Customer Reviews

How I Trade for a Living (Wiley Online Trading for a Living)

5 star:		(31)
4 star:		(10)
3 star:		(5)
2 star:		(7)
1 star:		(6)

 

 

read several times. at first was very excited as here is someone who has walked the walked, however, if your looking for answers, you won't find here. I've read over and over trying to bring sense to how author trades or insights to use. First, he ONLY trades Funds at this point(present), so those who say he trades futures, options, etc., haven't fully digested the book.

Author goes to length to explain an Indicator then several pages later will tell you he finds the indictor doesn't perform any more! Well what does? he spends a lot of time discussing his evolvement as a trader over 19 years!!

Lots of talk of momentum and late day reversals, which are suppose to be strong bullish indicators. These don't seem to work as evidenced by 12/6's strong momentum and no follow thru the next day! Also for intra-day trading which I've found to be brutal, unless you enjoy staring at your monitor for 8 hours a day! I've also heard over and over that the Big money is in trading short term (3-10 days) or long term, not intra-day.

He does spend time discussing how he USE to trade index futures and some of the patterns he used. However, these too were confusing and contradictory. Ex. "My original price patterns continue to work for me, but only because I filter my trades with the action of the tape."

What does that mean?

I found books by William O'Neil much more clear and consise.

good luck

I've traded stocks and futures for over ten years, and have spent thousands of dollars on books, courses and software on trading. Most of it is junk written by vendors who couldn't trade their way out of a paper bag. HOW I TRADE FOR A LIVING is one of the few books written by an actual trader who trades for a living.

Gary's story is like that of many traders (including myself:) Years of struggle and frustration in a seemingly futile attempt at beating the markets. Gary recounts his failures and his spectacular success: Since 1985 his account has grown from a paltry $2200 into over $650,000 (this amount does not include withdrawals for living expensese, so profits are even greater.)

Gary also tells us how he trades, what indicators he uses, and details exactly how he trades. In perhaps the best and must useful chapter "The Nitty-Gritty of Trading," Gary takes the reader through actual trades, which explain his methodology in great detail, which can be applied to stocks, mutual funds and stock index futures.

Though this book has my highest recommendation, I should warn the reader that this book is written for the serious trader. There are no magic formulas, just wisdom from a great trader. I plan on reading it many times.

This was the first book I ever read on trading. After about 8 months and reading a dozen more books, I decided to re-read 'How I trade for a living'.

A couple of things stand out. For one Gary says he does not place much value on charts and indicators, yet using these methods, he determines when he will increase his exposure to his mutual fund positions. The second (now being August 2001) he explains that most of his money was made by investing in technology funds with his various chosen fund families, funds that often mirrored the NASDAQ.

Looking back at the times when he was most active and making money, so were most people. I mean he was trading at the time of tech hype and crazy stock prices for basically any tech related company. My point is just about anyone could have made money trading at this period in time, you could have thrown a dart at the telco or internet sectors and bought whatever you hit and made money. How many stories have been told of amatuer investors running small capital to vast profits by just playing tech stocks.

Things are not the same anymore, and may never be in this relatively flat market, I would like to know how he is fairing now. I think a lot of contradictions come out of his book. The fact that he also trades primarily mutual funds and not individual stocks, options, futures etc, also makes me wonder how much of a trader he really is, Mutual funds are good for the grandma and grandpa investors, with empahasis on investors and not TRADERS.

I always get weary of succesful traders who suddenly become authors, it may yet be the best sentiment indicator of tough times ahead in the markets.

This is an excellent book. It is simple and practical, and written by someone who has successfully traded for many years. His methodology is is elegant in its simplicity. He uses little in the way of indicators, which I think is great, as I have never been a big fan of them, and studies consistently show most indicators not to be useful. The book will be controversial in this regard because many traders want to kid themselves in to thinking that these indicators help them trade better. Maybe a few traders get some benefit from indicators, if they have some better way of looking at them but most traders will find them useless, or actually harmful. Many of the most successful traders out there don't use them them for much. He spends little time looking at charts for the same reason. They really add little to your ability to trade. He essentially watches the market and trades the momentum. He's somewhat of a modern day tape reader. All traders leave things out when they describe their methods, though not intentionally. They do this because there are things that they do unconsciously, and so they can't describe them. But, I trade successfully with a methodology very similar to Smiths and I can attest to the fact that this a good no nonsense way to trade. I would also read Van Tharps book as it discusses position sizing and stops better than anything, and those are absolutely the most critical issues in trading, much more important than how to enter trades. Between Smith and Tharps books I don't think you need anything else.

