I’ve decided to a series of posts covering some basics of trading/investing. For lack of a better name, I’m calling it ‘Trading 101′. Much, if not all of what I write will apply to both trading and investing. In fact, I see no difference between the two, except maybe for time frames. I like to think of investing as just longer term trading. I’ll get more into that later.

Part of what I wanted to do with this site when I started it was to explain to people how I go about my trading. I’ve tried to write my posts such that a person with minimal market knowledge could understand what I’m talking about. But after getting some feedback from friends, I guess I’ve failed in that attempt. So I’d like to use this series to step back a bit and explore some basics of what I do. By no means am I attempting to write a treatise on trading. I don’t have the time for that and there are plenty of well-written books on the subject already.

I’ve written a tentative table of contents for this series which will give you a general idea of what I’ll be covering. That page will change over time, as what you see now is just my first shot at outlining this project. Once I finish a topic, I’ll post it to my weblog and modify the TOC so that it will link to the newly completed post. You’ll also be able to choose the ‘Trading 101′ category from the archives section on the front page of my weblog to get all of the completed posts. I’m going to try to do a couple of posts in this series per week.

Here’s a little bit about what I plan to cover in each section:

Recommended Reading

I’ve had a list of books on my front page for a while now. Of the 30 or so stock market books I’ve read, those listed are the ones that I found most useful. Two in particular, How to Make Money in Stocks and Trader Vic: Methods of a Wall Street Master, should be read by anybody who is serious about being involved in the markets. It was those two books that really opened my eyes to the workings of the markets. So I’ll be using this section to write reviews of each of those books.

Money Management and Risk Management

I’ve said before that money management is the most important part of trading, yet most books barely discuss it, if they even mention it at all. There is way too much focus on position entry techniques. You can have the most intricate entry methodology on Earth, but if you don’t work on exits, position sizing, favorable risk/reward ratios, etc., you’ll soon be broke.

Technical Analysis

Technical analysis (TA) is basically chart reading. There are tons of indicators and methods of doing TA, of which I use a very small subset. I think this is where I lose a lot of people in my posts. When my friends tell me that they don’t know what the hell I’m talking about it’s because of the technical jargon I use in my writing (at least I hope that’s the reason). I’ll give an overview of the indicators and techniques that I use. Again, don’t expect me to write a TA book — there are more than enough resources available already. TA can be a great help in timing your entries and exits, regardless of your time frame.

Fundamental Analysis

This is an area that I’m not even sure I want to discuss, but I think I should write a little something about fundamental analysis (stop laughing Duru!). For my short-term trading I really don’t care about fundamentals at all. But I think they are very important for longer term investing. So I’ll do a real high level discussion on this topic, and of course point you to other resources to get more information.

Trading Rules

There’s certainly no shortage of trading rules in existence, many of which contradict each other. Nevertheless there are many that are very powerful and have stood the test of time. I’ll list some of my favorites in this section.

Software, Websites & Other Resources

This is pretty self-explanatory. I’ll talk about the resources I use in my trading.

Miscellaneous

These are just some topics that I’d like to discuss but don’t cleanly fall into any of the above headings. I expect that I’ll be adding much more to this section over time, or I’ll just add another heading.

Please let me know if there are any topics you’d like me to address that I haven’t mentioned yet.