- Ari Kiev, M.D. Trading to Win: The Psychology of Mastering the Markets, John Wiley & Sons, 1998, 288 pages, $34.95
There are three ways to make money on Wall Street: trading, investing and offering services to people who trade or invest.
Few traders are really good. Many investors are at best fair. Most of the advice or services offered to traders and investors should be classified as mediocre at best. Some offerings, like Ari Kiev's
Trading to Win
, are simply poor. So why read further? Because buried among the many flaws of this book there are some kernels of value.
Kiev is a well-known psychiatrist and the author of a score of books on such diverse topics as stress, suicide, drug abuse and depression -- not to mention Mexican folk psychiatry. It's clear he has enough breadth to be an invaluable sounding board for traders seeking to spend more time understanding themselves. The book's presentation, though, unfortunately raises the question of whether Kiev is the top-flight trading coach he claims to be.
The problem is the book's lack of in-depth case studies -- examples of how traders make decisions from moment to moment when large amounts of money are on the line. The best way to learn more about being a trader is to read behavioral profiles of other traders -- both good and bad. Kiev tells readers to find models of successful traders by studying someone who approaches trading the way you do.
Yet in presenting his insights, Kiev employs the increasingly popular -- and controversial -- practice of providing what are called "composites." (These are assemblages of purportedly real people who seek to "teach" through the author's artful arrangement rather than the imperfect examples offered up by real life.")
Kiev uses more than 50 different composites to illustrate traders' various behavior patterns, along with his observations and advice. In justifying these composites, he states:
Because of the proprietary nature of many of the issues considered in this book, I have not identified any specific traders by name. All personality profiles represent composites of the various traders. ...
Yet the "personality profiles" Kiev describes are so brief that readers never get a sense of the person as a whole -- only that side which Kiev seeks to show us in order to make his point. Thus truncated, few of the examples ring true to anyone who has spent time on a real trading desk. And they're poorly written: One of the profiles actually begins with one name and switches to another mid-stream.
The skeptical reader is left to conclude that while some of the principles Kiev espouses may be valid, his examples are too fuzzy to be of much use to any but the amateur trader. The problem may be process: Kiev wrote this book after a six-year consulting assignment for
SAC Capital Management
, a hedge fund whose traders Kiev met with on a weekly basis. Kiev clearly understands psychology, but he hasn't demonstrated a deep grasp of trading mechanics. Nor is anything he describes even remotely "proprietary."
The good parts? Kiev's shibboleths hit home:
- Review each day's trades before you quit for the day.
- Don't take personal calls while trading.
- Learn to recognize when you are tense.
This last one is a valuable skill, and one Kiev teaches well. His advice on how to relieve this tension, described in Chapter 3, can be applied in any stress-inducing work environment.
Kiev consistently urges traders to stretch themselves, to push themselves out of the comfort zone of making a good day's wage and to press for more.
The core of Kiev's advice is in a chapter entitled "100 Percent Commitment." He writes:
Commitment implies a willingness to promise a result when there is no guarantee of the outcome. Simply making the promise -- taking that risk -- taps enormous energy that fuels the realization of financial goals.
In various parts of
Trading to Win
, Kiev also tells us how traders sabotage themselves, and he tries to show how other traders have learned to know themselves. But once again, his composite profiles are not up to the task.
Unfortunately, the valuable ideas in this book are so poorly organized and weakly written that spending $34.95 will, for some, amount to a mediocre trade. And that's a shame, because Kiev appears to be a tough coach whose book might have been very helpful had he done a better job.
Desmond MacRae is a New York based freelance journalist specializing in banking, finance and investments. He is a regular contributor to Managed Account Reports, Global Investment and Plan Sponsor. TheStreet.com has a revenue-sharing relationship with Amazon.com under which it receives a portion of the revenue from Amazon purchases by customers directed there from TheStreet.com.