Live the Dream by Profitably Day Trading Stock Futures by Gary Smith

Summary:

The book should be seen as a classic whose advice has for the most part not survived the test of time. Smith traded both the floor S&P contract and the now-defunct “Knife” contract that was traded on the NYFE. The round-the-clock markets have forever changed the trading of the S&P, and the days of trading starting at 9:30 EST and ending at 4:15 seem quaint, as part of a simpler time gone forever.

Review

This is not the same Gary Smith who used to write for thestreet.com and still appears on weekends on Fox to talk stocks.

This Gary Smith wrote one of the first books ever written on daytrading stock market indices-indeed, it was written even before there was such a thing as the e-mini S&P.

One can see how much this book is dated by looking at his rules and precepts. Daytrading is NOT meant to be an everyday affair, and most certainly NOT a multi-day affair. Daytraders should not be scalpers. Never trade the S&P with close stops. Never put a position on during the first fifty minutes of the trading day. Rarely put a position on after 12:00-12:15 EST. If a market makes a significant bounce from a low, that is bullish; if a market makes a large retreat from a high, that is bearish.

Smith traded from his living room, his only trading tools being CNBC (and, apparently, patience tested by watching CBNC all day) and a telephone, to call his broker, who would send his order to a runner in Chicago (CME) or in New York (NYFE). He would track data every ten minutes and would look to put on one position that would either be stopped out or held to the close. In 1995, before electronic futures, powerful desktop computers, and low commissions, this bare-bones setup made some sense. His profits, which are tracked in the book, made even greater sense (or should it be “cents”?).

Smith’s systems are backtested in the book AND in an addendum to the book, both by Futures Truth. Moreover, the book includes plenty of examples of his real-time trading. The late Bruce Babcock saw Smith’s brokerage statements and was so impressed that he published the book. Smith’s month-by-month p&l from 1986 to 1995 is in the appendix. The steady stair-step growth in his account balance would impress even the most jaded trading cynic.

The book should be seen as a classic whose advice has for the most part not survived the test of time. Smith traded both the floor S&P contract and the now-defunct “Knife” contract that was traded on the NYFE. The round-the-clock markets have forever changed the trading of the S&P, and the days of trading starting at 9:30 EST and ending at 4:15 seem quaint, as part of a simpler time gone forever.

The book nevertheless retains some of its usefulness. Just not as much as it used to.

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