The biggest bull market in history that ended in 2000 spawned many "traders" who essentially rode tech stocks all the way up and then wrote trading books about their "expertise". Mr. Smith is one of those people. The author admits to trading for an unbelievable 19 years without making any money (talk about your slow learners!). During half this time, trader Richard Dennis took $400 and traded it into 200 million. The author also admits that during this period, he never reviewed any of his trades to see what was going wrong, and never set any goals as a trader.

The book is somewhat schizophrenic in that the author contradicts himself throughout. For example, he slams charts and technical analysis, but then states that one of his best buy signals is a "V-bottom reversal pattern". If this is not technical analysis, what is? He also discusses many sentiment indicators he uses, and then mentions some of them no longer appear to work.

I was particularly amused at his antiquated trading technique, whereby he uses a telephone to enter his trades, often times being put on hold. A technophobe, he admits that he cannot use an automatic teller machine, and can barely function on a computer. At one point he gives a phone number he calls to get put/call ratios from the CBOE. Sorry Gary, but this number is no longer in service, and if you want to get CBOE put/call ratios, you must now get them online (which of course is much easier). He now trades only mutual funds, which have several major drawbacks. For example, he must wait until after the market close to enter or exit a position, which can be very costly. Also, most funds now charge a redemption fee if the fund is not held a minimum period of time in order to discourage people "trading" their funds.

This book is of value mostly because of its discussion of sentiment indicators, that are essential to understand if one is to become a successful trader. However, all of the sentiment indicators he discusses were mentioned in Norman Fosback's "Stock Market Logic", which was published 25 years ago.

Smith states in the book that although he has never successfully traded a significant bear market, he welcomes the opportunity. Although he might be successful if such a market was trending strongly over time to the downside, his trading techniques would not work in the current market, which is essentially sideways and choppy. The current stagnant market could continue in this pattern for years. What would Smith do then, sit on the sidelines for years at a time?

I was intrigued by this book's title. I am not a day trader, and have no plans to become one; however, I still gained some insights into Gary Smith's success by reading this volume:

1) Self-knowledge. Mr. Smith did not enter day trading for the glamour. He treats it strictly like a business. He comes across as a person with a solid inner core, perhaps gained by many years of contemplation during his early, lean years. His reading list appears to have something to do with this; he remarks [p. 231] "Looking at my massive collection of trading books, my friend commented about all the money and time I had wasted accumulating this stash of books since, obviously, they had done me no good. Fast forward 21 years, and my friend is still searching for his opportunity to get rich, while my trading account is closing in on $700,000...I believe reading as much as you can about trading and the stock market is part of the process of becoming a successful trader yourself."

2) Persistence. Mr. Smith endured many years of treading water before he began to consistently make money - the first 19 years of his 36-year career so far. This of course was initially fueled by passion, following his reading of Nicolas Darvas's "How I Made Two Million Dollars in the Stock Market" at age 14. Smith's initial passion had many years of follow up, such as [p. 197] "[During the 1960s], while most of my fellow students spent their free time partying or debating and protesting the Vietnam War...I could be found at the local stock brokerage office. There, sitting next to veteran traders in their seventies and eighties, I watched excitedly as the stock quotations rolled across the large ticker tape..."Smith even persisted during heartbreaking periods in the 70s when his first marriage apparently broke up (details obscure) and he spent time "working at menial and low-paying jobs, such as being a security guard".

3) Prudence. Despite many years of not being a whopping success, Smith was careful enough not to wipe out totally for a number of years, unlike Matthew Katzman of "A Sucker's Diary". Risk control takes many forms so I advise you to read the book to understand the full spectrum of what he was doing. However, I think the most important underlying risk control he undertook was not overspending in his personal life. Even in his later, flush years he describes himself as "frugal", having "perfected the art of living below my means." Leaving the West coast and moving to "cave-and-cow country of south central Kentucky" probably helped this.

4) Learning A Trade. After initial false starts Smith hit upon a second career as an insurance investigator. Up until quite recently his living expenses were completely paid by his investigative work, leaving his trading capital untouched.

