Textbook Trading – Notes and Review of Chapter 1 – Purpose & History by @investorslive

Table of contents:

Summary:

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This chapter was very useful but mainly for true beginners. That being said it’s still certainly good to refresh as a veteran, but obviously every story has to have a beginning and a history of the presenter and his methods.

intro

The core of this segment goes into how Nate got started, how he worked through big losses and bad trading to refine his methods into what works consistently today.

Some of the best and most useful anecdotes cover a lot of assumptions in the market and why they are often wrong. But also how to learn and profit from the assumptions that do work.

review

I don’t have a ton to detail about this chapter since it is really what I often to refer to as “housekeeping” chapter, again not that it’s bad. But the best analogy I can think of is it’s very much like the first session of a college class, you meet the instructor, go over the syllabus, lay out a roadmap of the class and then leave early. The real education begins at the second session.

FYI, for each chapter I will enclose my notes, these are just items that I want to remember but will also in theory give the reader a brief bulleted list of items discussed.

Notes:

Introduction
Pay market tuition
Strategy that can scale to any size account
Consistency
Long and Short styles
Forget why 90% fail, focus on why 10% succeed
Learn from Nate’s mistakes
Background of Nate getting into trading – interesting especially for beginners
History of email pumps/disclosures
-Believing in the hype of junk stocks – Long side
-Positive PR’s keeping you stuck
Losing money even on good trades – taking losses
Learning to not believe message boards/email/twitter
History of stock promoters embedded in filings
Hard copy mailers
-Going long these was “easy” for a while
-Immune to big price swings, because they all went up
“The motorcycle story”
Good lessons on big losses
Avoid boredom trades
Avoid “revenge” trading
Scared money/making rent
Myths of trading – dumb things people think about penny stocks
-reverse splits
-buy backs
-cheap “good deal” “can’t go down more”
-big buys — somebody is selling
Trade DON’T invest
Rationalizing bad trades – Trade tickers not companies
Always follow your plan if trades don’t work, don’t start reading looking for excuses to stay in.
Need to be humbled by the market at some point
How to take losses
Start with a plan to risk X to make Y, otherwise you are out.
Lock in profits as they come, be in cash overnight.
Be realistic in your goals

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