High Probability Trading: Take the Steps to Become a Successful Trader

by Marcel Link

Book Overview

A common denominator among most new traders is that, within six months of launching their new pursuit, they are out of money and out of trading. High-Probability Trading softens the impact of this "trader's tuition," detailing a comprehensive program for weathering those perilous first months and becoming a profitable trader.

This no-nonsense book takes a uniquely blunt look at the realities of trading. Filled with real-life examples...

• Format: Hardcover
• Language: English
• ISBN: 0071381562
• ISBN13: 9780071381567
• Release Date: March 2003
• Publisher: McGraw-Hill Companies
• Length: 416 Pages
• Weight: 1.55 lbs.
• Dimensions: 1.4" x 6.3" x 9.5"

Customer Reviews

The best I've read

For starters, I do not want to pick a fight, and I am not saying this book is by any means perfect, but I hope no one is influenced by Larry Livingstone's review dated May 18, 2006. In case you don't know, Larry Livingstone is the character in Lefevre's classic, "Reminiscences of a Stock Operator", which is itself a slightly fictionalized biography of the very real Jesse Livermore. Just so you'll know. Read his review and then come back. Again, without spending my entire review responding to the "Larry's" criticism, let me just say that if you actually read the book, these criticisms will vanish. Link is not advising traders to be loose and wild and not worry about blowing your account, as "Larry" seems to imply, rather he is stating an undeniable, plain fact....many successful traders have at one point blown their accounts.....period! Cold, hard reality. Yes, me included. Had I read this book, however, I might have prevented that. "Larry's" other cherry-picked criticisms will fade away when you read the book and understand the context of some of the quotes "Larry" provided. Moving on....as I said this is probably the best trading book I have ever read. As opposed to books like "The Master Swing Trader", this book is very well written (like it or not, this is important), very easy and interesting to read, very practical, and very informative. Nor is he a big Wall Street fund manager (at least the book is not written from that perspective) that operates in a completely different world than the average trader. It is a very practical and realistic book that you will be able to relate to. I have read many trading books including Market Wizards and Reminiscences, and I highly recommend them, but in reality how many of us actually operate at that level? These are good books and you should read them, but Link's "High Probability Trading" is aimed at the small trader and it will have an immediate impact on your trading. Yes, most of what he teaches can be found elsewhere, but my response is that it can be found here too; and as I said, he brings it to you in a way that you can relate to and it will help you really understand the why and the how. Just having a list of rules is not as good as having someone give you a very good example of how to implement the rule and what can happen if you don't. This is why, in my opinion, High Probability Trading, for the average trader, is even superior to books as acclaimed as Market Wizards and Reminiscences. Link's discussion of technical indicators is very brief, but I have to say it was in some ways far superior to other, much longer, items I have read about them. What he does better than others is that he shows you how to apply them. He gives you the proper uses, and limitations, of these indicators. Not many writers do that.... some make them out to be a crystal ball, while others tell you that they have no place whatsoever. I would disagree with both. Link does not try to build himself up in this book l

solid

This is probably one of the most realistic books on what it takes to trade professionally. The author starts by correctly stating how difficult it is to trade successfully. He gives a time frame of 3 to 5 years, although he states it took him seven years to be consistently successful (he refers to himself as a slow learner). He also discusses unrealistic expectations of beginning traders, who typically open accounts of $10,000 to $25,000, and expect to make a living trading such accounts. The author notes that the best fund managers on Wall Street, who can consistently return 35-40 percent, command salaries in the seven and eight figures. Even if a beginner could produce such returns their first year (extremely unlikely), could they live on 40 percent of $10,000? When Wall Street investment firms want to hire a trader, they go to the best business schools, recruit the top graduates, pay them maybe over $200,000 their first year just to sit in training classes for months. They tell these trainees they do not expect them to make any money for at least two years, and these are individuals who have access to some of the most experienced traders on Wall Street. When they do finally start trading, they are closely watched and given only modest amounts to trade. Would you be surprised to know that the average professional trader is successful on only approximately 50% of their trades? With some futures trading systems, it is closer to 30 percent. This is why taking losses quickly is the single most important aspect of successful trading. The book also covers the basics of trading systems, including indicators, stops and exits, typical trading system characteristics, backtesting and system writing. While he also touches on trading psychology, this is the weakest part of the book, and is mostly biased towards his own hurdles, which were taking too large a position in too many different markets. He refers to this as "overtrading", although I would define overtrading differently. For those looking for a book on trading psychology, try Mark Douglas' books, such as "The Disciplined Trader", and "Trading in the Zone". Finally, the book is interspersed with anecdotes about real trades and traders, which are invaluable about how not to trade, and are often hilarious. One example, the author stated he once held positions in 15 different futures markets at one time on a $5000 account, although this seems impossible, if one was to meet the margin requirements of each market.

This is the one!

At the risk of being repetitive, I'm going to have to give this book another stellar review. Like many others, I have read a hundred other trading books and this one stands heads above the rest. The author is obviously an active trader and is not ashamed to divulge his weaknesses, even current ones. He covers all of the necessary bases (psychology, money management, risk management, setups, tradeable markets, etc.) without being exessively wordy. He is one of the few traders who can actually write relatively well. He manages to explain arcane and complex trading concepts using understandable and economical word choices. The review structure at the end of each chapter is an excellent technique to enhance the learning process.Yes, most of the information is more useful to the novice trader but one neeeds a basic comprehensive understanding of trading to get the most benefit. On the flipside, since it is so inclusive, the book could serve as an excellent refresher for the seasoned trader. That trader might even come across a concept long forgotten and be able to turn it into a profitable strategy.HPT has become my primer. I come back to it every few months to review sections that I feel weak in. I recommend this book to everyone who asks me for that "one book" that can get them a head start in learning to trade.Great job Mr. Link! I eagerly await your next contribution to the world of trading literature.

This book ties everything together

I've read some of the reviews (or should I say criticisms) of this book. They write that it's for beginners, there are just a couple of setups, and the obligatory discipline "cut your losses" warning chapter. I think people are missing the big picture.If you want a detailed book about technical analysis, with lots of explanations, setups, etc. etc., there's "Technical Analysis Explained" by Martin J. Pring, or you can buy something by Jack Schwager or John Murphy.If you want a book about building and testing a trading system, there's "Trade Your Way to Financial Freedom" by Van K. Tharp.If you want a self-help book about discipline / psychology, there are a lot of those, some in the investment section, some in the psychology section.If you want a book about day-trading, there are a ton of those as well.The thing I like about this book is that everything is there in one place. At the end of each chapter, the author gives you pointers on what to do and what to avoid doing to reinforce your memory of the principles. The book is written in a very readable style. I got this book about three weeks ago, and by applying some of the principles I learned from the book, I made two profitable trades (which I would not have normally made) and avoided making a trade which I normally would have made. This trade would have been a loser. As a result of reading this book, I made and saved enough money in the last three weeks to buy ten copies of this book. Isn't that why we read these books???