Psychologists have proven that the quality of decisions we make under stress is lower than those we make in a peaceful and relaxed frame of mind, observes Elder. He says that you are likely to make better decisions, increase your profits, and reduce your losses if you write down your selling plan before you buy.

Despite the advantages of a written plan, many do not make one because of lack of knowledge. More worrying is the other reason that the author finds as the hurdle to planning: the desire to dream. A written plan cuts into sweet day-dreaming business, he chides.

“It feels nice to lean back and drift into a vague fantasy of riches. Sitting up straight on a hard-back chair and writing down your specific goals as well as a contingency plan robs you of that vague fantasy.”

The book wakes you up from such idle fancying into selling short. Find a stock that you hate, a stock that you think is going sharply lower, and sell a few shares short, Elder urges.

In his view, the three essential assets of trading are memory, patience, and experience, all virtues of age. “But first, in order to benefit from your experience, you need to survive and stay in the game long enough to learn to play it well…”

Recommended read for serious traders.

Stock selection, timing of the entry and exit, and portfolio management are the three strategies that make up the investing process, say David Brown and Kassandra Bentley in ‘All About Stock Market Strategies: The Easy Way to Get Started’ ( www.tatamcgrawhill.com ). This process underlies every investing style – be it momentum, growth, or value.

How to select stocks? Not randomly, acting on tips or recommendations by friends or neighbours or on a story you read in the newspaper or learned about on television, the authors advise. “Even if the price is reasonable, acting on a random tip is not a very effective way to select a stock. Instead, why not buy the best possible stock for your investment goals, rather than just an ‘okay’ stock?”

Use an online search engine to create a screen with criteria reflecting your investing goals, guide Brown and Bentley. “All stocks in the database are then filtered through that screen and only those that match your requirements are allowed through. It is similar to using a matchmaking service to search for an ideal date.”

Starter study material.

Mishandling money is one of our favourite ways to get ourselves into difficulty, laments Ernie J. Zelinski in ‘101 Really Important Things You Already Know, But Keep Forgetting’ ( www.macmillanindia.com ). “Unfortunately, money is more often misused and abused than used intelligently… Financial insanity has developed its own big following.”