5) Rigor. Smith's methods are too complex to describe here in any detail. After many years of losses, he forced himself to look at all of his prior trades and discover the reason for each loss, and formulate ways not to lose money the next time. Smith also read Rick Pitino's "Success is a Choice" and became very disciplined about how he spends his time, cutting out self-sabotaging behavior like "never roll[ing] out of bed for the early morning West Coast openings." He systematically developed trading methods that are so robust that they (surprise!) do not require the use of a computer or internet access. His methods also appear to be adaptable, judging by the nuanced language he uses for many of his "rules" and when to break them.

I have no idea how Gary Smith has been doing since he completed this book around August 1999 (I am curious), but I was so impressed by his overall attitude towards his profession that I wouldn't be shocked if he was doing just fine.

It seems that every once in a while a real trader comes along and writes a book that gives true insight into the difficult world of profitable trading. With this new book, Gary Smith has written a classic that is an absolute must read by all serious students of the markets. The author specifically describes all of his own trading methods. These methods are completely revealed; nothing is held back for future purchases or future seminars. Mr. Smith is not just another vendor trying to separate you from your capital, but rather a profitable trader who has attempted to assist other traders in mastering this profession. In addition to revealing his own style of trading, Mr. Smith's observations on filters, technical indicators, and seasonal trading are easily adaptable to any style of trading. While I have never traded junk bonds or mutual funds on a short term basis, his methods on these topics is so compelling that I am certainly looking into these topics now. The bottom line is that this rare book is ideal for both the experienced trader and the novice looking for just the right edge. All traders will profit from studying this manual. It is just pure gold!

I purchased this book partly out of curiosity from its reviews. It either received a 5-star rating or a 1-star rating. Much to my surprise, I found this book was dynamite and loaded with innovative trading strategies not found elsewhere. One strategy detailed in How I Trade for a Living - the Friday-to-Monday momentum break pattern - netted me over $20,000 the week of January 31. A warning though. If you are looking for the usual, staid, conventional trading advice, look elsewhere. The author never found charts, volume, and oscillators of any value in his quest for trading success.

A recent debate in one of the Internet trading forums this weekend on the efficacy of the strategies in this book since the bursting of the stock market bubble prompted this review. How I Trade for a Living is divided into 5 main parts. These include the author's 18 year search for trading success, the indicators he uses to trade, a blow-by-blow description of his trading for a year and a half period with an emphasis on various momentum patterns, and how he trades mutual funds and stock index futures. I most enjoyed the parts describing the trials and tribulations of Mr. Smith's 18 year search to become a consistently successful trader and how he overlays sentiment with momentum in his actual trading. Since I don't trade mutual funds I didn't find that section very informative except where he details how to dateline the international markets. This book is best used as a timing tool for the Dow, Nasdaq, S&P, and small cap Russell 2000 indexes. It will not help you in trading individual stocks other than knowing which direction to trade form - long or short. The author is very harsh towards stock market bears. I suspect if the book was written today he would be equally harsh towards stock market bulls as the author is a big believer in simply following the message of the market. While many of the momentum patterns discussed are best used in bull markets, some work just as well in the bear phases such as the divergence patterns. To be perfectly honest, the primary reason I gave this book a five star rating was because it enabled me to completely escape the carnage of the past year. At least so far, the innovative ways Mr. Smith uses sentiment have worked just as well in the present bear market as it did in the past bull. Perhaps I should write a follow up review to say how effective or ineffective the book is in getting me back in the long side at the beginning of the next bull market.

The author begins by telling his tale as a failing trader struggling to do what has consumed his life since his college days. He takes jobs that are not satisfying in order to supplement his trading capital and daily needs but always his passion and thoughts are of the trade. It is very interesting and captivating story of a home based trader.

The authors arsenal consists primarily of sentiment reports and market action(indices) that he translates into contrian(emphasis) trading rules (some firm some not so firm). Success seem to stem from him being in sync with markets and being able to forecast and act on sentiment reports and market action that tells of tops, reversals, or bottoms. And since you don't exit a trade until sentiment or market action dictates, holding periods are longer than a day. The author used mutual funds, futures, etc.

The author candidly shares with his readers methods that work and methods that are not nearly as reliable today as in the past.

If you used to looking at charts, etc, his trading methods are very different and definately help you see the market as viewpoints where the masses are often wrong and that presistence can lead to success.

One of the best trading book I've read!