Books on How to Trade Stocks Do NOT Work (I'll Show You Why...)

[@Serious-Man]

Books do give you examples of how to play technicals, and teach you trading strategies. This is undeniable, so I disagree with the video title which is very sensational. However, books do tend to train our minds to see the outcomes that don't yet exist in real life scenarios. In other words hind sight. This is also fact, so I agree with your opinion regarding this. The video does not directly explain the importance of having a trading plan although you certainly infer this, and I believe it is the bridge between book knowledge and real time practice. No one can predict the market, so all we can do is formulate a plan of action based on what we've learned and take the trade based on what we expect to happen. Thanks for the video Clay.

[@claytrader]

Thanks fo the thoughts

[@fredluden2298]

Couldn’t have said it any better

[@PositivelyBrainwashed]

I have to disagree. After reading Trade the Traders, it taught me to take profits based on my risk. So if my risk was $10, I'd sell 1/3 when the stocks goes in my favour by $10, then move my stop to my entry. Then if it moves by $10 again in my favour sell another 1/3 and move my stop to where I first took profits. So the gains are systematic.There is no hindsight bias involved.

[@claytrader]

You learned a THEORY.... trading is much more difficult than that

[@rayoflight4957]

Another great video Clay. This is me Clay. Every single day, hour & minute .. trading. Now the big question .. How did you make my video? :) A very complex question picked & demolished with a simple explanation. Trading is dynamic, while books are static. And your BA example fits the bill perfectly. We love you. And are always watching you. In a good way of course. Blessings & Warm Regards.

[@claytrader]

Cheers

[@Devi8ntdev]

I partially agree with you yes the hindsight can kind of train your brain but understanding the thought process and psychology behind why the market behaves a certain is helpful and I had a few books teach me that. I find even reading you have to know what information to hold and what to dump. But as always your content is solid

[@claytrader]

Thanks for the thoughts Devon!

[@myultrasound7619]

Hi Clay I enjoyed the video. I agree books cant "teach you to trade" but only the basic fundamentals. Experience in live scenarios is the key to true understanding of price action.

[@claytrader]

Do what you think is best.

[@iamskoon]

Oh the lovely “I need more confirmation” voice... I completely agree with this. Work experience matters. A book is great for initial knowledge and reference but it can’t teach you how to apply your knowledge in real time.

[@claytrader]

Totally agree!

[@aaronformella2869]

Regarding BA example at 10:56 when you ask to document our thoughts: I am looking at a short-sided trade but want to see it break through the 50 SMA first and try to get in quickly on a retest of that level, with the understanding that I may miss the move if it triggers a cascade of stop orders that buyers have placed on the other side of the 50 SMA. Entering the trade prior to the break I wouldn't care to risk personally since a logical place to have a stop would be above the previous peak around 187.75 giving the bulls 2 levels of resistance to fight through to get to the stop orders there. Also, I don't like that the two moving averages are trending upward at that point, which is another reason I would want to see the MA break. But I do like the leading indicator of that large bearish move down that crushed the bull pole. Really though, I probably can't think of all of this that fast yet in a 2 min candle chart. And I think my short bias on this set-up may come from having watched one of your previous videos because it looks familiar. And another clue to me is that you were already holding a short position.

[@claytrader]

Good documentation

[@gyaneshsuresh9771]

I agree with you books don’t show us the live movements in the market am sometimes stuck in trades to make decisions later to missing the opportunities but it’s better to be not in the trade than against the movement cheers mate for making a video.

[@claytrader]

Thanks for the thoughts

[@machee1368]

Very Good video. I actually thought it was a good time to buy but I was wrong. Looking forward to learning more from you in the future. Thanks Clay.

[@claytrader]

Glad it was helpful!

[@dionysmedrano]

You're 98% right about books, still I recommend "Japanese candlestick charting techniques". Of the couple books I read, that's the most relevant. It's easy to say take profit here on an image after it happened.

[@claytrader]

ehhhh

[@craigmaverick]

I usually find a nugget of information that I can use in most everything I read.

[@claytrader]

right, but is it "good" or "bad" nugget.... when you don't know what you don't know.... well, you don't know....

