This book came in two days ago. I had it on preorder for what feels like forever. The title is Best Loser Wins, written by Tom Hougaard. I’ve read it front to back. Twice.
I didn’t anticipate reviewing a book in this corner of the Internet but, this… not only this is on topic. I swear, this is required.
Now, before I can talk about the book with any kind of efficacy, I somehow have to find a way to introduce you to the character that is its author. But first, a foreword:
I am not endorsed in any way. The author, Mr. Tom Hougaard, which in this article I have no permission to informally refer to as “Tom”, has no idea who I am. The fact that I know so much about him is because I am a bloody stalker. I seek his content. I download and chart and analyze Tom’s trades. He has been invaluable to my progress. And with this book, he keeps on giving.
If you happen to engage in any kind of trading, you may have experienced this: a position is relentlessly losing you money, and it’s like some entity at the other end of the trade has decided to sink its teeth in your flesh. It won’t let go and it’s dragging you down. The market is now sentient, and it’s out for blood. Yours specifically.
Sounds familiar? Of course it does. The market has not singled you out, this is a coping mechanism to rationalize the pain of being wrong and paying for it.
But the entity that is drawing your blood, well it actually exists.
And it’s probably Tom Hougaard.
No kidding, that is what I actually think when I see Tom trading. Tom is a successful high-stakes trader. When he loses, he loses big. When he wins, he wins far bigger.
Tom hosts a YouTube channel, which is how I came across the guy. The backdrop of Tom’s live sessions reads:
Do sharks complain about monday?
They’re up early. Biting stuff. Chasing shit. Being scary.
Reminding everyone they’re a f*king shark.
His channel and his website (www.tradertom.com) deliver a neatly organized treasure trove of trading education and psychology material, and live trading sessions which are not doctored or edited in any way. It’s all in the open. Instances of bad outcomes too.
Tom also manages a Telegram channel in which he posts, live, his own trading activity. It is said there are trading rooms replicating Tom’s trades. I have no trouble believing this.
To this day Tom isn’t getting any money from this. As a matter of fact, the project is costing him money and time. But he says that public trading helps him in being more accountable for his own trades.
Tom is also a fantastic teacher, literally unable to be boring. If you ever come across the opportunity to attend one of Tom’s talks, go for it. For what it’s worth, you have my word you wouldn’t regret it.
Like other great stage speakers, Tom loves to deliver concepts, analogies, and jokes. You can always tell that he really is into the moment. He genuinely enjoys it. It’s not there because he has agreed to deliver a talk. He is there because he is having a blast.
Tom does all of the above of course because he is one of those people who feel the need to give back.
This is the kind of character behind the book.
Best Loser Wins
This book starts as a love letter to the markets. And like any love good story, it involves a lot of pain.
Pain, being uncomfortable, is the whole point of this essay. It is designed to make you being ok with being uncomfortable.
Tom in this book is very adamant, almost blunt, about one thing: 90% of the traders lose money. And he’s right. That is where the winner’s money comes from.
The vast majority of the market participants provide liquidity and lose money in the process. They are very intelligent operators, and they all go through heaps of technical analysis, they are all equipped with the best tools, but still end up losing money. They are overall normal, well-functioning, rational people.
Why do they lose?
Because normal just doesn’t cut it.
Tom cut his teeth in the trading industry. Among other things, he gained insight into traders behaviours by observing their operativity from the broker’s perspective.
The objective of this book, the way it is engineered, is to give you a very tangible blueprint of the path that Tom has fought through in order to become one of the 1%.
Editing this book must have been an excruciating exercise.
Judging from how much Tom loves to talk, how articulate he is, to explain his view, make analogies, consolidate concepts, tell stories, and deliver jokes, I have no trouble thinking this work started as a manuscript twice the final size. One can almost feel the struggle between the author and its editor fighting sentence by sentence, to refine it to the current form.
That struggle paid off. This is a brilliant piece. The book is 250-odd pages, making up for a very entertaining ride, around intimate aspects of Tom’s experiences, and about many practical aspects of trading psychology.
