How To Trade The Futures Market - Review
Malcolm Robinson’s How To Trade the Futures Market was one of the first futures-specific trading books that I read, and indeed it launched me into my full time trading career, so it seems appropriate that I include a review of it here.
This ebook (electronic book) has been written by an ex-LIFFE pit trader turned screen trader. In that respect it is quite unusual – the majority of books on this subject are by traders who have learnt their skills in front of a PC monitor. Malcolm’s hands-on experience in the pit gives him a slightly different perspective on the markets, so whilst you will find the usual necessary discussion on charts, trends, and order types common to most works on this topic, you will also find a lot of emphasis on how to read price action as it is unfolding in real time. Malcolm talks extensively about understanding the ebb and flow of the market and it’s importance in being able to anticipate short-term price moves that one can profit from. This departure from the more familiar talk of indicator based chart reading is very refreshing, and the methods presented here can be applied to all markets not just futures.
Following the discussion of price, an entire chapter is dedicated to Volume and how it can be interpreted. This is not an easy subject to grasp, I know many traders grapple with trying to understand volume and eventually leave it aside believing it is of no use. However the clear writing style, evident throughout the book, gets the message across loud and clear – volume speaks, well, volumes!
In the latter sections, Robinson talks about trade execution, covers some of the psychological aspects, and discusses the all important money management. His coverage of this last subject is one of the clearest I’ve read, and the useful examples put the matter plainly into perspective.
Along with the book itself, there is a bundled trading simulator called “Market Master”. This allows you to play back recorded futures data bar by bar, for practicing reading price action and trading outside of market hours. It’s a fairly useful tool, but in only being able to advance one complete bar at a time its limitations quickly become evident as soon as one starts looking at live charts where the bar is changing every second. Still, if you have never traded from a chart before this is a good introduction.
The last element of the package is Malcolm’s “trend following system”. This is an attempt to wrap up the knowledge contained in the book into a simple mechanical trading system that one can start trading immediately. As with all mechanical systems, trend followers in particular, this system will have good days which will be very very good, and bad days which will be just awful! It’s tempting to read the book then just try and trade the supplied system, we all want an easy life after all, but to do so would be a waste of the quality trading advice taught in the main work.
Summary: At 86 pages for the main book, this is a concise but well written course that manages to convey key the concepts of futures trading in an easy to follow manner. It will give you a solid understanding of trading any futures market (and indeed most of the concepts apply equally to any traded market) but to get the best out of it requires some practice and persistence. If you want a book that gives you a guaranteed winning system that tells you exactly when to buy and sell, then this isn’t it (is there even such a book in existence?). If however you want to understand how futures markets function, how to read a chart in real time and how to profit from small intraday moves that add up to big daily profit, then I wholeheartedly recommend this book.
Website: How To Trade The Futures Market