Tony Oz – How I Make a Living Trading Stocks
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Tony Oz – How I Make a Living Trading Stocks
Many authors write books about trading for the sole purpose of marketing training or website access. Tony’s books are different. They provide in-depth information that is clear and concise. The Stock Trader is the perfect compliment to his first book, Stock Trading Wizard. I found it to be absolutely fascinating and accessible for those with trading experience. It actually enhances my understanding of the first book because it adds the hands on insight which is so critical. The first book dealt with Tony’s rules for trading. It’s sort of like ground school when learning to fly an airplane.While this is the essential foundation of trading one also needs to see these rules in action. His new book does this perfectly. We move from ground school into the flying plane and get to see every move.
As each trade unfolds all of the nuances of Tony’s trading style become clear. He uses simple, easy to recognize, support and resistance coupled with effective analysis of Nasdaq level II and the major indices to find and execute high probability trades. This doesn’t make successful trading easy, but as Tony says it does make it “doable”. For me it also reinforced one of life’s essential lessons: The simplest effective solution is almost always the best solution.
In many respects Tony has taken the methods first illuminated in Reminiscences of a Stock Operator and showed us how to apply them utilizing today’s technology. The information contained in The Stock Trader coupled with his Stock Trading Wizard are all experienced traders need to develop a successful trading style.
There is much more to learning how to make money on the stockmarket than reading “how-to” books. There is another equally important task and that is how the markets work in real life. The real skill is often not losing money. Winning can be relatively easy, but so is losing. If you can eliminate most of your losing trades, success will be yours.
One way to learn how to do this is from those who have “been there and done that”. There have been hundreds of trading books written on this topic, but a stand-out contribution comes from Tony Oz, a professional trader. His book The Stock Trader: How I Make a Living Trading Stocks gives the reader a fabulous opportunity to track his trades over four weeks. He also reveals the skills used during the biggest crash of the past decade – the awesome April 2000 tech wreck.
Oz’s book is easy to read and sets a slick pace. For today’s army of daytraders, it gives a unique look at how serious, aggressive daytrading is conducted, those annoying missed opportunities that we all waste our energies lamenting and, of course, the winning trades.
It is a diary of a fascinating four-week hectic trading period that outlines how every trade was identified, managed and closed. The trades were taken only from the long side, or buy side, which is more applicable to Australian markets than other US books that concentrate on selling stocks.
The book was written in response to a challenge and starts with $50,000 in a new account. Profits are taken out each week. These are real trades, not theoretical examples. The total return is 35 per cent in four weeks. There are 116 trades recorded, charted and then explained in a daily trading journal including illustrations and formulas.
Oz explains the research and preparation, the joys and frustrations, the exhilarating victories and disappointing defeats. He gives us a blow-by-blow description of each battle between emotions, decisions, market makers and technology, and explains what he was thinking and feeling. Oz then outlines each trade’s strategy, the profits and the losses. At the end of each week, he orders a cheque from his broker to clean his account and prevent compounding of profits. After all, he explains in the book, Friday is payday.
There are 26 main chapters with some terrific topics such as Working on My Golf Swing, The Market is Always Right, Sitting on My Hands, Thank God It’s Friday, Sweet Dream or a Nightmare, Cash is a Position and Thank You, But No Champagne For Me.
Every chapter has something aspiring that even experienced traders can learn from. The chapters are informative and sometimes very funny; any trader can relate to the stories.
There is an epilogue and a bonus pack that covers what happened next, tips, guidelines, rules and case studies. There are eight appendices covering everything from plans, records, statistics through to creating a constant watch list and some useful resources for the active trader. A full glossary of terminologies is included.
Daytraders will be pleasantly surprised at the small size of each win, and the even smaller size of each loss. Interestingly, none of the popular technical indicators are used and Oz outlines his simple and straightforward approach. His book reconfirms several important lessons that come up repeatedly in all good trading books. These include:
The need for absolute discipline.
The need for a simple, straightforward trading approach.
The ability and, importantly, the willingness to cut losses quickly and cleanly and at pre-determined levels.
The need to take profits based on what the market is telling you and not on what you want to tell the market, or wish the market would do.
The most important lesson presented in the book was to never break from a trading plan or discipline. Overall, the book is a good read for traders who have learned the basics and want to see how to put it all together and move to the next level.