What Trading Books Influenced ICT Early On?

Name: What Trading Books Influenced ICT Early On?
Uploaded: 2021-02-10T19:33:26.000Z
Duration: 3 h 2 min 43 s
Description: This is the only collection of books that had an influence on my early development. Hope you find it insightful... thumbs up if you did.

Introduction to Influences in Trading

Early Mentorship and Influences

The speaker reflects on their early influences and mentors that shaped their career as an analyst.

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They clarify that the discussion is not a sales pitch for books but rather a sharing of personal milestones in their development as a trader.

The Beginning of the Journey

The speaker recounts receiving a significant package on November 5, 1992, which marked the start of their trading journey.

They describe how they became interested in trading after responding to a classified ad in Entrepreneur magazine, which promised financial success through trading.

Initial Learning Experience

The ad led them to an audio message discussing potential profits from small investments, igniting their interest in making money.

After requesting more information, they received a well-crafted pamphlet that motivated them to purchase Ken Roberts' course.

Ken Roberts: A Key Figure

Impact of Ken Roberts

Ken Roberts is identified as a pivotal figure who introduced many new traders into commodities trading during the early '90s.

The speaker purchased his course, which included cassette tapes and manuals that were instrumental in shaping their understanding of trading.

Course Content and Personal Connection

Although the book is no longer widely available for sale, it holds significant personal value for the speaker due to its impact on their learning process.

They explain how this course connected them with their first true mentor regarding trading techniques.

The Role of Family Influence

Family Background in Trading

The speaker shares insights about their uncle Stan Kreitz, who was successful in trading during the '80s but did not inspire widespread interest within the family initially.

Fate and Opportunity

A chance encounter with an Entrepreneur magazine at work led to borrowing it and ultimately purchasing Ken Roberts' course, marking a turning point in their journey.

Conclusion: Foundations of Trading Knowledge

Learning from Experience

The speaker emphasizes that while they learned valuable lessons from these experiences, they also faced challenges along the way regarding profitability and expectations set by others.

Understanding Trading Education and Responsibility

The Importance of Paper Trading

The speaker emphasizes the significance of paper trading as a foundational aspect of trading education, highlighting its role in minimizing legal liabilities.

Educator's Responsibility

The speaker identifies himself as a "demo baller," indicating his preference for teaching through demo accounts to avoid taking responsibility for others' trading losses.

Insights from Ken Roberts' Course

The speaker reflects on his experience with Ken Roberts' course, noting that while it included a hotline for support, he found the information provided to be inaccurate and uninteresting.

Optimal Trade Entry Concept

A key concept introduced is the "optimal trade entry," which the speaker credits to Ken Roberts. He discusses how this idea has been misattributed over time.

Challenges with Traditional Patterns

The speaker critiques traditional trading patterns like one-two-three tops and bottoms, explaining their complexity and difficulty in predicting market movements accurately.

Trading Techniques and Personal Growth

Transitioning from Open High Low Close Bars to Candlesticks

The speaker shares his initial use of open high low close bars in 1992 before transitioning to candlestick charts, which he appreciates for their clarity despite initial reluctance.

Buying Strength Strategy

He explains a strategy based on buying strength after identifying new 12-month lows, emphasizing patience in waiting for optimal entry points.

Influence of Beat the Market Maker System

Many concepts taught by the speaker are rooted in Ken Roberts’ teachings, particularly regarding late buying strategies within the Beat the Market Maker system.

Personal Reflections on Teaching Methods

The speaker admits past greed influenced his teaching methods; he withheld certain strategies from students while publicly promoting less effective ones.

Key Takeaways from Educational Materials

Fair Value Gaps and Order Blocks

He describes using fair value gaps and order blocks as critical components of his successful trading strategy during 1994–1995.

Simplicity vs. Complexity in Trading Concepts

Despite finding elementary ideas within educational materials, he acknowledges their foundational importance in developing effective trading strategies.

Opportunity Is Nowhere vs. Opportunity Is Now Here

A memorable phrase learned from Ken Roberts—"opportunity is nowhere"—is discussed; it highlights how perspective can alter one's view on opportunities available in trading contexts.

Mentorship Impact on Trading Philosophy

Lasting Influence of Larry Williams

Introduction to Larry Williams' Trading Course

The Impact of Larry Williams

The speaker discusses receiving a flyer from Larry Williams about his "Futures Millionaire Confidential Trading Course," which was a 4 VHS tape series that deeply inspired him.

Larry Williams made a documented million dollars in trading during 1987, making him a prominent figure in the trading community of the late '80s and early '90s.

