If you expect Trade Your Way to Financial Freedom, written by a trading psychologist, to be a psychobabble treatise on ways to reduce fear and greed, forget it. While eschewing those worthwhile topics, the book is, instead, a thoughtfully constructed amalgam of concepts, techniques and underlying strategies that provide a doorway to profitable trading and investing.

It is both iconoclastic and traditional. Its countercurrent character derives from Tharp’s revelation that the great majority of traders concentrate on a different aspect of the trading process than the relatively few successful ones, among whom there is a commonality of focus on several ideas. The author details these ideas with no question about his predilections for them.

The more traditional portion is manifested by discussions of well-known trading tools, albeit used for purposes that may seem somewhat unusual to the practiced trader.

This is one of those rare works that present good advice, as well as the specifics of how to follow it. Included in the advice (instructions?) are ideas that support often-heard generalities such as “Cut losses and let profits run.” The difference here is that Tharp approaches such too-general-to-be-useful instructions from an unorthodox angle, lending specificity to the concepts and showing how they might be accomplished profitably. He renames some ideas for the sake of clarifying the trader’s approach to them. He leans heavily on the concepts “expectancy” and “position sizing”, which are not only explained in exquisite detail but are exemplified and formulated for the more careful readers.

Once you have really come to grips with the implications of an idea like expectancy (the possible profit per dollar risked), your trading is likely to be influenced for the better. Such information is laid out as a buffet in Tharp’s text.

At the outset of this book, the author states that he wrote it with two objectives. Those are to help the reader...

The mere mention of “the Holy Grail” causes one to mutter the doubt-ridden phrase “Yeah…Right!” But, by the time you have completed reading Tharp’s explanation of what the Holy Grail’s secrets really encompass, you might be more prone to exclaim, “Yes…Right on!”

Although Tharp does not discuss the well-known fear-greed problems, he does reveal a psychological substrate that, once understood, provides what might be termed the “Holy Grail”, the real secret of making profits via trading the markets. Even the most confirmed skeptic owes himself an open-minded exposure to these empirically derived ideas.

These include the necessary concepts, prioritized in order of importance, to build a profitable trading system. Having incorporated Tharp’s rationale, you may find yourself eager to develop a system based more on “position sizing” and exits rather than entry “set-ups” that you have used heretofore, knowing those were ultimately likely to be less profitable. Furthermore, he describes what steps are necessary to arrive at that goal.

These 343 pages cover a broad gamut of sub-topics. They are divided into three main sections:

In covering these topics, Tharp brings in several outstanding traders, each of whom contributes his expertise. But, the bulk of the text is derived from Tharp’s considerable experience and study of markets and marketeers over the past 15 years. The result is a well written piece, that, because of its lucidity, is capable of being read in a relatively short time but demands further study (especially in the area of money management), a task that the reader may find him or herself anxious to pursue.

This is a true textbook, written in a facile style. While engaging the reader, the book includes all of the trappings that one might require: Notes and a summary at the end of each chapter, recommended readings, a glossary and a useful index. Previous contributors are given appropriately respectful mention and, where useful to the reader, careful explanation of their contributions.

Edward Dobson, President
Traders Press, Inc.
http://www.traderspress.org