According to Greg Collins, the portfolio manager who wrote the introduction, master traders possess certain key characteristics. These include self-evaluation, humility, maintaining a strategy and focus, consistency, good risk management and intellectual curiosity.
The book is divided into five subject areas: technical analysis, fundamental analysis, sentiment, derivatives and trading size. Fari Hamzei, the author and founder of Hamzei Analytics, wrote a chapter on the equities and options markets and the closing comments.
The most practical and detailed chapters covered sector analysis, a combination of technical and fundamental analysis, seasonality and the key to biotech stock investing. Readers will be able to replicate most of these strategies easily.
The section on options, although interesting, was more general and not as useful in applying to actual trading. A complete focus on equity trading would have strengthened the book.
Unfortunately, only the chapter on seasonality included profit/loss data.
The chapter on biotech investing provides rules to uncover value and also includes a case study. The chapter on using real-time dollar-weighted put/call ratios in combination with pivot points and support and resistance lines argues that options data provides advance knowledge, up to three days, about futures market price behavior.
A chapter on technical analysis reviewed the critical importance of using volume and price together in making trading decisions, how to properly draw trend lines and how to use three basic technical indicators. Other chapters covered were how to select stock sectors using relative strength analysis, and breadth analysis and volume. All these technical analysis chapters were comprehensive and well worth the price of the book.
Surprisingly, the biographies include no mention of each trader’s actual performance records. How do you assess Hamzei’s claim that they are actually offering “strategies for superior return,” as the book implies? In comparison, Jack Schwager, author of the best-selling Market Wizards and The New Market Wizards provided performance data for the traders that he interviewed.
In summary, Master Traders provides readers with a credible look at 13 traders whose perspectives provide unique insights. There are useful tips readers can incorporate into their trading, especially on equity and sector trading.
Leslie N. Masonson is president of Cash Management Resources, a financial consulting firm, and author of All About Market Timing and Day Trading on the Edge. E-mail: firstname.lastname@example.org.