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The New Trading for a Living

Psychology, Discipline, Trading Tools and Systems, Risk Control, Trade Management

By Dr. Alexander Elder
15-minute read
Audio available
The New Trading for a Living: Psychology, Discipline, Trading Tools and Systems, Risk Control, Trade Management by Dr. Alexander Elder

The New Trading for a Living (2014) is your complete guide to getting started in trading. These blinks provide a detailed overview of a range of trading methods that will allow you to approach the market with minimum risk.

  • Those interested in alternative investment opportunities
  • People studying finance or working in the financial sector
  • Anyone who wants to start trading and earn a living doing it

Alexander Elder, M.D., was born in Russia and grew up in Estonia. He entered medical school at age 16 and, at 23, was granted political asylum in the United States. He worked as a psychiatrist in New York City, an experience that gave him unique insights into the psychology of trading. Today, he is a professional trader and trading teacher. His other trading books include Come Into My Trading Room and Sell & Sell Short.

 

[Alexander Elder: The New Trading for a Living] copyright [2014], John Wiley & Sons [Inc. or Ltd. as applicable] Used by permission of John Wiley & Sons [Inc. or Ltd. as applicable] and shall not be made available to any unauthorized third parties.

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The New Trading for a Living

Psychology, Discipline, Trading Tools and Systems, Risk Control, Trade Management

By Dr. Alexander Elder
  • Read in 15 minutes
  • Audio & text available
  • Contains 9 key ideas
The New Trading for a Living: Psychology, Discipline, Trading Tools and Systems, Risk Control, Trade Management by Dr. Alexander Elder
Synopsis

The New Trading for a Living (2014) is your complete guide to getting started in trading. These blinks provide a detailed overview of a range of trading methods that will allow you to approach the market with minimum risk.

Key idea 1 of 9

A new trader can fall into many traps and end up paying more than she’d like.

Have you ever looked at famed stock traders like Warren Buffet and wondered why you can’t live like them? Well, you can! It’s challenging to get there, but if you’re cognizant of some early pitfalls, it’ll be much easier.

As you take the plunge into trading, the first thing to be aware of is the danger of commissions. You pay your broker or bank a commission every time you do a trade – and if you don’t watch out, these commissions will eat up your trading money!

Say you’re an active trader, doing two trades a day, four days per week, paying $10 per trade in commissions. By the end of each week those commissions amount to $80. Working 50 weeks a year, you’ll have paid $4,000 in commissions by year’s end! If you’re trading with $20,000 per year, that’s 20 percent of your budget spent on commissions alone.

To minimize commission costs, make sure you do your research on various brokers and banks. Compare their services and commissions carefully to avoid paying more than necessary.

Another common pitfall is slippage. Slippage means that your order could have been filled for less money than you paid. If you want to avoid this, you’ll need to make your orders the right way.

There are two order types: limit orders and market orders. Using a market order is rather like saying, “give me a stock.” This guarantees you a stock, but you don’t know at which price. If the price has increased from $50 to $53, you are paying $3 more than you intended.

Using a limit order is like saying “give me that stock for $50.” You won’t pay more than $50, but if nobody is selling at this price, you might not get a stock. Limit orders are definitely the way to go, since they prevent you from overpaying for stock.

Paying too much, whether to brokers or for stocks, is one pitfall the new trader faces, but it’s not the only one.

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