guys knew what they were doing, right? One of the bozos working there drove a red Porsche He also brought in a gallon saltwater aquarium into the office.

He wore big rings. He really thought he was the thing. You guessed it; the company went out of business. The NFA is the self-regulatory body authorized to sanction people to work in the industry, mediate arbitrations, and generally harass or intimidate those responsible for providing access to the markets.

By the way, the first firm I had worked for was also shut down by the NFA. I had no idea how any of this would later come back to haunt me. It never occurred to me that guilt by association was a real thing that would make it harder to work in the business. I had this problem more than once. So did many others, honest and crooked alike. The funny thing was, most of the guys who worked at these companies moved on to other firms like rats from a sinking ship.

They offered these brokers huge deals to play the same show in a different town. Did it ever occur to any of them that if this technique generated lots of lawsuits, it might not be a good idea to hire these brokers?

I was on the sinking ship too. So now I was broke, having spent my huge income like a drunken sailor. After all, just get on the phone and wait for the next big haul, right? I went through a succession of companies and repeated this entire scenario over and over again for the next several years. Because I was beginning to consider that this boom-and-bust cycle might be avoidable, I actually listened to a wheat pit trader explain the concept of overbought to me. I picked up a book or two on market analysis.

Over the years I kept buying books, attending seminars, listening to tapes, and subscribing to newsletters. I spent thousands and thousands of dollars doing this. I routinely listened to what pit traders thought and what they read. It never occurred to me that pit traders might be some of the least educated people in the business. I think you will be surprised at how little that whole process can help a trader.

This period became a huge emotional struggle for me. Believe it or not, I never lied to any client about anything. I never misled them or promised they would make money.

I sold clean and really wanted them to win. I genuinely liked my clients. I returned phone calls promptly and never asked for more than a reasonable amount of money for my services.

I always did what I believed a true professional should do when he has a fiduciary responsibility—and still do to this day. However, the fact was, I was grossly misinformed about the true nature of the markets and the industry. I honestly thought the solution to this problem was more market study and finding the right brokerage house.

You have to live it to understand. Let me finish setting the stage for where and how I finally became the winner. Someone once told me that all progress in the world depends on the unreasonable man. The reasonable man persists in adapting himself to the world; the unreasonable man persists in adapting the world to himself. Therefore, all progress depends on the unreasonable man.

At this point, my career in the commodities markets had been less than spectacular. I had worked at many companies and all of them had gone out of business. All the money literally millions of dollars I had raised was also gone. I had spent all my income and was once again without a place to work or a client base of any kind.

What was wrong with this picture? Was it me? Was it the industry? I wanted to be reasonable about it, but what was the true answer? I was spending a lot of time dealing with this same problem.

I was attempting to learn the markets to reduce the loss factor but still losing all the time. I got really angry with myself, the markets, and the companies—everyone and everything. What was wrong?

The year was now But during these previous years, all the raw material for ultimate success were given to me. At the time I saw it as complete and unmitigated adversity. Even filing bankruptcy, and all the embarrassment that goes with it, was a huge stepping-stone to prosperity. When the Department of Justice subpoenaed me while I was working for a company that was doing a Ponzi scam through the legitimate markets; even that was important.

What is wrong? The years of frustration, bitterness, and disappointment were beginning to boil over. Let me draw all this together for you. Embarrassed in front of my family and friends; earning an undeserved bad reputation.

To make matters worse, watching everyone I know get on with their lives; getting rich, being in love. The women in my life lost interest in me. I could go on with all the rage, hatred, and blame. It was not the fault of anybody but me. If you are in the business, and honest, you know you have said or thought the same things. Or at least heard it from someone you work with. I was completely amazed during my period of recovery to learn that somewhere around 80 to 90 percent of people who trade lose.

The average company goes out of business in less than five years. All this despite the fact that the industry as a whole was growing faster than ever. How can these seemingly contradictory positions be true?

Where was all that money going? And to whom? Now before you assume that I never experienced these deep conflicts, or I had some kind of detached concept of what was happening c I felt completely trapped.

I could not find an answer to what seemed like a huge injustice being perpetrated and worse yet, against me personally. I actually thought that God himself was out to get me. This entire conflict was more than a war inside of me. It was literally a personal struggle between life and death. There is no doubt that if I had lost control of the last part of myself that I still controlled, I would have committed suicide. I know how those poor souls who actually kill themselves feel. It is almost impossible, even in a thousand books, to adequately communicate the emotions I was feeling.

Feelings that were so real I could taste them. Despair really tastes like burning copper and gin. No one reading this will be able to appreciate the intensity of that experience unless he has been through at least some of it.

That could never happen to me. I never thought I could get so upside down in every part of my life. I actually believed it was all about money and how money works. Remember, I have a higher I. Women loved me. My family loved me. I had friends. I made money. I was young and ambitious, respected by strangers. Then I got into the markets. Why should it be any different? This thought never went through my mind. In fact, at one point early on my little brother bumped into me on LaSalle Street and asked me how it was going.

He prayed while I cried. My entire concept of success and what it meant to be a success was turned upside down and blew out with the wind.

I felt like I was detached from the rest of the human race. I felt as if everything I c I resented the success others had and felt powerless to create it for myself. Something priceless. Still, nothing was working. I knew there was an answer. I knew I could find it.

I wanted to win. I believe it was this resolve that finally made the difference. Then I had the turning point. The rest of the book is about all the pieces that were there and how they came to fit together.

All of the chapters and sections fit as part of the whole. If you are in the business you know what I mean. The side of the business I was first exposed to was retail brokerage. I worked from an office and solicited accounts from the public—typically with a market concept easy for the novice to grasp— trades such as soybeans during a drought, cattle during the barbeque season, that kind of thing.

