My Book Reviews

This book is a collection of interviews with various traders, including: Gil Morales, Chris Kacher, Kevin Haggerty, Cedd Moses, Mark Boucher, Lewis Borsollino, David Ryan, Jeff Cooper, Wiliam Greenspan, Jon Najarian, Greg Kuhn, David Kuang, David Baker, Manual Ochoa, and Jim Whitner.

The biggest problem I had with this book is that it mostly profiles momentum traders whose returns were artificially inflated because of the tech stock boom of the late '90s. In times like those, it wasn't particularly difficult to get huge returns. For example, if the Nasdaq rises 100% in 1 year and you are using 2-to-1 leverage, then simple passive indexing of the Nasdaq will give you a 200% return. Although the book is not explicitly or solely based on hype, the book irresponsibly quotes returns of 70,000% in 4 years. The authors, aware of the aura of hype, seem like they try to legitimize these abnormally high returns by making a deliberate effort to point out the career longevity and accolades of each trader.

The second problem I had with this book is that all of the techniques used are ultimately arbitrary. The techniques are mostly based on generic indicators like RSI, MACD, ADX, and various chart formations. All of these indicators are arbitrary because trading success is not about finding the right indicators; it is about having the skills to know how to use them. All indicators are essentially the same. That is why the book seems so repetitive - because all of the (supposedly) different techniques and stories in the book are simply echoes of each other.

Winning traders know that success isn't about finding a technique that works; it is about finding a technique that works for you. Showing a channel breakout of DELL from 1996 to 1999 doesn't have much value - you can find a chart of a simple channel breakout in every technical analysis book every written. The fact that the indicator worked in the DELL example doesn't validate the indicator as having any objectively value. It simply means that the trader who used that particular indicator has a particular trading style that works well with that indicator. But chances are high that your trading style will probably differ from theirs. Some readers may point out that the examples in this book can help traders learn which indicators will work for them. This is true. But, if your goal is to browse a book in order to find useful indicators, then you are way better off reading a much more comprehensive technical analysis book such as John Murphy's 576-page Technical Analysis of the Financial Markets or Thomas Bulkowski's Encyclopedia of Chart Patterns instead of a book that focuses solely on a narrow set of indicators used by a few particular traders.