[@craigmaverick]

@@claytrader Well Clay after 25 years of trading and investing I like to think I'm smart enough to sort out the good information that I can use to help me make $$ Reading is learning, just like watching videos on KZbin!

[@claytrader]

@@craigmaverick I'm not talking about someone who has been trading for 25 years...

[@nepatriots77]

Books are great to get new traders started. Once they realize the set ups there to guide them after entering into trades, it's up to the new traders to get ready in anticipation of patterns playing out.

[@claytrader]

Ehhhh... I'll kind of agree

[@MPArmy123GDtime]

@ClayTrader - Happy Friday brother. I hope you had a decent week. I walked away with 1200 gains, but I'm still down this month so I only have 1 week to make up the rest. I'm hoping to level out this month if not a little gain (just my personal goal). Question about this weekend. Would you hold a short or a buy over this weekend on big tech stocks? (MSFT, AAPL, AMD, TSLA ect...) Thanks Clay and my personal feelings about my question is - Hell no, I'm waiting in cash.

[@claytrader]

if you're interested in "talking stocks/trading in general", that's the entire idea behind my private trading community (which you are welcomed to join) which you can find here claytrader.com/team/

[@Derrick1981y]

My first book I read was 'Day Trade Online' by Christopher Farrell. It actually helped me because I didn't even know what a bid/ask spread was at the time. But I do see what Clay is saying. I learn more from someone showing me.

[@claytrader]

cheers

[@liviumircea6905]

Yep nice demonstration ...I'd choose the middle path, some books contains valuable information ...btw Clay, do you know a good trading book ? :D

[@claytrader]

lol... well played

[@crustycloud3611]

I really enjoyed this video, think you do these a bit more often. It helps to really think for yourself and think about what your gonna do. It's good practice

[@claytrader]

This is what I do for students of my program

[@surafelfikru3348]

Totally agree clay, many of them are pretty egoistic and very, how can I say this, by the book. But not all of them man......I recommend al brooks price action series books. It’s genius and and it does not have many graphics and it never gives emphasis on patterns but pure price action. He even explains that particular phenomena and many others with out pictures but plain English.

[@claytrader]

those are a joke

[@surafelfikru3348]

Oh......ok, thanks for the heads up.

[@ParthPatel-ic4ip]

I lost 18% of my whole account today because of 2 trades (premarket gappers) it had pushed about 10% to the upside and I was waiting for the pull back to the open of the day because from what I’ve seen a lot of stocks dip down to the low of the day and bounce but this did not happen in either stock and I had poor risk management I should’ve got out earlier but I didn’t also I wasn’t checking how the overall markets were doing and obviously they were going down. Luckily I’m new and only had $400 in my account so I only ended up losing $74. Thanks clay I’ve learned a lot from your videos

[@claytrader]

Sorry to hear that. Thanks for watching!

[@craiggoodwin652]

What I would think to do with the example @9:40 is to hold and see what the next candle would do... I'm thinking that because it failed to hold above 186.46 - 187.50 it may actually start to fall again, so buying at this point would be risky... But I'm only about a week or so into this stuff so who knows... lol

[@claytrader]

Cheers

[@lucrative11]

False breakouts of consolidation patterns get me all the time.

[@jajajaja266]

3 upward candle sticks long with upward ENA .

[@claytrader]

you're not alone

[@lucrative11]

@@jajajaja266 Did u mean EMA? Are u saying that's what you look for to confirm a consolidation breakout?

[@jajajaja266]

@@lucrative11 EMAdisplacment on with the DMA on TOS . DMA acts as support for the price action while the EMA shows the stock in a upward move before price action goes up and stay above . And when the EMA cross the DMA that singal a down trend is near . This for TOS .I don't know about other systems.

[@rubenh5490]

A Shoulder-Head-Shoulder formation. I will short on the neck line, and put my stop loss on top of the head. Waiting the breakout volume point.

[@zachary4232]

The top of the head sounds far...

