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The Layman's Guide To Trading Stocks Hardcover – October 1, 2010
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From the Author
In early 2008, I was inspired to write this book after seeing a good friend needlessly lose a lot of money. Initially, it was only intended to change the way the average Joe thought about Wall Street. My goal was to help investors avoid the common pitfalls of following conventional wisdom and to protect them from counterproductive urges of human nature itself.
As I watched more and more people lose money in one of the greatest bear markets in history, I felt compelled to add more and more information. The basic book that I had envisioned soon ballooned into much more. It dawned on me that in order for the average person to survive the markets they must learn to think more and more like a trader. What started out as a very basic beginner's book developed over two years into a complete guide for trading. If that makes you wonder whether this is an overly complicated text, you can put your concerns aside. My approach is a very simple one.
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Top customer reviews
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Charles Kirk’s highly rated blog The Kirk Report had recommended Dave Landry’s book as “one of his all-time favorites.” Purchasing it was “a watershed event” for me. Landry’s assumptions and strategy were compelling because of what I had discovered through my own, painful experience. For example, money can only be made when stocks trend, therefore follow the trends--do not buy and hope; often little correlation exists between a company’s fundamentals and its stock price, hence price must be central to a trader’s analysis; stock prices that appear cheap can often get much cheaper, therefore don’t try to “bottom pick”; always use stops to control losses; no one can consistently predict future market direction, therefore, don’t try--only follow the price action; hedge your bets by trading for both short-term swing moves, and longer-term big moves where the real money can be made.
I discovered The Layman’s Guide to Trading Stocks to be an excellent handbook. In thirteen chapters (about 172 pages), Landry presents clear, user-friendly explanations and illustrations of each component of his versatile methodology. His themes include the dangers of conventional Wall Street “wisdom,” using price analysis to “read the mind of the market,” trading both sides of the market for both short-term and long-term gains, identifying healthy trends and entering trades using pullbacks, managing your money and limiting losses, gaining insight into your own trading psychology, the dangers of micromanaging positions, and advanced techniques of trading. The book is peppered with instructive anecdotes and memorable phrases, such “plan your trade and trade your plan,” “obsess before you enter a trade, not afterwards,” and “trade the best and leave the rest.”
Although The Layman’s Guide is not quite a complete guide, since there is little discussion of equipment, software and workstation setup (and no index), nonetheless it presents a highly compelling, straightforward, “blueprint for success” in trending markets. Any trader, but especially the aspiring novice, will accelerate his learning curve and be saved from “a multitude of [trading] sins” by purchasing it, then digesting Landry’s theory and practice. This book is the product of a seasoned professional with over 20 years of trading experience. For even more direction, support and tools to achieve success, check his website titled Dave Landry.com.
In this work Landry puts forward an intriguing approach worth studying: Enter with a trend on signals of at least a good probability swing trade. At this stage your target is modest and stop tight. If it blows past your swing target shrink your position size, loosen up your trailing stop and run the remainder of your position out to its full trend potential.
His ultimate entry points are into PULL BACKS of young or established trends. Ones that have held and show convincing signs of resuming in the original direction. Even if the original trend fails to fully recover you have the odds of at least a nice little swing rally as the market tests and tugs which way to go.
There is nothing revolutionary about these "simple" pull-back set-ups: they are classic trend and swing favorites. However in trading simple does not = easy. Many mistaken entries and not so happy outcomes lie ahead, like so many rocky reefs. There is no sure thing. Landry's takes on how to select and navigate makes this a worthy contribution.
Riding with trends makes sense, and Landry helps point the way. However expecting a "free ride" of both a high win percent AND a high reward to risk ratio will set one up for bitter disappointment. Landry's system, like most trend following (if not trading in general) is predicated on little contained, but common losses being more than compensated by steady enough small wins AND occasional large ones let run to most of their potential. To buck-up realistically for the inevitable PAIN along the way, a complimentary read would be the wise and entertainingly blunt "Universal Principles of Successful Trading" by Brent Penfold.
Of course Landry's Guide covers more than the issues touched here. It attempts to be an overall guide to survivable trading practice.
One last point. The daunting PRICE of a Landry book can make one wonder if they are being taken to the cleaners. The skinny Layman's Guide, with lots of white space, has a price/word ratio that is up there. However I look at it this way. Many in the frothy industry marketed at traders get books out there cheaply, using them like hooks on fishing lines. Their books are adverts to reel in nibblers for their Services. Be it coaching, subscriptions, miracle software or what ever. Landry to be sure has much out there beyond the books. But he does NOT price and use them as the lip of the funnel. In a sense he stands that common practice on it's head. On YouTube at least you will find HOURS of absolutely FREE Landry explaining his approach with uninhibited detail and generosity. Owning the Layman's Guide would be the way to get the most of his webcasts. More than that, in buying it we make a small contribution to support and encourage the existence of such free resources. Now that's a refreshing approach worth investing in.
I am NOT won over on ALL the Guide's details. However there is much hard won common sense here. The du-gee simplicity of the basic concepts compared to multi-volume tombs (that fail to add much with their layers of verbiage, massive hodge podge of doggey indicators, macho hero worship, and pop pyscho-babble) is an amusing delight. The arrow points clearly at the BUY button. Sail On!
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