Winner Take All: A Top Commodity Trader Tells It Like It Is by William R. Gallacher is a great read. Gallacher is a pure fundamentals guy who dismisses technical analysis by itself, but recognizes its importance in the context of an overall system.
Here’s the jist of Gallacher’s discussion:
* Fundamentals rule the day – technical analysis by itself is worthless.
* That being said, you need some technical entry and exit system to support your trading system.
* All technical only systems are pure crap – Fibonacci, Gann, etc are great only when applied to historical data.
* Risk management is very important so that you don’t go bust – he lists suggested position sizes for various situations.
* Your entry/exit system does not matter, as long as it’s consistent. Gallacher employs a 10-day breakout entry and exit in his text.
It makes a lot of sense to me that Gallacher says fundamentals should determine which side of the market you are on. Would anyone want to be short grains and oil today, even if the technicals were bearish? That’s too scary for me. In a bull market like this, I want to be long only.
The book is a bit over 200 pages and an extremely enjoyable read. I cranked it out on a recent overseas plane ride. I normally prefer to read stuff like this, with heavy content, much slower so that I have a chance to digest. However Gallacher writes with such clarity and humor that I was able to plow through. I will need to re-read at least once in the near future.