The interesting part is that even though the markets can be traded from the long or short side any time, and often represent more profit potential from shorts, it is very difficult to communicate this to a public client who has never traded before. Consequently, most brokers prefer to open accounts by marketing a trading opportunity from the long side. I believe the New York Mercantile Exchange NYMEX still trades heating oil only because it has so much public interest from all the brokerage houses selling it each fall.

They suggest when to enter or exit the trade, when to add to the trade, how to protect equity, and the like. During the time I was a broker, I did all of this. By doing so, I acted in the capacity of a trader. I had little knowledge of how that really worked, though, which is one reason why I created so much pain for myself. A trader, on the other hand, is entering and exiting the market under any time frame you choose with the intention of making a consistent profit. His perspective on price action has more to do with where he feels the market is at, where it might be going, how long it will take to get there, what to do if he is wrong, how much to put on, when to add to the position, whether to add at all, when to lighten up, and what to do if something changes; basically, how to profit without his head being handed to him.

This all seems very understandable until you consider that to broker an investment a trade is a completely different skill, and is no way even in the same universe as trying to profit from that trade. Stop to consider that selling a financial intangible over c Some rookies work for months and quit before ever opening an account. This often happens after a financial trauma hits them, such as getting their car repossessed.

At one company, every rookie who started got the same desk. Add to this the fact that all brokers are paid only a percentage of commissions generated and you have a very volatile income situation at its best. The bottom line is that even with a superior, never-ending-saleslead flow, the average broker has to bust his rump to bring in accounts and hope that the commissions generated becomes a decent income before he goes broke. This is why there is such a high temptation to do trades just to create a commission, which is also known as churning.

It is considered unethical and is, in fact, illegal. Since those trades are always losers, some clients do mind. If a client who allows this to happen changes his mind usually at the point of total loss , then the broker might get sued. So he settles. Or find someone who knows how to trade.

But that is too much work. Additionally, if a broker would take power of attorney on his accounts, then he could trade anyway he wants; but then the regulators assume if you do that you intend to churn them anyway. How do you do that? If you plan out a trade and call everybody, what happens when something changes?

Do you put the client in anyway, knowing he would lose or do you make all the calls all over again? Therefore, most guys just do it anyway and hope for the best. So who cares? Often, the broker has only one tape, and he just keeps recording over the old conversations. The purpose of the markets is to provide unlimited opportunity.

Sometimes that means five executions in one day, sometimes it means nothing for a week. Now consider that most clients are losing anyway. So the broker is doing two things with most of his time: trying to replace the losing clients with fresh equity AND trying to convince the loser that he should stick around a bit longer. The average commodity broker is not able to handle both on a consistent basis to keep his book of tradable equity growing every month.

This is exactly what I went through. I would raise a group of clients, put them in a trade, hold their hand as they lost, and do it all over again next month.

Then my head would explode from the pressure. I would take a break for a week or two. Sometimes I would come back to find the company shut down without anyone thinking to call me or mail me my paycheck.

This was often around the same time my personal income was gone. Add to this the pressure of looking for work once or twice a year. Is it any wonder that friends or family think you are crazy? Or that brokers drop like flies? To this day I question the sanity of some of the wives of the brokers I worked with. Why put your family through that? I saw it happen. In August the first Persian Gulf War began, which eventually created the amazing move in the crude oil markets.

At that time the markets literally went wild with euphoria. It was something truly amazing to witness. We were on the phone 18 hours a day raising equity.

No one had time to spend the money we were making. There was no end to the people willing to invest to get rich. The brokers, myself included, were paying it gladly.

It was insane. It was without a doubt one of the most unique experiences of my whole life. One day a buddy and I went to lunch for about an hour and when we returned there were paramedics taking one of the brokers out on a gurney. Apparently, this broker actually had a fatal heart attack right there in the office and died while on the phone talking to a prospective client. There is no formal process to get ready for trading. It is basically on-the-job-training.

In other professions, such as doctor or attorney, that kind of money is a given. Most of these traders blow all their equity in a short time and go back to being doctors and attorneys. Some traders start by being a floor runner, work up to clerk, and then find someone to stake their entry into the pit.

Consider that about half of floor traders are undercapitalized in the first place, and you can begin to see why trading is not an easy thing to do well. Suppose this guy is supporting a family? What do you tell your spouse when you blow out and you have to sell the house? For the typical, off-the-floor trader an upstairs trader , getting started is even easier. All he has to do is fill out an application with a clearing firm and give them a check. Then he simply calls the floor and gives his order to a trader in the pit who executes it for him.

Upstairs traders, or people who trade their own account, are no different than pit traders. They are all attempting to profit from price action. Most of the time they have done nothing more than the most basic research or understanding of what is going on. The fact is, of these two groups of traders plus the public client, about 80 to 90 percent close out their account or have it closed for them at a loss. The average account lasts about four to six months.

Where does all that money go? Some trading groups take a very professional approach to their market presence. Many large firms require university degrees, certain market knowledge, and require their traders to work under very close scrutiny. But this approach is not as common as you might think. My point is only to illustrate that the world of trading and the world of brokerage are not easily integrated. To their credit, some people realize this problem is real. Some brokers never advise their clients of anything; they simply charge a fee for doing what the client wants.

Many traders do the same thing and never trade for themselves, they just stand in the pit and wait for someone to hand them a piece of paper and simply execute the order.

I have a close friend who is always the number one or two producer in commission income to his brokerage house. He makes about c Are you ready to change your business? Order your copy Now. Than you, Your pre-order booked successfully.

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