[@claytrader]

Thanks for the thoughts

[@kylejf9059]

BA example: planned to go long but was waiting for price strength to prove itself over the top SMA a bit more. Practiced a little bit of shorting but it's not something I've quite gotten the hang of yet, so wouldn't have played it like that anyway. You'd think it was easy because it's just the opposite way to look at it, but shorting just doesn't naturally seem to stand out to me. Practice. Practice. Some more practice. Then more practice required until i start to get to grasp with it I suppose. Forgot to add: really enjoyed this, a little different than usual 👍🏼

[@claytrader]

"prove itself".... nice sound bite, but need to actually define it.

[@kylejf9059]

@@claytrader by showing the next candle above the SMA on a 1 minute chart for me. I also use a 9 day SMA to confirm that for myself.

[@claytrader]

@@kylejf9059 oh....

[@brucetoh1321]

the shooting star rejecting previous support turned resistance pushing below 50sma support,entry(aggressive) or consolidation support entry(confirmation), take profit the previous low and not 200sma due to bullish trend.aggressive risk mitigation trading against trend and stop above shooting star high. smaller profit unfortunately but overall will be able to replicate success without hindsight.

[@claytrader]

exactly

[@apbeats1312]

I feel like getting a book about the mind would be very helpful with following rules and being calm

[@claytrader]

I agree. Psychology books can have some benefits.

[@troy3423]

Looking at the candle volume, it looked like there were more sellers than buyers and it was just a failed breakout. I was betting on short before you said anything

[@troy3423]

The problem I was having was the point in which you exit the trade. Do you wait for the previous lows or just take your cake and run

[@claytrader]

fast moving decisions are needed for sure

[@robertwalker2225]

Where did the price come from? I didn’t have enough info to play that trade.

[@claytrader]

I don't rememebr

[@bsnyclass6929]

Love this Clay!

[@claytrader]

Thanks

[@simonfier1018]

Hi clay..then if i am looking to learn trading from books how should i approach it? Also u hav ny top book recommendations?

[@claytrader]

lol...

[@simonfier1018]

@@claytrader wtf dickhead..

[@serv4ntPGR]

Agree, trading books do not work at all, you have to experience it first hand and learn the hard way, since Images in the books are all “hindsight”. You have to develop your own setups and criteria. However, psychology books work !

[@claytrader]

well said

[@robertwalker2225]

Double top, I was aware of the resistance and been prepared with a tight stop

[@claytrader]

cool

[@osamaumweni2948]

Great explanation.

[@claytrader]

Glad it was helpful!

[@dabd8175]

Totally disagree trading in the zone is awesome helped me a ton personally.

[@TheCotang]

Trading in the zone is more psychology then actual strategy. And yes it does help me too. I think it's a good book, lots of fluff to get through to get to the points.

[@dabd8175]

@@TheCotang yeah mindset helps you trade stocks lol

[@dabd8175]

@@TheCotang no point in having a strategy if you can execute it the right way because your mindset

[@TheCotang]

@@dabd8175 you mean "can't".

[@dabd8175]

@@TheCotang I mean go fk your opinion

[@chiragsingla8710]

Books say that always go for a risk to reward ratio of atleast 1:2 or 1:3 however in my opinion this happens once in a blue moon.

[@claytrader]

Lots of opinions out there

[@drinkingwater4039]

books are not alive but the market is.

[@claytrader]

indeed

[@jajajaja266]

Everything in a book don't happen in real trading . Waiting looking at the l2 . Me if my EMA is not going up I'm not buying. Also I use time n sales . Also l pre screen the night before .

[@claytrader]

Exactly

[@shannonedwards5564]

The thing is you are a professional trader that KNOWS market patterns etc. I, and a lot of others, do not. We need the knowledge that has been accumulated in pro's mind to not make the same mistakes and just have enough information to make the best informed decision of the market. Knowledge will curtail mistakes and definitely save time.

[@claytrader]

Somewhat....

[@diabawad1420]

I made the right decision I want to learn trading sadly I don't have a pc or laptop

[@claytrader]

You can use your phone

[@americanalpha7606]

You're the man! 👍

[@claytrader]

You too!

