Book Review :Sell & Sell Short

Sell and Sell Short (Wiley Trading) by Alexander Elder

If you are searching for a book on trading stocks then look no further, this is it. I have been a successful trader for years and read over 160 books on trading,and in my opinion this is one of the very best. Alexander Elder actually read the change in the market from bull to bear in late 2007 and was able to get this books first edition released in early 2008 when it was needed most.

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, technical analysis and keeping a trading journal into one book. These four 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
discretionary vs systematic
The author follows a discretionary, 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 in equity draw downs and will almost completely eliminate your risk of ruin.

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 win and loss. 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, humor, 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 excerpts from his past books to build an even more complete picture. If your dream is to trade for a living or just trade successfully this is the book to buy.

This new second edition contains many examples of short selling stocks from the 2008-2009 financial panic, showing how traders miss out on substantial opportunity to profit by only trading long. Also, this new edition contains a study guide to help readers understand the material completely before trading.Stephen Burns a trend follower and break out trader that specializes in the Darvas System. To learn more about him and his trading style you can pick up his recent book at Amazon.com