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 Trade
Your Way to Financial Freedom
FULLY REVISED
EDITION
Now Available
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Trade Your Way to Financial Freedom
was originally published in 1999.
Numerous people have told me that it
totally changed their thinking about trading, investing, and how
they approached markets.
My understanding has always been that you cannot trade the markets. Instead, you only trade your beliefs about the market. For example, if you believe that the market is going to go up (or generally goes up in the long run), and you believe that trend following works, then you might adopt a trend following approach to buy stocks that are going up. However, if you believe that the market is overvalued and likely to go down, then you might have trouble buying stocks that are going up because it conflicts with your beliefs.
Everything that I said in the first
edition of this book reflected my beliefs about the markets and what
was necessary for trading success at the time that I wrote the book.
However, beliefs are not reality. Instead, they are your filters to
reality. I’ve acknowledged that for a long time, and I’ve
continually said that what I teach reflects the most useful beliefs
that I now have about the market and trading success.
Over the
years, I occasionally run across beliefs that seem to help people
even more than those reflected in the first edition of this book.
And after seven years, I’ve adopted many new, more useful beliefs.
As a result, even though most of the core concepts have NOT changed,
I still believe that enough things have changed that I can help
people even further with a new edition of this book.
Here are a
few of the major changes that reflect my current beliefs:
•
I believe that all trading systems should reflect the big picture.
In 1999, we were nearing the end of a great secular bull market that
had begun in 1982. In 1999, you could buy any high tech stock and
hang on to it for six months and perhaps double your money. However,
secular bull markets are followed by secular bear markets such as
the one that began in 2000. These tend to last for as long as twenty
years, so people need strategies that take advantage of such macro
tendencies to make good profits. The bear market isn’t bad news.
It just requires a different focus to make money.
•
My concept of expectancy in the first edition of this book was
slightly misleading and definitely confusing. I changed it in my
other books, but it is also important to make sure it is crystal
clear in this book as well.
•
I now strongly believe that systems can be thought of as
distributions of R-multiples, which you’ll understand better as
you read the book. When you understand this, your perspective on
trading systems will totally change.
•
Because systems can be thought of as distributions of R-multiples,
it’s also possible to use those distributions to simulate what
your future results might be like. And even more importantly, such
simulations will tell you how to position size your system to meet
your objectives. I’ve placed a strong emphasis on this topic in
the new edition of this book.
The two
brand new features in this book include a study of seven traders
whom I follow through five trades. Each one has the same
opportunities, but based on their individual beliefs and strategies,
what they do with those opportunities is very different from one
another.
Also, I have
analyzed the performance of nine prominent newsletters using
R-multiple distributions, and share the varying results with you.
In addition, there
are many small, but significant changes to this book that will help
you become a much better trader or investor. I hope you benefit as
much from the second edition as many people have claimed to benefit
from the first. Here are a few reader reviews from the first
edition:
"This book, and a few others, are the
type you NEED to read and KEEP. It may not have all the answers and
doesn't purport to, but as you develop your understanding of the markets,
it is this quality of information that will allow you to retain the
proceeds of your efforts. IF you think you know about risk management and
haven't read Van Tharps books - its likely that you should
reconsider." — Amazon.com reader review
"After 48 yrs if successful
trading--this is the Best Book. The best of over 200 trading books, cd's,
video's--if you have failed at trading ( the majority have ) read,
re-read, re-re-read etc this book to improve your trading."—
Amazon.com reader review
"I'd have to agree with the good
reviews on this one. Offers some unusual insights which i haven't come
across in other books. The chapters about position sizing and money
management are excellent - it's not rocket science, it's 'obvious' once
you've read it, but I haven't seen it mentioned or explained before."
— EliteTrader.com reader review
"Dr. Tharps book is one of the finest
trading volumes written in the past ten years. While some books are chock
full of hazy trading axioms and incoherent discussions of technical
indicators, Tharps book is clear and meaningful."—From
www.meta-formula.com reader review
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