In my opinion, the best trading book ever was written in the 1930s.
Author: Gerald M. Loeb.
And it is probably because of its somewhat unspectacular title that the book has remained unknown to many: "The Battle for Investment Survival.”
Why would I choose this book and not one that was published just last year?
Because this book was written by an old hand who knew what really matters on the stock market. And that was not much different in 1935 than it is today, whether you use a computer or not.
To start with: Loeb does not believe in diversification. On the contrary. He advises keeping most of one's assets in cash and speculating aggressively with a small portion. You create a fortune through concentration, not diversification.
Of course, he advises limiting losses quickly. You wouldn’t expect anything else from a savvy professional.
He also recommends investing only in highly liquid stocks (index futures did not exist at that time).
Further: Specialize! Do not try to be a master in stock trading, real estate, foreign exchange, and commodities all at the same time. Decide!
Only buy a share which is expected to greatly increase in value. You can safely leave the others behind.
And finally, he advises a student of his investment strategy: only buy one stock at a time.
You hear it right: only one stock at a time.
Only when you have sold this paper can you make a second commitment.
Do not do anything unless there is an exceptional opportunity.
And here is the thing: the correct method is to buy the same stock repeatedly as the price rises.
So, he is not advising, buy a stock and then do nothing.
The trader should buy a first position, as a test, so to speak. If the market confirms his assumption, then he should systematically increase the position!
This is quite different from spreading one’s assets out in ten different securities...
In my opinion, you cannot give a better advice to someone who intends to make money on the stock market.
He traded for a hedge fund and then went on his own. He specializes in scalping and fast day trading. His scalping book "Scalping Is Fun!" is an international bestseller and has been sold more than 30.000 times. His books have been translated into 11 languages.