I have always considered Dr Alexerder Elder as a writer par excellence; he gives a touch of humanness to the cold hard Technical Analysis. Maybe it’s because of his background as a trained psychiatrist. If his book Trading For A Living dealt with basic structure of technical analysis then his other book Come Into My Trading Room provided the body to that structure. Dr Alexander Elder summed it as “to be a successful trader you have to develop iron discipline (mind), acquire an edge over the markets (method), & control risk in your trading account (money).”
His another book Entries and Exits: Visits To 16 Trading Rooms, though not a Technical Analysis book in its strict sense, was a mirror into, how his methods have been practically employed by ordinary traders to further their trading careers.
Coming to his latest book Sell & Sell Short. It’s often said that the entry is the easiest thing, but it’s the exit that matters the most, because it is the exit that defines the net outcome of the trade whether it results in profit or loss. We give so much of importance to entry and let our exits be governed by our emotions. There are plenty of books which teach you to have that perfect entry but there are very few which stress how to have that perfect exit. Sell and Sell Short is an attempt to bridge that gap and teach a trader how to sell profitably. The book is divided into two parts;
- Sell: By sell he means booking profits on your existing trade or getting out with a minimal loss. Here Dr .Alexander Elder outline various ways where one can exit the trades.
1 Selling at the target: Dr. Alexander Elder suggest that selling should be done at the Moving Averages. Selling at Envelopes or Channels or selling at the Resistance.
2 Selling On the Stop: In this chapter Dr. Alexander Elder outlines various techniques such as Iron Triangle, Market or Limit Orders. He also explains the usage of Hard and Soft Stops. There is new concept he has introduced in his book called Volatility-Drop Trailing Stops. This is a very good concept if one is sure of the direction of the trend and wants to ride it without compromising on the locked profit.
3 Selling “Engine Noise”: In this chapter Dr. Alexander teaches to take profits or exit trades in the event of weakening momentum. He outlines ways for discretionary exit from long term trade. How to sell before earnings report and how to sell using his favorite indicator; The New High- New Low Index.
- Sell Short: This part deals with short selling. I wonder weather this book was timed for release when we already fear the onset of a Bear Market. Anyway for newbie’s like me who are the products of the current Bull Market, and haven’t yet encountered the real Bear Market, this section is a real delight. This section outlines ways to short at tops and short at down trends or how to short fundamentals.
Though this has been the main crux of this book, but time and time again through out the book Dr Alexander Elder stresses the need for following strict money management rules and maintaining of good records. In fact he often stresses that show him a person with good records and he will show you a successful trader.
Ok now if you are wondering how I am qualified to review this book? Well I am one of the first few to lay my hands on this book. Yes sir I have the hard copy personally autographed by the Master himself. So if you are a classic Elder fan get your copy and read.