A review of Josh DiPietro’s book “The Truth About Day Trading Stocks”

“The Truth About Day Trading Stocks: A Cautionary Tale About Hard Challenges and What It Takes to Succeed” by Josh DiPietro. Mr. DiPietro opens his book with the line “The purpose of [this book] is to caution, and to some degree reprogram, the naive, heedless amateur day-trader. I want to prevent beginners from watching their money disappear.” Indeed, this book lacks the sugar coating, ultra-motivating, get rich quick feel that other books on day trading offer. But it is because of his brutal honesty that this book is a must read for anyone considering the field of day trading.

The first 5 chapters of the book focus mainly on the psychology of the investor and how to manage your rollercoaster of emotions so that they don’t cause you to trade impulsively and lose your money. The author goes on to then explain the importance of risk management and budgeting your investments. Basic strategies are briefly covered, including averaging down, stop/loss orders, and picking the right online brokerage.  Techniques are not fully explained, but are introduced very generally, so the reader will need to look to other books focused on technical analysis to learn the actual ropes of day trading.

This book is a very easy read. It is written in a casual style with numerous personal accounts of failure and success given by the author.  It is these stories of the author’s personal accounts that make his warnings more imaginable by the reader. I have read many books about day trading and most share the same warnings. With other books, I often thought to myself “well I wouldn’t do that” but Josh DiPietro’s candid personal accounts are convincing and help you understand the reasoning behind why you would also make those mistakes.  

In addition to being an easy read that brings the reader into the author’s world, this book mainly focuses on the psychology of investing. This area of study  is undervalued and spoken little of but it influences every trader and is often the cause of extreme losses. To avoid losses, a trader must examine their reactions to volatile trading environments and how they cope with profits and loss. They must confront greed, fear, and anxiety, which all come into play when trading large sums of money.

A new day trader will definitely need to supplement his/her reading with another book that focuses more on technical analysis. This book does not offer step-by-step or in-depth training on technical analysis and the many trading techniques that are used by the successful day trader.

This book is focused more towards the beginning day trader than an experienced trader. As such, an experienced trader may not find this book very helpful; especially if they have already experienced the losses that DiPietro covers . Despite this, only good (or loss of a small amount of free time) can come from reading this book and re-reflecting on such losses for the experienced trader.

Other books I would recommend for the beginning day trader, or those experienced traders interested in the psychology of investing would be by those of Dr. Van Tharp.