Tom’s hard-earned wisdom explains that “normal” consists in a number of emerging human behaviours designed to avoid pain and being uncomfortable when managing a trade. All of them, invariably, are counter-productive in the long term. This book is of course is not the first one assessing this.
But it comes first in giving you very tangible methods, routines, behavioural structures and tricks to cope with that. This is a very practical, hands-on book. This is a recipe book.
In my personal view this read should be a natural progression from Trading in the Zone by late Mark Douglas (which isn’t a prerequisite, as Best Loser Wins stands alone just fine). Douglas’ books are the cornerstone of trading psychology, and deeply understanding Trading in the Zone gives you the introspection tools to spot what’s going on in your mind as you approach the market. But from that point, you are on your own. Douglas unveils what’s wrong with your trading mind, and that’s a huge step forward, but how does one go about to take control over it?
Best Loser Wins, in my opinion, has all the answers and more.
This is not a book about how long-term profitable trading is done, it is a book about how it is endured. And it isn’t actually about trading itself, although it comes with more than enough trade examples.
It’s a book about pain, about being uncomfortable. And accepting it. Dealing with it, because being profitable implies being uncomfortable for the entire journey.
What not to expect.
For starters, this is not a beginner’s book. It should be read by anyone who wishes to be profitable for the long haul, ok, but it assumes that the reader is comfortable at least with the basic tools.
The book is not a self-help program. It is not a new-age/ask-and-you-will-be-given thing. And it is not intended to solve any of the technical problems that may affect you and your operativity. Correctly understanding how your strategy of choice works, that is your responsibility.
It is not explicitly aimed at investors and position traders (although they would benefit from reading it too), instead it is geared to best engage with the minds of short term and swing traders.
What to expect instead?
Best Loser Wins teaches how to self administer a very focused mind surgery.
It teaches how to train your brain to respond inhumanely to the survival impulses that plague the normal way of approaching (or not approaching) a trade. It’s going to require a hell of a lot of effort, and trial and error on the reader’s part. But you don’t have to trust me when I say it pays off. I’d say trust the author.
Tom has a very peculiar personal history, and is a complete trader with intimate knowledge of the markets. He is able to trade essentially any security in any timeframe. He is also the kind of person who values the quality of his rest above all – the book explains why – and therefore he mostly engages in scalping and day trading of stock indexes.
In Best Loser Wins, Tom has no problems displaying his losing streaks. He is completely upfront about everything, showing you how he deals with the aftereffects that losing, or winning, have on the human psyche.
Tom may take a bad blow, but he has mastered himself to the point of being able to gain insight from what just happened, regain perfect stability quickly, and attack the markets. Blow after blow, day in and day out.
Among other things, Tom is a master in charts and technical analysis, but this doesn’t mean he blindly believes in them. The book does not teach you a strategy with 1 to 25 risk-reward ratio (although it tells how one can exist).
It doesn’t teach you any trading strategy at all.
Instead it provides examples and pointers on how to be prepared to trade a market. How to study it. What to expect from it. How to get intimate enough to gauge what its next move would be. When to assume your opinion is wrong.
Best Loser Wins wants you to not be afraid of failing. It will guide you through the complex undertaking of extracting actual value from failures. It teaches you how to become cynical and resilient.
The whole point of the book is to provide you with the tools required to behave inhumanely. It is a training regimen to correctly perform the most uncomfortable tasks that are necessary to succeed. Things like:
- Sit on your hands and wait
- Act aggressively according to plan, setting aside all cognitive dissonance
- Dealing with loads of excruciating pain
- Accept losses, extract value from them
- Keep going.
Tom argues that normal, well-adjusted rational people don’t work well as traders because they are hopeful when they should be fearful, and fearful when they should be hopeful. Adding to losers, letting them run, and cutting winners. In all of his published content Tom teaches how to, essentially, turn the trading game upside down.
Best Loser Wins teaches you both how to be humble, and how to be the f*king shark.
The book is available on Amazon, paperback, Kindle and audiobook. (Not a sponsored link).
Everything you ever wanted lives on the other side of fear.
Then it’s time we learn how to navigate it.
Seriously, read the book!