Rules of The Trade: Indispensable Insights for Online Profits [Hardcover]

The problem with writing a book about trading strategies or systems is that the markets are constantly changing, and trading systems become obsolete and must evolve over time. What doesn't change is the emotions and psychology of the people who compose the markets. The author states numerous times that trading is about 90 percent mental. While this is in fact correct, he then only briefly touches on the mental and psychological barriers that must be overcome in order to trade successfully. The best books on trading understand this, and are devoted almost totally to this subject.

There are also numerous inaccuracies. At one point, he details a month of trades from an "anonymous" daytrader who allegedly made 731 trades during the month, of which 377 were winners, with those trades averaging $93.03 profit. He then claims the trader netted $68,001.35 for the month. If you think about it for a minute, this is a mathematical impossibility. Also, he makes the typical mistake in believing a broadband connection is necessary to receive timely streaming quotations. Broadband speeds up downloads only with large size files. Streaming quotes do not fall into this category. I have timed my quotations against a T1 connection using an atomic clock accurate to 1 millionth of a second and have detected no difference. I do not use broadband, as it is not available in my area.

If in fact the author is a successful trader, it would have been much more productive for him to detail his own evolution as a trader, as well as the evolution of other specific successful traders he has known. This is the information that would be most useful to new traders. Unfortunately, the author only briefly discusses a few of his own trades, and gives no information whatsoever on the path he traveled to reach competence, assuming he has reached that level. It would also be interesting to see how he is trading in the post-bubble market, if in fact he is still trading successfully.

However, I have been very disappointed because the content does not reflect the attractive title and description. The book is almost 100% for daytraders trading with level II screen. This is not said anywhere. "Online" does not mean exclusively daytrading to my opinion. It keeps on repeating "be disciplined" to fill space. One of the example of trade record given does not fit the explanation given in the text. For example, the trader made most of his profit in a single swing trade lasting several days whereas Nassar wants to show us that the guy is a good daytrader...

Another interesting thing: This book is not for beginners but it describes in fact very general basic rules... in a tough style that assumes that the reader already knows almost eveything.

When you read the table of contents, it looks great: how to enter, to exit, etc... but none of this is given in the book. No techniques are given.

Conclusion: This book could be fine if the description was fitting the content. It is for daytrader watching level II screen and who trade instinctively.

Neatly structured, the book consists of 12 paragraphs, each of which about a specific topic, such as rules for the stock selection, rules for entering trades, rules for evaluating performances, rules for money and mind management, rules for this and rules for that...In the beginning of each chapter, related rules are listed.

In "the rules for exiting trades", to name a few: dont expect to squeeze all the juice from the orange; exit on reaction, not price; set mental stops; when in doubt, get out; know why you are in a trade, and where you will exit etc.

In the rules for active traders: size the trade; average winners, not losers; never let a winner turn into a loser; take profits often; never mix disciplines; dont fight the tape etc.

In the rules for the technician: day trade the range and swing trade the trends; always use indicators to confirm charts and patterns; dont make it rocket science, cause it aint; never ignore volume regardless of your trading style etc.

To me, this book is an easy read, well written but still can serve as a good reminder of things I know I need to remember but had somehow forgotten after intensive trading activities. Not a classic nor really insightful, but definitely good value for money!

p.s. The author had named 10 books of note in the Appendix. Four of them would be in my own list of top 10 recommendations. That might be the reason why I consider this book so readable.