Books The New Trading for a Living: Psychology, Discipline, Trading Tools and Systems, Risk Control, Trade Management Book by Alexander Elder

The New Trading for a Living: Psychology, Discipline, Trading Tools and Systems, Risk Control, Trade Management by Alexander Elder is a comprehensive trading guide that integrates the psychological, technical, and practical pillars needed for success in the financial markets.

Key Points

Three Pillars of Success: Elder structures the book on psychology (mastering emotions and self-discipline), method (trading systems and technical analysis), and money (risk control and trade management).

Trading Psychology: Controlling emotions—such as fear, greed, and hope—is central. Elder stresses recording trades and emotional reactions in a trading diary to cultivate self-awareness and discipline. Understanding crowd behavior and market sentiment helps traders avoid impulsive decisions.

Risk Management: The book advocates rules like risking no more than 2% of account equity on any single trade, and not opening new trades if total monthly risk approaches 6% of account equity. This approach ensures capital preservation and minimizes the impact of inevitable losing streaks.

Trading Systems: Elder recommends keeping trading systems simple and effective, discouraging over-complication. He highlights the importance of technical analysis, especially chart patterns and indicators, to time entries and exits.

Trade Management: The book outlines practical tactics for setting stops, taking profits, and continually evaluating trades. Record-keeping and reviewing previous decisions are emphasized as tools for improvement.

Realistic Expectations: Elder cautions against dreaming or taking reckless risks; successful traders treat trading like a professional, disciplined process rather than gambling or wishful thinking.

Triple Screen Trading System: The book introduces Elder’s signature system, which analyzes the trend with a longer-term chart, signals with a mid-term chart, and times entries with a shorter-term chart—supporting strategic decision-making while filtering out false signals.