His success led to numerous teaching opportunities, including writing books and creating courses, capitalizing on his fame.

Personal Journey into Trading

The speaker shares how he became immersed in trading literature, spending around 80% of his weekly pay on books at Traders Library in Maryland.

Reflecting on this period, he acknowledges it as a wasteful expenditure but emphasizes the strong desire for knowledge that drove him.

Learning from Others

Resources Available Today

He advises against replicating his past spending habits due to the wealth of free resources available online, including YouTube channels offering valuable content.

The speaker finds inspiration from various traders who share their methods and psychology, even if he doesn't always agree with their approaches.

Importance of Discipline

Emphasizes the necessity for discipline in trading; successful traders maintain consistency despite market fluctuations.

Highlights that having faith in one's strategy is crucial; even small profits can grow significantly with proper money management.

Developing Trading Strategies

Finding Simplicity

The speaker recounts needing simple strategies while pursuing a computer science degree; visual patterns on charts helped him identify potential trades easily.

Bad Habits and Learning Experiences

Discusses challenges faced when trying to implement strategies, such as using buy stops without adequate stop-loss measures leading to poor trading habits.

Optimal Trade Entry Concepts

Shifting Perspectives

Initially wanting to emulate successful traders by buying high rather than low; later realized the importance of waiting for optimal entry points based on teachings from relevant literature.

Key Insights from Literature

Mentions learning about breakout strategies through reading materials that emphasize holding positions after significant price movements.

Accessing Educational Materials

Utilizing Online Resources

Encourages viewers to access educational resources like open libraries online where they can find valuable trading literature without cost.

Creative Learning Techniques

Suggestion for crafty individuals: use screen capturing software to record pages from online resources for personal study purposes since some materials are no longer printed.

Conclusion: Foundations of Optimal Trade Entry

Framework Development

Optimal Trade Entry Strategies in Trading

Understanding Optimal Trade Entries

The optimal trade entry is identified at a price point of 0.3, emphasizing the importance of entering trades before significant price movements occur to avoid "chasing" prices.

Utilizing strategies like buy stops or sell stops can be effective for traders who are not day trading or cannot participate during major trading sessions (London/New York).

The speaker reflects on past experiences with traditional indicators and how they failed to align with market movements, leading to confusion.

The Role of Market Narrative

A lack of understanding regarding market narrative can hinder effective trading; many common tools (like support/resistance lines and Fibonacci levels) often do not provide the expected clarity.

Teaching emphasizes that avoiding indicators can lead to clearer insights into market behavior, as indicators merely represent historical data rather than predicting future movements.

Analyzing Price Movements

The focus should be on anticipating initial price movements rather than relying on moving averages, which may only confirm trends after they have already occurred.

Traders should look for opportunities above previous weekly highs or below weekly lows instead of waiting for long-term signals like 12-month highs/lows.

Exploring Timeframes for Trading

By analyzing hourly charts and recent trading patterns over various time frames (5 days, 4 weeks, 3 months), traders can identify consistent patterns that inform their strategies.

Quarterly shifts in the market are highlighted as key moments where significant moves can be anticipated based on prior retracements.

Learning from Experience

New traders may find simplistic resources appealing but must recognize the potential pitfalls; real-world losses serve as critical learning experiences.

Personal anecdotes illustrate the challenges faced by traders in earlier years when technology was less advanced, emphasizing the evolution of trading practices since then.

Evolution of Trading Tools

Early trading involved manual charting methods that were cumbersome compared to today's technology; this highlights how far trading has come in terms of accessibility and efficiency.

Trading Education and Resources

The Shift in Trading Tools

The speaker emphasizes that using tools like MetaStock is acceptable for live trading, but educators should consider switching to platforms like TradingView or their own live accounts for teaching purposes.

There are now abundant resources available for traders that were not accessible in the past, allowing individuals to find their unique trading style without excessive spending on books.

Reflections on Learning and Mentorship

The speaker shares a personal anecdote about investing heavily in books, noting that many were unhelpful; however, they plan to highlight the most impactful ones from their extensive collection of over 2000 books.

A significant influence mentioned is Larry Williams, whose early video course left a lasting impression on the speaker. They recall being able to recite his teachings verbatim due to extensive study.

Key Influential Literature

"How I Made a Million Dollars Trading Commodities" by Larry Williams is highlighted as essential reading. Specific chapters (4, 5, and 6) are noted as particularly valuable and still relevant today despite being published in 1973.

