Introduction
Sell and Sell Short is the most recent trading book from Alexander Elder. As you can imagine from the title, the book is about selling, both as an exit from a long trade, and as an entry to a short trade. However, as all trades require both a buying transaction and a selling transaction (i.e. an entry and an exit), Sell and Sell Short includes information about buying, and a variety of general trading information as well.
As I write this review in 2008, stock indicies and currencies are making new yearly lows, and new short trade restrictions are being implemented. In this bearish atmosphere, selling is a hot topic, so the release of Sell and Sell Short is quite timely, and should be useful for a lot of traders.
Sell and Sell Short is published by Wiley Trading, and is one of the many titles that Wiley Trading publishes on the subject of financial trading.
About The Author
Alexander Elder (professionally known as Dr. Alexander Elder) is a professional trader, a psychiatrist, and obviously an author of trading books. Alexander Elder's previous trading books include Trading for a Living, Come into my Trading Room, and Entries and Exits, all of which were bestsellers within the trading community.
Alexander Elder is a technical trader and a discretionary trader, meaning that he uses technical analysis (charts and indicators), but that he makes his trading decisions in real time, as opposed to a system trader that makes their decisions in the past (further information about these two types of trading is available in my discretionary or system trading article).
Part One - How to Buy, Manage Risk, and Keep Records
The first section of Sell and Sell Short is titled How to Buy, Manage Risk, and Keep Records, and includes three chapters dealing with each of these topics.
The first chapter discusses buying as an entry to a long trade. This chapter covers different types and styles of trading (such as fundamental or technical analysis, and discretionary or system trading), and introduces some of the indicators that Alexander Elder uses in his own trading (such as the Force Index).
The second chapter discusses trading psychology (as you would expect from a psychiatrist), and risk management. This chapter includes topics like discipline, and stop loss orders, and explains two risk management rules that Alexander Elder strongly believes in (the 2% and 6% rules).
The third chapter discusses the importance of good record keeping, and offers a variety of methods for keeping track of your progress as a trader. Topics such as keeping a trading log (or trading diary as it is called in the book), and giving a performance grade to each of your trades, are covered in detail.
Part Two - How to Sell
The second section of Sell and Sell Short is titled How to Sell, and includes three chapters covering selling as an exit from a long trade.
The first chapter discusses selling to exit a profitable long trade. This chapter suggests three technical analysis, but still slightly different, reasons for selling (moving averages, trading ranges or channels, and support and resistance levels).
The second chapter discusses selling to exit a losing long trade using a stop loss order (yes, even professional traders and trading authors have losing trades). Various stop loss related topics are covered, including types of stop loss orders, where to place your stop loss orders, and how to manage stop loss orders (e.g. traling stops).
The third chapter discusses selling to exit a long trade because of market conditions (referred to as engine noise in the book). Different types of market conditions are covered, including technical analysis (i.e. a particular chart pattern), fundamentals (e.g. earnings reports), and external factors such as overly bullish or bearish public sentiment. These external factors are referred to as the market ringing a bell in the book, and as the market speaking to you in one of my day trading quick tips).
