Come Into My Trading Room: A Complete Guide to Trading

I have read both of Dr Elder's books. Come Into My Trading Room is an excellent book. I have developed a system based on MACD-Hist, ADX, Impulse Buy/Sell, and a 6 month exponential moving average. I have back-tested the system from 1975-2004. Based on 30 years of back-testing I had only one losing year -12%. The winning years had profits greater than 100% of a few occasions. However, most of the time the profits ranged from 30-40%. I will take those kind of numbers any day. The trades were executed on the following commidity markets... C, S, SM, BO, CL, HO, HU, NG, SP, TY, and US. I also used the money management system that he talked about in the book... 2% stop loss per trade and a max loss of 6% for the month. The system that I developed didn't trigger a bunch of trades. For all 30 years I never executed more than 75 trades in a single year. The trading style that Dr. Elder recommends in his book is not going to make you rich overnight; however, it will provide you with consistent steady returns year after year. By bankrolling profits from year to year one can become a millionaire in due time. I am currently going to paper trade my system for the entire year of 2005 to verify that it is as profitable in real time as in back testing. I will send out another review in 2006 detailing my results.

Alexander Elder gained well-deserved prominence for his first book, Trading For a Living. It's one of my favorite books on trading. Out of this classic came such new indicators as the Force Index, which is one of the indicators I use regularly in my chart software. I read Elder's follow-up, Come Into My Trading Room, in hopes of learning additional insights of the Force Index. While I found some new information here, I was even more impressed by the following lessons Elder shared:1) "Some of the best trading opportunities occur after false breakouts" - I'm finding this more and more these days, which is why I actively use my Momentum Divergence indicators to separate the fakeouts from the real breakouts. Elder does a great job showing numerous charts throughout his book, laying the groundwork for the divergence examples he explains in great depth when you step into his trading room in the final chapter with many actual trading examples. You need to understand the concept of divergence to trade today's markets more profitably, and this book will be a great help in showing you how to trade divergence setups.2) Triple Screen - Elder explains the important of using multiple timeframes, though he advocates two to no more than three time frames. The key concept is that whatever timeframe you use, you need to go up to the next longer timeframe to get confirmation. This provides the bigger picture trend to define the nature of your trades, and then you can return to the shorter timeframe and make more tactical decisions with this broader trend in mind as well.3) Grade Your Performance - Elder actually quantifies trading effectiveness by defining the width of the channel for a stock, and what percentage of the move the trader actually captured to determine his grade. Regardless of how a trader measures his performance, it must be tracked in order to make improvements and experience constant improvement.4) The SafeZone Stop - While I have not tested this indicator in my systems yet, Elder's SafeZone Stop looks like a more effective way to place a trailing stop than standard moving averages. The SafeZone Stop appears to adjust more rapidly to trending versus flat periods for a stock, compared to moving averages. This new technique should easily be worth many times the price of this book by itself.5) Chapter 9: Trading for a Living - This chapter was my most highlighted chapter, as Elder covers the stages of growth from beginning to professional trader, covering a wide range of topics on trading discipline, time management, organization and developing a viable trading plan, to highlight just a few. All in all, Come Into My Trading Room is an excellent follow-up to Elder's Trading For A Living, and I think you'll also find it a quick and thought-provoking read.

Book Review - Come Into My Trading Room by Dr Alexander ElderIt was with a great deal of curiosity that I began to read Come Into My Trading Room. Trading for a Living, Elders first and classic book was the second trading book I ever read and even 40 or so books on from there I still rate it in my top five and frequently recommend it to others who want a considered and honest introduction to trading.I was interested to see how the themes and emphasis had changed and developed in the nine years since the first book was published. I had briefly read a couple of reviews that suggested it didn't add much to the previous book but I was eager to make my own mind up.So the first question I asked myself was what hasn't changed? The style of writing is as clear and engaging as in the first book. The layout is logical and in all key areas he suggests further, more specialised reading to take you deeper into the subjects that may interest you. For the size of the book (only 313 pages), it is very comprehensive and covers the three main areas of competence for a trader. Psychology, Technical Analysis and Money Management. So the three pillars from the first book are still very much standing.What is different? A great deal in my opinion. The psychology section is vastly improved. I thought that to be the main weakness in the first book, with an over reliance on the AA model which (because of my professional background I have issues with) He draws the title of the psychology section from another excellent book by Mark Douglas, again giving the impression that Elder himself has been learning a lot over the past few years.The technical analysis section goes much less into describing basic TA than the first book did and instead focuses more on the application of TA to trading. It also includes an update on a method first described in the first book the "triple screen" and a section on systems trading and system testing. As someone who is toying with developing systems at the current time I particularly enjoyed his discussion of the distinction between systems and discretionary traders. The book is not just aimed at day traders, in fact he lays great emphasis on people examining their own motives to become day traders suggesting that you require at least a years successful experience with end of day trading before you move to intraday trading. He does ask his readers to answer tough questions about themselves and if you are able to give honest answers you will profit greatly from this book.He also concurs with one of my prejudices, which I am happy to repeat here, he stresses that traders should take their first steps in inexpensive markets to trade. So with futures for example trading the Eurostoxx50 at 10 euros per point is a better starting point for the new trader than Dax at 25 euros per point. He also provides a helpful method for working out which markets you can afford to trade. It is this applied aspect of the book that makes it so valuable. There is no

I really enjoyed the first book by Dr Elder, "Trading for a Living" very much. I have just finished Dr Elder's new book, "Come Into My Trading Room" and have enjoyed it very much too. There are several new ideas in the new book. A lot of the material in this book was presented in "Trading for a Living". It is the best book that combined the 3Ms -- Mind, Method and Money Management -- required for successful traders. It expands on the methods presented in "Trading for a Living" and makes the triple screen concept very clear. I think the great difference between this book and other trading books is Dr Elder's background as a psychiatrist. He provides valuable insights into understanding the human element of market behavior, and the individual trader that makes his work unique. Dr Elder shares his own, successful trading strategy in a clear, concise, and easy to understand style. He does a great job showing some of his successful trades. I'm sure this is one of the finest books on developing trading skills. It is not only fun and easy to read but it is profitable. It pays back.

I read Dr. Elder's first book, Trading for a Living back in 1994 and have reread it several times since then. It truly set the standard for defining the psychology of the market and why understanding this will help you beat the market. His level of thinking on defining the math of a technical indicator, then articulating the mass psychology that drives the indicator was truly groundbreaking. It's been the one book that I consistantly refer to, while the other 30+ books I've read on investing are comingled in a large bookshelf collecting dust. His second book, Come into my Trading Room, is the essential follow-through on the best way to apply the first book. In delivering the basic goal of helping you make money in the capital markets - it's even better. He clearly explains how to take the ideas of the first book (and a lot of new ideas) and make money with them. Day to day, trade by trade - how do you keep records? Which exact indicators to use? What do they mean? When to get in? When to get out? How to get out? What seperates the amatuers from the pros? What to avoid? Yardsticks of performance? The list goes on....... At the same time, he points out that there aren't any recipes, magic wands, exact procedures ....that good trading remains a product of good judgement, hard work, discipline, wisdom, and artwork. On top of all this ... he gives solid perspective on making the jump form a corporate job into a profession of trading ..and other psychology gems that I found useful and generating self-reflection.This book (or the first one) is the very next book you should on investing. You can't afford not to.