Trade Your Way to Financial Freedom (Hardcover)

by Van Tharp (Author)
Key Phrases: market timing, judgmental biases, lotto bias, Putting It All Together, Conceptualizing Your System, The Most Important Factor (more...)

Editorial Reviews

Review
"The book is clearly written and makes generous use of practical examples and models...The principles he [Tharp] promotes for traders, if followed closely, can be applied to a wide group of investors." (Ticker Magazine ) --This text refers to an out of print or unavailable edition of this title.

Product Description

The bestselling holy grail of trading information-now brought completely up to date to give traders an edge in the marketplace

“Sound trading advice and lots of ideas you can use to develop your own trading methodology.”-Jack Schwager, author of Market Wizards and The New Market Wizards

This trading masterpiece has been fully updated to address all the concerns of today's market environment. With substantial new material, this second edition features Tharp's new 17-step trading model. Trade Your Way to Financial Freedom also addresses reward to risk multiples, as well as insightful new interviews with top traders, and features updated examples and charts.

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Product Details

• Hardcover: 482 pages
• Publisher: McGraw-Hill; 2 edition (November 22, 2006)
• Language: English
• ISBN-10: 007147871X
• ISBN-13: 978-0071478717
• Product Dimensions: 9.1 x 6.4 x 1.6 inches
• Shipping Weight: 1.8 pounds (View shipping rates and policies)
• Average Customer Review: 4.2 out of 5 stars See all reviews (169 customer reviews)
• Amazon.com Sales Rank: #9,320 in Books (See Bestsellers in Books)

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Customer Reviews

Most Helpful Customer Reviews

236 of 253 people found the following review helpful:

2.0 out of 5 stars ProTrader, February 8, 2006

By	ProTrader (USA) - See all my reviews

This review is from: Trade Your Way to Financial Freedom (Hardcover)

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.

54 of 54 people found the following review helpful:

3.0 out of 5 stars Best of breed, but not a very good breed!, January 22, 2006

By	Leon Story "amateur" (North Reading, MA USA) - See all my reviews (REAL NAME)

This review is from: Trade Your Way to Financial Freedom (Hardcover)

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.

44 of 46 people found the following review helpful:

5.0 out of 5 stars Best trading book ever written... hands down, November 12, 2006

By	Ziad Masri "Ziad Masri" (Canada) - See all my reviews (REAL NAME)

This review is from: Trade Your Way to Financial Freedom (Hardcover)

I dont usually like to write any reviews, but I felt compelled to write this for two reasons. The first, is that this book has been the single biggest influence in my trading out of anything I've ever read, and I actually bought it because of someone's review- so if someone reads it because of my review then I would have definitely done them a great service. Second, and more importantly, I really was absolutely disgusted by the many negative reviews written about this book, and I wanted to set the record straight for anyone reading them so that they wouldn't make the huge mistake of not reading this book. So here goes, but before I start i'd just like to say to those "nay sayers" that Tharp is a trader, and that what makes all of his insight so effective is the fact that he has studied thousands of traders over 15 years and came up with a model for effective trading based on what they all have in common. Then, using a scientific approach, he has quantified this model and given you all you need to know in simple terms. It's not a bunch of philosophy, but rather priceless insight which we should all be greatful for.

I am indeed calling this the single greatest book ever written on the subject of trading. Why does it deserve such high praise you might ask? To put it simply, this book explains the process of successful trading in such a way as to give u the most incredibly clear understanding possible. There are hundreds of trading books out there, and each one seems to give you the author's view on what sucessful trading is. The only problem is that so many authors hold the view that it's all about the methodology and that their methodology is the best or even only way. So u might have heard that you have to have at least a 3 to 1 reward to risk ratio to take a trade. Or u might have heard that you should always scale out to cash in profits, and so on and so on. But what makes this book so unique is that it doesn't explain trading from a methodology standpoint, but rather gives you the most flexible and open minded explanation out there. It alows u to see, for instance, that a 1 to 2 reward to risk ratio (yes risking 2 just to get 1) could be great in some instances depending on the system. It allows u to stop focusing so much on ur entries and focus on ur exits, which are truly the most important thing. "cut ur losses short, let ur profits run". U might have heard that before, but now u'll understand that all it's talking about is the importance of exits. The book also gives you an unparalleled understanding of what it takes to design your own method, whether it be mechanical or discretionary, and how to track it precisely to see if it will make u money over time. Perhaps more importantly, the exact way it defines the paramters of successful methods gives you a psychological edge that makes it easier for you to trade successfully by default. What I mean by this is that it shows you how to start looking at trading as a long series of trials that will over time make you money because they have a positive expectancy. Do u know how powerful it is just to view trading this way??? It allows you to stop wanting to be right on every trade because you know that while your method will make money over time, each specific trade's outcome is almost random and unknown. And so u focus on the big picture and find it easier to take losses and not get upset because over a series of many trades u'll be up. Don't underestimate the effec this will have on ur trading.

Apart from giving you all of these well defined ways of looking at the basics of trading (things that are all mentioned by the market wizards by the way, but often in vague and seemingly contradictory terms), the book is the single best insight into trading psychology. And here i'm not talking about simple knowing how to be "discipline". But rather, Tharp shows you in great detail how u need to think about all of ur trading objectives before u start, and how to even align ur trading purpose with ur general life goals.

In the end, the people who rated this book very low are those people that need this book the most. They are out looking for set-ups or for exact formulas on risk, instead of focusing on the foundations of trading success and building things from there. If they dont see the value in this book then I'm pretty sure they're not very successful because the keys for success in trading- which are no secret- are very precisely outlined in here. In fact, this book has cut down my learning curve by at least a couple of years. Without reading it I would have went off on so many wrong paths because I would have always been confused when seeing seemingly contradictory advice from different authors. That doesnt happen anymore though, because I have such a solid foundation about the essence of trading from this book and can easily tell when an author is simply talking about something which fits him and which I don't need to apply to be successful. In the end, the key thing you'll learn from this book is how to truly develope a methodology that fits you and to back it up with all of the other essential things required for long term success.