There is more to be learned from one guy who lost a million trading stock than from all the books wrtten by guys who won millions: What I Learned Losing a Million Dollars, by the late Jim Paul.
Nuggets:
Trying to make money in the markets by imitating the most successful pros is a waste of time: “What one guy said not to do, another guy said you should do.... if one guy did what another said not to do, how come the first guy didn’t lose his money? And if the first guy hadn’t lost, why didn’t the second guy?”
The key strategy for making money as a trader is an ability to control losses. “Learning how not to lose money is more important than learning how to make money.”
Make the distinction between external and internal losses. An external loss is an objective fact. Say Kentucky loses a basketball game -- as an external, objective fact, it's no more of a loss for the players than the fans. But players and fans “could internalize the loss if they equated their self-esteem with the success or failure of the team.” Traders tend to internalize their losses by equating losing money in the market with being stupid or wrong -- which accounts for people’s unwillingness to sell losing positions.
The most common fallacy to which market participants are susceptible: money odds vs. probability odds. Couching rationalizations about buying and selling stock in arithmetic terms [money odds] does not automatically lend credibility to a held position, has nothing to do with the probability that the stock will move a certain amount.
Charlie Munger said: "If you don’t get elementary probability into your repertoire you go through a long life as a one-legged man in an ass-kicking contest."