Sell and Sell Short (Wiley Trading) (Hardcover)

by Dr. Alexander Elder (Author)
Key Phrases: sell short, trading diary, short interest ratio, Manage Risk, Force Index, Keep Records (more...)

Editorial Reviews

Product Description
In Sell and Sell Short, Dr. Alexander Elder examines one of the most overlooked aspects of trading and reveals how you can protect and profit from your trades by exiting them the right way. Throughout the book, he explains how to set profit targets and stop-loss orders prior to entering any trade. He also shares real-world examples that show how to manage your position by adjusting your exit points as a trade unfolds. Along the way, Elder also addresses short selling.

From the Back Cover
Sell and Sell Short

Selling is the hard part of trading. If the stock we buy rises, when do we take profits? If our stock falls, when do we bite the bullet and exit the trade? If our stock stagnates, when do we say enough is enough and move on to another opportunity? Every serious trader must make these decisions.

Beginners and amateurs invest the bulk of their time in looking for new trades. Many become pre-occupied with finding some magic combination of indicators that will always identify good stocks. They assume that if they get the entry right, the trade will take care of itself. Professionals, on the contrary, understand that monitoring the reward-to-risk ratio of an open position and exiting at the right price and time is absolutely fundamental to their success.

If perfection is possible anywhere, it is certainly not in trading. No one can consistently pick the absolute tops and bottoms. Good trading means taking reasonable profits and limiting losses. Reaching for extremes is not a viable long-term strategy. Leaving some money on the table is a normal and even positive thing. When it comes to profits in trading, the power word is "enough." A mature trader knows when to exit.

In Sell and Sell Short, Dr. Alexander Elder explains how to set profit targets and stop-loss orders prior to entering any trade. He shares real-world examples that show how to manage your position by adjusting your exit points as the trade unfolds. Specifics include:

• How to control risk by linking the placement of your protective stop with your money management and position size

• Where not to put your protective stops

• Why using moving averages as profit targets works well in the early stages of an upmove

• Why channels or envelopes are better targets when you are riding a trending stock

• How to use support/resistance areas for profit targets and stop losses in long-term position trades

• How to adjust your targets when market conditions change or your stock blows through the initial profit target

Stocks go down as well as up, but most market participants only go long—effectively throwing out half of their profit opportunities. Dr. Elder shows that stocks tend to fall twice as fast as they rise. This provides great opportunities for faster profits in selling short, but calls for different strategies than when trading from the long side.

Shorting—profiting from market declines—is one of the favorite games of market professionals, and they account for the bulk of shorting in most markets. Whenever you see a situation in which the mass of amateurs is crowding one side of an issue, while the more experienced and better capitalized professionals are on the opposite side, ask yourself—which side is more likely to win? That is the side of the market which you want to be on.

It pays to run your trading account like a hedge fund, with some long and some short positions at any given time, shifting their balance as your view of the market changes. Being comfortable with selling short allows you to wrestle with the market while standing on both feet. This is a much more comfortable position for a battle than standing on only one foot—only going long.

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Product Details

• Hardcover: 250 pages
• Publisher: Wiley (May 5, 2008)
• Language: English
• ISBN-10: 0470181672
• ISBN-13: 978-0470181676
• Product Dimensions: 9.1 x 6.1 x 1.1 inches
• Shipping Weight: 1.5 pounds (View shipping rates and policies)
• Average Customer Review: 4.1 out of 5 stars See all reviews (24 customer reviews)
• Amazon.com Sales Rank: #33,498 in Books (See Bestsellers in Books)

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Customer Reviews

Most Helpful Customer Reviews

61 of 64 people found the following review helpful:

5.0 out of 5 stars Every trader needs to read this book, May 17, 2008

By	Steve Burns "Life long learner" (Nashville, TN) - See all my reviews (TOP 500 REVIEWER)

