Finance Trends Letter

I was just rereading Nicolas Darvas' How I Made $2,000,000 in the Stock Market and came across this interesting summary of his trading method and risk management approach in the author's intro. I'd like to share it with you. Quoth Darvas:  "I built a fortune with serenity by avoiding premature selling yet making an exodus from most of my stocks with the use of a single tool: the trailing stop-loss.  I have discovered no loss-free Nirvana. But I have been able to limit my losses to less than 10 percent wherever possible. My stop loss method had two effects. It got me out of the wrong stock and into the right one." Full passage in the image below: Sounds a bit like William O'Neil's philosophy on taking losses, doesn't it? Well, as O'Neil points out, his trading style and risk management philosophy was influenced by (among others) Nicolas Darvas and famed speculator and author, Gerald Loeb. Loeb advised speculators to cut all losses a...

There's a stack of books on a corner of my desk and it's piled 10 high. They are all, in some way, related to trading or professional money management and investing.  These are books you may have heard me mention on Twitter . Some I've read and re-read. Some are newly acquired and I may have only had a chance to flip through or read to the halfway mark. We'll focus more on those I've read, but I want to give you the heads up on some of the newer (to me) titles as well. I think they all contain some useful insights that will help you to become a more focused and informed trader (or investor). Quick disclosure note: all the books I write about on this site are either purchased by me or have been given to me, either as review copies (free) from authors and publishers or as gifts from friends.  Now on to the reading list, which I hope will help you fill out your list of must-read trading books. 1. Inside the House of Money by Steven Drobny is a book I've me...

Charles Kirk recently re-posted a very worthwhile rundown of trading lessons from Nicolas Darvas . Here is an excerpt from that piece: " Nicolas Darvas has inspired traders for many generations. His book, “How I Made 2,000,000 in the Stock Market” is one that you’ll find on many recommended reading lists including my very own . While some have argued that much of Darvas’ success had to do with lucky timing, his books are still widely read and for good reason. A lot of traders can identify easily with Darvas because he went through the process of learning how to trade much like most people do today as he first began by searching for the “secret” to making money in the market. And, just like all of us have found, after finding no success from trading on the stock tips of others including brokers and expensive newsletters, Darvas figured out that he ultimately had to develop a trading system on his own. .." Check out Kirk's notes on Darvas' trading approach and ...

Found these excellent comments on trading from Fullcarry and had to favorite and share these tweets: One of the best traders I ever met was never right. — Ed Bradford (@Fullcarry) February 18, 2011 It was one of the few woman traders I ever worked with. She just new how to trade and manage positions, but was terrible at calling things. — Ed Bradford (@Fullcarry) February 18, 2011 Amazing how quickly these pearls of wisdom can dissipate in the real-time information ocean of Twitter if you don't happen to spot them at the right time. Incidentally, this is why I try to favorite (Twitter's bookmark function) tweets and check up on my favorite Twitter lists. You never know what you'll find, or what you might have missed if you didn't happen to catch it in your stream. Wish Twitter would improve its archived search features so users could easily uncover more great information like this, but that's a topic for another day.  Back to Fullcarry's notes...

StockTwits U recently highlighted our collection of classic trading books on Scribd, with special reference to Jesse Livermore's 1940 primer, How To Trade In Stocks . You can find free pdf and ebook versions of Livermore's text, plus WD Gann's Truth of the Stock Tape and Nicholas Darvas' How I Made $2,000,000 in the Stock Marke t , at the post above, or by visiting our Scribd trading books collection page. I'll be adding more classic trading texts to the collection as I find them. If you have any suggestions on authors or highly educational book files to add to the collection (preferably those already found on Scribd), please mention them here or drop me an email. We've already had some good suggestions from the StockTwits stream, and I'll try to upload or share any texts that are likely to remain up on the site. Related articles and posts : 1. Jesse Livermore: How To Trade In Stocks - Finance Trends. 2. Wall Street Stories - Edwin Lefevre - Finance Tre...

A plunge in the Baltic Dry index may herald a global slowdown, while financial markets grow expectant of an endless parade of bailouts. Meanwhile, Warren Buffett is cheerfully buying US shares for his personal portfolio. Why? All this and more in our, "Features of the week" . 1. Baltic Dry index at lowest since 2002, global recession fears grow. 2. Hedge funds in grip of vicious redemptions, selling cycle . 3. Buffett says " Buy American. I Am." ; call gets lukewarm reception . 4. Switzerland pumps billions into UBS bank rescue plan ; bank bailout angers Swiss public . 5. Markets get addicted to bailouts . 6. Taleb's "black swan" investors post gains as markets dive. 7. Financial websites see record spikes in visitors . 8. Putin may use credit squeeze to destroy oligarchs . 9. Maoxian points to interviews with stock trader Nicolas Darvas . 10. An ABC Lateline interview with investor Marc Faber . 11. Junk bonds signalling a deep recession. 12. Art: ...