[@andresvalencia3977]

That most important thing is to have discernment and actually apply it. If you get your ass handed to you, the book was bad or you read it wrong 😝

[@claytrader]

Something like that :-)

[@robertwalker2225]

I wanna see the rsi

[@claytrader]

ok

[@DarthTrader707]

Meh. You missed the mark, sport. "Books aren't going to do this. Books don't have the ability to do this." Do what? Are you a gunslinger, like the overwhelming majority of day traders (pronounced "day gambler")? Seems like you are. Bob and weave....in an out....at the whim and mercy of every blip move that wreaks havoc on your emotions and your ability to think clearly and do the right thing. Your example at the 12:00 mark is just so gross. I pity anyone trying to trade with the messed up MO exhibited in your example of how the "real world" works. I only watched this vid because in your still shot of the vid, you were holding up one of Steve Bigalow's books.....a book I have found immensely valuable. I appreciate your point about how books show static examples of winning set ups....for the express purpose of illustrating whatever concept they're detailing. Bigalow is as annoying as any of them (one of the most annoying) when it comes to failing to mention one of the most important points of trading...."these (whichever) patterns are going to fail often." The most beautiful, text book set up is going to reverse on a dime....A LOT. What is "a lot?" About 50% of the time. That's where most trading authors fail. It's natural for them to present only the "see how this worked" side, though. How pissed off would Bigalow's readers be if he said...."look for a Bullish engulfing at a tested moving average or support....it works out about 50% of the time." People don't want to hear that. Most people can't wrap their mind around the idea that a set up that works 50% of the time being fantastically profitable. The truly great teachers are the ones who base their books/courses around that fact--the fact that yes, an edge CAN be carved out. But, it doesn't come from trade selection (an entry criteria). It comes from risk management. Individual trades are a coin toss of "maybe it will, maybe it won't." Anyone claiming to have a system that isn't is a liar. The edge comes from risk control. If I make 2R when I'm right, and lose 1R when I'm wrong (which I do....actually a little more than that, thanks to a 2.2R:1R all or nothing trading MO), then a 50% win rate is like a ticket to print money. That type of reality--that you're going to be wrong a lot, no matter how perfect the set up looks, but that with risk control, you can get rich from a 50% hit rate--is almost never talked about in the trading books. Van Tharp and Alexander Elder talk about it, but Bigalow, Stan Weinstein, O'Neil, Edwards and Mcgee never mention it at all. But going back to your examples....what a hot mess. That type of blowing around in the wind of meaningless fluctuations is just a recipe for frustration and washing out.

[@claytrader]

Thanks for the opinion, sport.

[@bakotako]

its not shady because you said it was not shady. KEKW =) suggestions/steps on how to learn without paying for courses?!?

[@claytrader]

Stop being such a cheapskate.

[@robertwalker2225]

Waiting for more confirmation

[@claytrader]

ok

[@waltergonzalez3820]

Long but out at 11:09 :(

[@claytrader]

whoops

[@robertwalker2225]

And longer time frame

[@claytrader]

ok

[@i.g.7098]

Good job on the video. . I say this all the time. Then the wanna say some crap about patterns. GFTOH. Everybody is GUESSING and minimizing risk with those guesses. Educated guesses are still GUESSES.

[@claytrader]

Thanks for watching

[@youkeston8941]

Looks like a false breakout on ba

[@claytrader]

Maybe.... maybe not....

[@chiragsingla8710]

Yes they don't work however they can give you a rough idea of market...

[@claytrader]

and "rough idea" isn't even close to being good enough

[@chiragsingla8710]

Yes😅 I just wanted to say that by reading books a person can understand all the terminology like bull, bear, bullish, bearish, cover order, bracket order, stop loss market, stop loss limit etc.

[@claytrader]

@@chiragsingla8710 i guess....

[@skjin100]

Very bad advice.Books enables you to think in different perspectives unlike KZbin videos .For example any one who are getting into trading must read "Trading in the Zone " for sure it will definitely change you the way you see markets.Like your videos but have to strongly disagree with this one.

[@claytrader]

You should watch more of my videos then... in another one I clearly state "trading psychology" books are different.

[@robertwalker2225]

I would never have traded that, just sayin.

[@claytrader]

cool

[@goodday5570]

trial and error

[@claytrader]

That's expensive.