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335 of 375 people found the following review helpful:
2.0 out of 5 stars
ProTrader, February 8, 2006
Out of kindness I have chosen to rate this a two-star publication. There are a few, very few, useful statements here for traders.
What else would one expect from a person that does not trade? Merely talking with successful traders does not imbue one with trading wisdom.
Like all of Tharp's work, from what I have seen, the title belies the content. That is, little to no worthwhile content, but a captivating title. Anyone that honestly believes themselves to be credible enough to write a trading book that can deliver "Financial Freedom" that has never traded professionally should not be believed. It would be similar to seeking advice from a homeless person about becoming a billionaire.
Another credibility issue for me with this author is that he is now hawking "No Money Down" and "Get Rich in Real Estate" tapes, books, seminars, etc. I would speculate that Tharp would sell widgets, or, at a minimum, books about widgets, if he believed there was money to be made.
I find it impossible to believe this person could ever be a credible source of information about trading! His trading resume consists of ..., well nothing, except the idea of how to make money by writing words on a subject he knows nothing about.
Many more useful, credible books exist that will help in attaining real financial freedom. Brett Steenbarger is a trader and has produced good material on the psychology of trading, and Mark Douglas, even though he does not trade, has produced more interesting and valuable books.
The most useful advice, read books about trading that are written by traders, and read reviews written by people who trade every day.
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106 of 116 people found the following review helpful:
3.0 out of 5 stars
Best of breed, but not a very good breed!, January 22, 2006
Dr. Tharp's book is head and shoulders above most popular investment books, and I heartily recommend it to anyone who is not a professional trader but is interested in managing his or her own investments at the level of individual stocks, bonds, options or futures. Why then only a three-star rating? I explain below.
The first three chapters, on individual psychology and biases, is non-technical but essential. The middle chapters, especially Chapter 5 which contains introductions to various styles of trading (supplied by various professional traders), are moderately informative and quite entertaining. The third part, the core of the book, primarily on money management and exits but with sections on setups and entries, is as good as you're likely to find in the popular literature of the subject. All the same, this is a maddening book with all the vices of its type Some examples:
. The cute metaphors and examples ("Holy Grail", "Snow Fight", "Marble Game") are are well chosen and probably motivate some readers. They are not mere filler. But they are elaborated at the expense of more precise information on the statistics of posiion sizing, the testing of trading systems, and so on.
. The much-vaunted "expectancy" turns out to be nothing but the ordinary mathematical expectation of probability theory, applied to the result of a trade or series of trades. The use of a coined meaning for an uncommon word may prevent some readers from finding further information in the general statistical literature. The discussion of this concept in Chapter 6 is just imprecise enough, and the examples in Chapter 12, trivial enough that the reader may be encouraged to purchase Dr. Tharpe's home-study course or take one of his seminars in search of clarification. Why do I think this is probably intentional? Because it is typical of the whole genre! On the positive side, the book is not riddled with advertising---something I can't say for most introductions to trading.
. The essentially mathematical and statistical nature of position sizing is watered down to an unconscionable extent, and what's there is presented with great fuss and fury but in a shallow and confusing manner. My seventh-grade teacher would have hit me with a ruler if I'd used the expression "divided into" (despite its retention in the COBOL programming language---presumably to cater to business programmers with sixth-grade educations).
. It's unconscionable that a a book which emphasizes risk management and position sizing should contain no reference at all to the most frequently encountered derived statistics. Not even the Kelly formula nor the Sharpe ratio are mentioned. But these require first-year high school algebra and a tiny bit of knowledge of statistics (means and standard deviations).
. The book contains no verifiable results of the statistical modeling of any of the described trading or sizing system components. Indeed, for the most part the descriptions are so broadly drawn that no such evidence would be possible.
. At least there's a decent bibliography, which includes Ralph Vince's books. These contain some of the statistical details. But I don't see a standard text on investments such as Bodie or Sharpe listed. Again, it seems to assume that the prospective trader is a sixth-grader, certainly not a candidate for business school, or even for the trading floor.
. This is a McGraw-Hill book, not the product of a "vanity" (or greed?) financial publisher. Yet there are dozens of editing errors. It appears to have been proofread for style and sentence structure, but by someone completely ignorant of the subject matter. P.184: "...O'Neil's criterion being an increase of 70 percent..." (where all three versions of O'Neil's CAN-SLIM method give 20%). P.185: "A stock in the top 75 to 80 percent would probably be one to consider..." (here the author---or proofreader---seems to invert "20 to 25 percent"). See also the inversion of "winners" and "losers" on p.148. There are too many instances of this sort of reversal to list in a review. Would I trust this man with my money? It's doubtful. The frequency of spelling errors is also rather high for a professionally-produced book.
But I repeat: This is absolutely the best popular book on trading of the half dozen that I've selected and read. It deserves most of the plaudits given it in other reviews. Traders would do well to peruse it. I hope they will also be cognizant of its limitations.
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39 of 40 people found the following review helpful:
5.0 out of 5 stars
Even with its flaws, it's the best best best, May 27, 2001
By A Customer
What makes this book so good? It tells you how to build a real trading system. In the process, it exposes the prejudices and assumptions that cause people to lose money. For example: most people think that successful trading is a matter of picking the right stocks. Believe it or not, this belief sets you up to fail. Before reading this book you would probably rank as most important: (1) knowing when to get into the market; followed by (2) knowing when to get out of the market; (3) knowing how many shares or contracts to buy/sell; (4) understanding the psychological factors involved. The book makes a strong case that this ranking is exactly backwards! In other words, when it comes to trading it reverses your entire worldview. (It certainly reversed mine.) Some of these ideas are common, but Tharp tells you *what* and *how* to do. Not on the level of "here's a great trading system," but on the level of "here's how you *make* a trading system", oh and by the way, here's why you *need* to make your own system." That's a huge, huge difference, and other books on the subject are shallow by comparison. The book does have problems. The writing and organization are uneven. Many passages are magnificent, others are cluttered or confused. Tharp is not a very good technical writer; technical details appear to be his weakness in general. Nor is he a good judge of others' writing (the worst parts of the book, especially the gobbledygook on neural networks, were written by other people). All of Tharp's writing that I have read suffers from poor editing. A first-class editor would have turned his first-class material into a first-class book. Instead, what we have is third-rate editing and first-class material yielding a second-rate book. It's a crying shame. However, the book still deserves more than 5 stars. Tharp shines at explaining the key concepts behind successful trading -- and this is the area that matters most -- and at this he is the best.
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