finance and investing

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.

I've read dozens of trading books over the years and this is the best yet. "How I Trade for a Living" is an intelligent, straightforward look at a successful trading professional who's not promoting seminars or newsletters. Gary Smith is giving readers the benefit of his 30+ years of trading experience. What's important to me is that he's got the documentation to back it all up.

As a follower of Gary Smith since 1996, I've been impressed with his knowledge and understanding of today's market. His research and insights have saved me years of trial and error in my personal trading.

This is not a get rich quick book. Smith outlines a low-risk trading strategy that works, but it is intense. It requires dedication, discipline and more time than some people might want to devote. Still, if you've ever dreamed of being a home based trader, this is the book you should buy, read and STUDY.

As a number of reviewers before me mentioned, this is a terrific book that belongs in every trader's library. It is that good, and is easy reading. You will probably want to read it more than once just to get all of the concepts down.

While reading Gary Smiths book, a light went on in my head. He mentions somewhere that approximately 90 per cent of new traders don't make it. Another words, less than 10 out of 100 people who set out to do day trading wind up making consistent money (a profit). This ratio is very close to the number of people who don't make it (or don't even try) to be self-employed - about 94%

Think about this: 94% of the working U.S. population, is employed for the other 6%. Why is that? It's because most of us are not taught as children to think for ourselves. Our schools teach us to obey the rules and prepare us for a career or trade working for an established company (i.e. someone else). At our job, we are usually given instructions on what needs to be done, when it is due, and in some cases, how to do it. Nothing wrong with that, but this training can work against you if applied to the stock market.

Day trading, is very much a self-directed profession. It requires you to make ALL decisions. There is no one to tell you when to start, when to stop, what securites to buy or how to buy them or especially how many to buy. In Gary's book he discusses all of these topics in detail, but not in a general way.

Is it any mystery that so many don't succeed? I believe, that in order to be a good trader, even if you are working for a trading firm, you must have a self-employment mindset. Most of us do not.

I recommend reading the following book along with Gary Smith's book in order to learn those ideas that were not taught to us when we were young. Reading this book will improve the odds of success significantly for traders just starting out and who have not previously run their own operation.

The book is "Secrets of Self-Employment" by Sarah and Paul Edwards. Amazon.com carries this title ISBN 0874778379. This book will help you establish the right mindset for working on your own. These two books alone are not going to make you a super trader, but they are a very good start.