trading-book-library

Trading Book Library

Condensed wisdom from 62 trading books (17MB, 3M words). Extracted frameworks, principles, and techniques.

Core Frameworks

The Turtle Trading System (Turtle Trader, Way of the Turtle)

• Entry: 20-day breakout (buy above 20-day high)
• Exit: 10-day breakout in opposite direction
• Position sizing: ATR-based, risk 1-2% per trade
• Pyramiding: Add at 0.5 ATR intervals, max 4 units
• Principle: "Trade what you see, not what you think"

Risk Management (Trading in the Zone, Market Wizards)

• Core rule: Never risk more than 1-2% on any single trade
• R-multiple: Every trade expressed as risk/reward multiple
• Expectancy: (Win% × Avg Win) - (Loss % × Avg Loss)
• Drawdown management: Scale down at 20% DD, stop at 30%
• Principle: Mark Douglas: "Anything can happen"

Candlestick Patterns (Beyond Candlesticks, Encyclopedia of Chart Patterns)

• Reversal: Hammer, Shooting Star, Engulfing, Morning/Evening Star
• Continuation: Three White Soldiers, Rising/Falling Three Methods
• Indecision: Doji (Dragonfly, Gravestone, Long-legged)
• Confirmation: Always wait for next candle to confirm
• Principle: Nison: "The market is a discounting mechanism"

Volume Price Analysis (Anna Coulling)

• Key signal: Volume confirms price — high volume + price move = valid
• Testing: Low volume on pullback = healthy, high volume = distribution
• Climax: Ultra-high volume + narrow range = exhaustion
• Principle: "Volume precedes price"

Market Wizards Principles (Schwager)

1. Have a method: Every wizard had a specific, repeatable edge
2. Cut losses: "Losers average losers"
3. Let winners run: "It's not whether you're right, it's how much you make when you're right"
4. Risk management is primary: Position sizing > entry timing
5. Discipline over intelligence: Emotional control beats IQ
6. Adapt or die: Markets change, methods must evolve

Behavioral Finance (Fooled by Randomness, When Genius Failed)

• Survivorship bias: We only see the winners, not the thousands who failed
• Black swans: Fat tails are real; prepare for the impossible
• Overconfidence: Most traders overestimate their edge
• Principle: Taleb: "Never cross a river that is on average 4 feet deep"

Ichimoku Cloud (Trading Ichimoku)

• Components: Tenkan-sen (9), Kijun-sen (26), Senkou Span A/B (52)
• Bullish: Price above cloud, Tenkan > Kijun, future cloud green
• Bearish: Price below cloud, Tenkan < Kijun, future cloud red
• Kumo twist: Senkou A crossing B = trend change signal

Buffett/Graham Value Investing (Intelligent Investor, Buffett Essays)

• Margin of safety: Buy below intrinsic value
• Circle of competence: Only invest in what you understand
• Mr. Market: Use volatility, don't be used by it
• Long-term: "Our favorite holding period is forever"

Key Principles Cross-Referenced

Position Sizing

Stop Loss Placement

Exit Strategies

Anti-Patterns to Avoid

1. Averaging down (losers average losers — Paul Tudor Jones)
2. Over-optimization (curve-fitting to historical data)
3. Ignoring correlation (multiple positions in same sector = hidden risk)
4. Position size drift (letting winners become oversized)
5. Revenge trading (trading to recover losses)
6. Analysis paralysis (too many indicators, no action)
7. Premature profit-taking (cutting winners short)

On-Demand Chapter Lookup

The full extracted text (17.65MB, 62 books) is available at: C:/Users/ARTHUR~1/AppData/Local/Temp/book_skill_work/full_text.txt

Use search_files(pattern="book_name", path="C:/Users/ARTHUR~1/AppData/Local/Temp/book_skill_work") to find a book's SOURCE header, then read_file with offset/limit to stream chapters into context. Each book is marked by its ==== SOURCE: filename.txt ==== header.