The emotional impact of this book is discussed; it instilled hope in the speaker regarding financial independence at a young age.

Expectations vs. Reality in Trading

The speaker contrasts past realistic expectations with today's culture of instant gratification among younger traders who expect quick wealth without effort.

This sense of entitlement is viewed as problematic; the speaker reflects on how previous generations had more patience and realistic goals when pursuing success.

Personal Commitment to Learning

The speaker recounts their dedication to studying Williams' book every night after work, illustrating their commitment through physical wear on the book's dust jacket.

They possess multiple formats of this influential book (hardcover, PDF, Kindle), emphasizing its importance as a resource that evokes nostalgia and aids learning.

Practical Application of Knowledge

Insights from Williams' work have been applied successfully by the speaker in trading commodities such as soybeans and corn markets.

Understanding Market Structure and Trading Insights

Observations on Trading Literature

The speaker critiques a trading observation, suggesting it is not practical for trading decisions. They reference another book that discusses commitment traders, which inspired their own hedging program using COT data.

Market Structure Concepts

The speaker expresses reluctance to share insights due to anticipated reactions from those who claim to trade smart money but focus on order blocks and market structure differently than they do.

They mention learning market structure from Larry Williams through his VHS course, emphasizing its value for understanding futures trading.

Key Resources for Learning

The speaker highlights "Long-Term Secrets to Short-Term Trading" as a valuable resource, particularly for its concise teaching on market structure.

They caution readers not to expect more from the book than its insights into market structure, which offers a unique perspective compared to traditional methods.

Distinction in Market Analysis

The speaker clarifies that their understanding of market structure does not stem from Wyckoff's teachings but rather from other sources. They critique Wyckoff's historical approach versus their predictive methodology.

They assert that while Wyckoff focuses on past price action, they aim to forecast future movements with precision.

Institutional Market Structure

A second form of market structure discussed is institutional market structure, which involves analyzing price action signatures distinct from traditional teachings.

This approach challenges conventional understandings of price action by focusing on liquidity needs rather than typical buy signals or patterns.

Liquidity and Execution Strategies

The concept of the market efficiency paradigm is introduced; it emphasizes finding liquidity pools for executing trades rather than relying solely on chart patterns.

The speaker notes that deep pools of liquidity can be identified within price action beyond just old highs or lows.

Additional Reading Recommendations

They recommend "Secrets to Selecting Stocks for Immediate and Substantial Gains," linking it back to concepts like SMT divergence derived from Dow Theory.

For stock traders, combining this book with William J. O'Neil's "How to Make Money in Stocks" and an IBD subscription is suggested as beneficial for understanding strong stocks fundamentally.

Practical Advice for Stock Traders

While discussing the IBD newspaper format, the speaker mentions the convenience of electronic formats over physical delivery due to inefficiencies in print distribution.

Resources for Trading Insights

Overview of Financial Resources

The speaker discusses various financial resources they subscribe to, including Investors Business Daily and Wall Street Journal, expressing skepticism about their value relative to cost.

They emphasize the importance of sharing these resources with their audience, particularly those who frequently inquire about them.

Key Books and Concepts

A specific book is highlighted as foundational for understanding SMT (Smart Money Techniques), along with a chapter on chart reading that significantly influenced the speaker's trading approach.

The concept of Relative Strength Analysis is introduced, clarifying that it extends beyond just the RSI indicator commonly used by new traders.

Influential Learning Materials

The speaker references Larry Williams' VHS course as a critical resource for understanding advanced trading concepts not covered elsewhere.

Two volumes titled "The Definitive Guide to Futures Trading" are mentioned; each contains one influential chapter relevant to the speaker's development in trading strategies.

Understanding Market Dynamics

The idea of "zero balance" is discussed as an early influence on the speaker’s understanding of institutional market flow, despite its limited coverage in literature.

A significant chapter on measuring accumulation and distribution in commodities is noted as pivotal for changing how the speaker interprets price action.

Practical Application of Concepts

The speaker suggests creating an indicator based on cumulative differences between daily opens and closes to visualize professional distribution within markets.

Insights on Cumulative Lines and Price Action Analysis

Understanding Cumulative Lines

The concept of using cumulative lines to analyze the difference between a candle's open and close can provide deeper insights into market behavior.

Overlaying two cumulative lines allows traders to visualize institutional buying at lows and selling at highs, offering an "x-ray" view of market dynamics.

The speaker emphasizes that this method has not been shared in mentorship sessions, highlighting its uniqueness and potential value for traders.