If you are searching around on Amazon for a book on trading stocks then look no further, this is it. I have been a successful trader for years and read over 85 books on trading, in my opinion this is the best. While as the title suggests it teaches when to sell your stocks for profits, and also does the best job I have seen on explaining short selling and when technical indicators show to short. This book is a complete book for any trader. The main lessons of this book is when to lock in profits and exit a trade using a target, and how to double your potential for profits by not only buying stocks but also selling stocks short and buying them back at a lower price for profit. Professionals sell short because while overall the stock market drifts upward, when a stock falls it falls over twice as fast as it rises. I sell short and it is a powerful tool when used correctly. This book will show you when it is appropriate to short.
Dr. Alexander Elder is the only author I am aware of that integrates trading psychology, money management, and record keeping into one book. These three factors will determine whether you are successful in the market or not, even more than the trading method you choose.
You will learn the three great divides in trading, technical vs. fundamental, trend vs. counter trend, and discretionary vs, systematic. The author follows a discretionary strong technical approach trading counter trend for the most part. However what you learn in this book can be applied to any type of trading. The authors own technical approach uses prices, volume, exponential moving averages (13 day, 26 day), envelopes, MACD, and force index. Limit your tools to no more than five, more is less, any more just causes confusion. The main method you will learn in this book is using the moving averages as a technical base for agreed upon value and buying at the lower edge of the envelope and selling at the high edge of the envelope when you have favorable MACD and force index agreement, or buying at value between the EXP MAs.
If you are going to be a trader you must follow the money management suggestions in this book. NEVER risk more than 2% of your total equity on a trade, and if you lose 6% of your equity in a month you must stop, clear your head and start back next month. If you follow the 2% rule from the book, it will be a major life lesson in your trading and save you a ton of equity draw downs.
Your long term success as a trader is determined by your ability to learn from your mistakes and not repeat them. The best way to do this is to keep detailed records on a spreadsheet and charts of each trade and a diary of why you traded. You must look squarely at each loss and win. If you learn from each bad trade and limit your loss to less than 2%, it can turn into a long term positive.
This review only scratches the surface of this great book. It is packed with very helpful principles, real trades, humour, and is just outstanding. I really grew as a trader from reading and implementing Dr. Elder's best selling classics "Come into my trading room" and "Trading for a living", but in my opinion this one is the best, using exerpts from his past books to build an even more complete picture. If your dream is to trade for a living or just trade succesfully this is the book to buy.

32 of 34 people found the following review helpful:

5.0 out of 5 stars Another tour de force ! , May 11, 2008

By	J. F. Gunter "NothingIsSimple ..." (St. Louis, MO (show me state!)) - See all my reviews (REAL NAME)

Why the book's title? - Traders love to buy, but hate to plan when to sell. (Spontaneous selling in the heat of trading does NOT work out well.) Dr. Elder's new book has great ideas and examples of how to set stop-losses, how to define sell-targets, when to "cut-and-run" from a stale trade, and how to sell short. But there's much more to this succinct book.

It's also a complete review of Dr. Elder's trading approach, as it has evolved over his career. More than a "cook-book", it's like being in the kitchen with Dr. Elder and his trader colleagues as they plan, implement and document a series of trades.

His perennial themes are present: hope is not a strategy, so plan your trades; every trader must develop a style that suits his or her own personality; show me a trader who keeps good records, and I'll show you a good trader.

These themes come alive in this new book, perhaps because they are spelled out so clearly and succinctly. They feel achievable.

Of course, getting there is a process. I've studied Dr. Elder's books for 5 years, participated in his "webinars" and a week-long "traders camp". I'm here to say he's not peddling dreams (like so many trading "gurus") but offering up the tools he developed over 20+ years of becoming a top trader.

Dr. Elder's new book has given me renewed energy to make changes and take my trading to the next level.

32 of 36 people found the following review helpful:

4.0 out of 5 stars A Look at the Art of Selling, May 14, 2008

By	Craig L. Howe "The Pointed Pundit" (Darien, CT United States) - See all my reviews (TOP 500 REVIEWER)    (REAL NAME)

Determining when to sell or cover are the most difficult decisions I face when trading. Lacking a sound plan, I find myself relying on instinct and emotion, often to my detriment.

In Sell and Sell Short, Dr. Alexander Elder--a trader, teacher, and practicing psychiatrist--addresses this issue. Not since Justin Mamis' When to Sell: Inside Strategies for Stock-Market Profits, has there been such a comprehensive discussion of the art of selling.

Elder provides practical strategies. He discusses the selling process from a variety of angles: technical, fundamental, and psychological. Unlike Mamis, who during the period we were both employed by the same firm seemed to be a perpetual bear, Elder is disciplined and analytic in his approach.

I found the chapters "Selling at a Target" and "Selling on a Stop" to be particularly insightful and provocative. Elder punctuates his thoughts with illustrative charts. They are both readable and printed in color. No doubt this adds to the book's expense, but the clarity they add more than compensates.

Dr. Elder has penned some great books. Unfortunately in this one, he opted to include wholesale sections of them as adaptations. Reading this book is often like a W. E. B. Griffin novel, much time is spent re-hashing the past. This practice, no doubt, makes the author's job easier. Yet, the purchaser is left to question why he or she is paying for information that pads to the book's length and adds virtually nothing to the author's point.

Despite its flaws, this book fills a gap in the literature of trading. It is well-written, skillfully edited and beautifully illustrated. Traders of all levels will benefit from its insights.