TRADING - THE LAST FRONTIER

You can be free. You can live and work anywhere in the world. You can be independent from routine and not answer to anybody.

This is the life of a successful trader.

Many aspire to this but few succeed. An amateur looks at a quote screen and sees millions of dollars sparkle in front of his face. He reaches for the money - and loses. He reaches again - and loses more. Traders lose because the game is hard, or out of ignorance, or lack of discipline. If any of these ail you, I wrote this book for you.

How I Began to Trade

In the summer of 1976,1 drove from New York to California. I threw a few books on psychiatry (I was a first-year psychiatric resident), several histories, and a paperback copy of Engel's How to Buy Stocks into the trunk of my old Dodge. Little did I know that a dog-eared paperback, borrowed from a lawyer friend, would in due time change the course of my life. That friend, incidentally, had a perfect reverse golden touch-any investment he touched went under water. But that's another story.

I gulped down the Engel book in campgrounds across America, finishing it on a Pacific beach in La Jolla. I had known nothing about the stock market, and the idea of making money by thinking gripped me.

I had grown up in the Soviet Union in the days when it was, in the words of a former U.S. president, "an evil empire." I hated the Soviet system and wanted to get out, but emigration was forbidden. I entered college at 16, graduated medical school at 22, completed my residency, and then took a job

as a ship's doctor. Now I could break free! I jumped the Soviet ship in Abidjan, Ivory Coast.

I ran to the U.S. Embassy through the clogged dusty streets of an African port city, chased by my ex-crewmates. The bureaucrats at the embassy fum­bled and almost handed me back to the Soviets. I resisted, and they put me in a "safe house" and then on a plane to New York. I landed at Kennedy Airport in February 1974, arriving from Africa with summer clothes on my back and $25 in my pocket. I spoke some English, but did not know a soul in this country.

I had no idea what stocks, bonds, futures, or options were and sometimes got a queasy feeling just from looking at the American dollar bills in my wallet. In the old country, a handful of them could buy you three years in Siberia.

Reading How to Buy Stocks opened a whole new world for me. Returning to New York, I bought my first stock-it was KinderCare. Ever since then, I have avidly studied the markets and invested and traded stocks, options, and now mostly futures.

My professional career proceeded on a separate track. I completed a resi­dency in psychiatry at a major university hospital, studied at the New York Psychoanalytic Institute, and served as book editor for the largest psychiatric newspaper in the United States. These days, I am busy trading and go to my psychiatric office, across the street from Carnegie Hall, only a few after­noons a week, after the markets close. I love practicing psychiatry, but I spend most of my time in the markets.

Learning to trade has been a long journey-with soaring highs and aching lows. In moving forward -or in circles -I repeatedly knocked my face against the wall and ran my trading account into the ground. Each time I returned to a hospital job, put a stake together, read, thought, did more test­ing, and then started trading again.

My trading slowly improved, but the breakthrough came when I realized that the key to winning was inside my head and not inside a computer. Psychiatry gave me the insight into trading that I will share with you.

Do You Really Want to Succeed?

For the past 17 years I've had a friend whose wife is fat. She is an elegant dresser, and she has been on a diet for as long as I have known her. She says she wants to lose weight and she does not eat cake or potatoes in front of

people - but when I come into her kitchen, I often see her go at it with a big fork. She says she wants to be slim, but remains as fat today as the day we met. Why?

The short-term pleasure of eating is stronger for her than the delayed pleasure and health benefits of weight loss. My friend's wife reminds me of a great many traders who say they want to be successful but keep making impulsive trades-going for the short-term thrills of gambling in the markets.

People deceive themselves and play games with themselves. Lying to others is bad enough, but lying to yourself is hopeless. Bookstores are full of good books on dieting, but the world is full of overweight people.

This book will teach you how to analyze and trade the markets and how to deal with your own mind. I can give you the knowledge. Only you can supply the motivation.