Practical Application of Indicators

The speaker encourages viewers to create their own indicators based on the discussed concepts, suggesting that others may develop similar tools for free use on platforms like TradingView.

Utilizing Larry Williams' accumulation distribution formula as a model can enhance understanding of price action by comparing previous candle closes with new candle opens.

Visualizing Market Patterns

Observing price action through cumulative line charts reveals patterns not visible in traditional candlestick charts, allowing traders to see underlying market movements.

This approach is applicable across various asset classes, including stocks, commodities, and bonds, potentially revealing consistent patterns of accumulation and distribution.

Identifying Market Extremes

The analysis is particularly useful during market extremes rather than trending periods; it helps confirm suspicions about potential tops or bottoms in price action.

Recognizing these divergences can assist traders in making informed decisions regarding entry or exit points based on significant market shifts.

Reflections on Commodity Trading Literature

The speaker shares insights from a book titled "Short Thing Commodity Trading," which inspired them despite its outdated content related to now-nonexistent markets like pork bellies.

Understanding Seasonal Tendencies in Trading

The Importance of Seasonal Tendencies

The speaker discusses the influence of a specific book and VHS course on their understanding of seasonal tendencies in trading, emphasizing the importance of not misnaming it.

Steve Moore is highlighted as a leading expert in seasonal tendencies, with his service providing exceptional data visualizations that allow traders to analyze trends over various timeframes (5, 10, 20, and even 25 years).

Strong seasonal tendencies are identified by their consistency across multiple timeframes; these insights serve as valuable roadmaps for short-term or swing traders.

Evaluating Resources and Services

While acknowledging that no method guarantees success, the speaker asserts that Steve Moore's resources are invaluable for those interested in seasonal trading patterns.

The speaker emphasizes their personal experience with Moore’s services without any financial incentive, reinforcing the credibility of their endorsement.

Trusting Data Over Contrived Information

The speaker critiques other sources of seasonal tendency data as unreliable and contrived compared to Steve Moore's offerings.

After discovering Moore's work through Larry Williams' trading methods, the speaker has remained loyal to this resource without seeking alternatives.

Influential Books in Trading Development

Key Mentorship and Learning Experiences

Larry Williams is recognized as a significant mentor despite never having met him; the speaker expresses admiration for his contributions to trading knowledge.

A pivotal book titled "Street Smarts" from 1995 is mentioned as influential in shaping the speaker's understanding of market mechanics.

Understanding Market Patterns

The concept of "Turtle Soup," which relates to reversal patterns and stop hunts, is introduced. This terminology helped clarify complex ideas about market behavior for the speaker.

The term "Turtle Soup" was used by the speaker to communicate concepts related to stop runs effectively during early teaching experiences.

Evolution of Trading Strategies

Although recognizing its validity, the speaker does not personally trade based on Turtle Soup but acknowledges its role in understanding market dynamics.

In 1995, key realizations about liquidity pools and smart money began forming a cohesive strategy for trading based on historical data and trends.

Implementation of Concepts

The year 1995 marked a turning point where various concepts coalesced into actionable strategies that would later inform many current trading practices attributed to the author.

Understanding Trading Patterns and Influences

Key Insights from Influential Books

The speaker discusses the importance of understanding trading patterns, particularly referencing a book that covers the stochastic indicator and various setups. They emphasize the value of learning from established discussions in trading literature.

The speaker shares their personal approach to trading, likening it to a "kitchen sink" method where they bring all tools into the market. This minimalist strategy focuses on eliminating unnecessary elements to enhance effectiveness.

They highlight specific chapters (four, five, and nine) from a book that were pivotal in their development as a trader, particularly focusing on concepts like "turtle soup" and "ante."

Inspirational Interviews and Concepts

The speaker finds inspiration in interviews from notable traders featured in "Market Wizards," especially appreciating Linda Raschke's analogy of reading price charts like sheet music.

They express indifference towards other interviews but note George Angel's seminar on his S&P trading methodology called Spyglass, which introduced them to intraday trading concepts.

Understanding Price Vacuums

The concept of price vacuums is discussed as an inefficiency or imbalance in the market. The speaker credits George Angel for introducing this idea, which has been prevalent longer than many realize.

They explain how floor traders historically tracked highs and lows to anticipate market movements, emphasizing the significance of these observations in making profitable trades.

Pivot Points and Market Psychology

The discussion includes how pivot points originated from floor traders' practices. These numbers still influence modern traders who use them for decision-making based on anticipated market behavior.

The speaker notes their fascination with observing price action contrary to retail expectations when using pivot points or indicators, indicating a strategic advantage over less informed participants.

Distinction Between Teaching Styles

A reluctance is expressed about creating content due to concerns over others rebranding or misrepresenting teachings derived from Wyckoff’s methods while failing to acknowledge original sources.

Understanding Trading Mentorship and Influences

The Role of Mentors in Trading

The speaker discusses how many traders claim to learn from various mentors, yet they actually learned from the speaker's own teachings. This highlights the influence of mentorship in trading education.

The speaker references a first edition book that is no longer available, emphasizing the importance of diligent research for traders seeking valuable resources.

Insights from Influential Books

A specific book inspired the speaker's approach to intraday trading, particularly regarding buying at lower prices rather than following trends of buying strength.

The speaker expresses high respect for Larry Williams, noting that while he teaches about buying on strength, there may be deeper insights he withholds from his audience.

Data-Driven Trading Concepts

The discussion shifts to data-heavy materials that focus on probabilities related to opening and closing prices, contrasting them with more visual trading methods.

The speaker reflects on how understanding these probabilities helped him decipher challenges faced by other traders like Larry Williams.

Personal Experience and Learning Process

Emphasizing personal experience, the speaker notes that years of trial and error have led to valuable lessons which are now shared through video content for others' benefit.

He recommends Toby Crable’s book as an excellent resource for those interested in intraday trading and building confidence through case studies.

Understanding Profitability Models

Ryan Jones is introduced as a more accessible author compared to Ralph Vince; both authors provide insights into mathematical approaches in trading but vary in readability.

The concept of capturing small profits (like 10 pips in Forex trading) is discussed as a viable strategy that can lead to significant earnings over time when executed consistently.

Understanding Money Management in Trading

Theoretical Profit from 10 Pips

Discusses the potential for profit when applying money management strategies to trading with a focus on small movements (10 pips).

Emphasizes that while significant wealth is not guaranteed, the insights gained can shift perspectives on making money through trading.

Influential Literature on Money Management

Mentions Ralph Vince's contributions to money management and highlights his library of works.

Notes that one particular book is less impactful, described as a "watered down rehash" of previous ideas.

Advanced Strategies and Risk Management

Describes the books as dry but valuable for profitable traders looking to enhance their models using gaming theory.

Highlights the importance of balancing profit output with risk management techniques taught by Ralph Vince.

Historical Success in Trading

References Larry Williams' success in turning $10,000 into $1.2 million during a trading contest, attributing part of this success to Ralph Vince's principles.

Points out that Williams had even higher profits at one point before experiencing losses due to market crashes.

Personal Development Through Mentorship

Shares personal experiences of developing a unique money management approach influenced by Ralph Vince and Larry Williams.

Acknowledges the emotional challenges faced after initial losses but emphasizes the importance of adjusting strategies accordingly.

The Role of Mindset in Trading

Early Attitudes Towards Losses

Reflects on an early mindset where losing was accepted as part of learning, indicating resilience and long-term commitment to improvement.

Unrealistic Expectations Among New Traders

Observes that many new traders expect immediate results, contrasting this with his own understanding that success takes time and effort.

Influence of Foundational Books

Clarifies that while influential books shaped his views on money management, they do not directly reflect his teaching methods or concepts about market structure.

Algorithmic Insights and Unique Approaches

Distinction from Traditional Mentors

States that none of his mentors discussed algorithmic approaches or Forex inspirations; instead, he built upon their foundational ideas to develop unique insights.

Innovative Techniques

Claims that students under his mentorship gain new perspectives on trading due to innovative techniques he has developed over time.

Personal Inspirations Beyond Trading Literature

Spiritual Foundations

Insights on Life, Faith, and Trading

Personal Reflections on Imperfection

The speaker acknowledges their imperfections, admitting to losing control of their tongue and expressing anger. They emphasize the importance of recognizing these flaws and seeking forgiveness through repentance.

The Bible as a Guide

The speaker views the Bible not as an outdated mythological text but as a vital instruction manual for life, offering insights into self-awareness and interpersonal relationships.

Stewardship and Responsibility

Emphasizing stewardship, the speaker argues that one must be responsible with what they have before expecting more. This principle underlines the importance of effort in achieving success.

Enduring Challenges

The speaker reflects on personal struggles in trading, highlighting that suffering can lead to growth. They stress maintaining faith despite setbacks encountered along the journey.

Learning from Adversity

Acknowledging that challenges are part of learning, the speaker aims to help others navigate difficulties without being overwhelmed by them. They believe this guidance will keep individuals engaged in their pursuits.