Short Term Trading Strategies That Work by Larry Connors
I give this book a generous two out of five stars due to a lack of detail.
I decided to purchase this book after having read a great article that was co-authored by Larry Connors in the February 2008 issue of Technical Analysis of Stocks & Commodities that I thought was well done. When Connors’ book finally arrived my first impression was disappointing. The book is about as thick as a magazine and it is written on 8x11 sheets of paper with 12-point font and generous spacing. After having just spent $50, the 125-page book seemed somewhat of a letdown. As I flipped through it I noticed that on several pages there were only three paragraphs of writing and sometimes a page with only a giant chart on it. It actually reminded me of a high school term paper that stretched one page of information into three just to make it look big.
But I know not to judge a book by its cover or how many words fill a given page so I sat down and gave it a read. It only took me an hour or two to finish and when I put the book down I felt that I had learned a few interesting ideas worth further testing but overall, I also felt that there were a lot of holes in the content. Again, I was disappointed.
Chapters two and three, which together only comprise seven pages basically say the same thing: buy pullbacks. This definitely is not a new secret so I was baffled as to why it took two chapters to make this point.
Chapter four also points out what I found to be rather obvious: buy stocks that are trading above the 200-day moving average. From a statistical standpoint, prices are more likely to continue rising if they are above its 200-day moving average. Of the seven pages in this chapter, five of them show one huge chart that further demonstrates the point.
Chapter five is two pages and it talks about using the VIX with a simple moving average to help time entries and exits. Connors shares an interesting, yet simple strategy and closes the chapter.
Chapter six suggests that the use of stops actually hurts trading performance. I happen to agree with this to a point. Unfortunately, Connors does not provide any alternative suggestions or strategies so his observation isn’t all that helpful.
Chapter seven points out some statistical evidence that supports the idea it is actually better to hold positions overnight than simply buy on the open and sell on the close. That’s it.
Chapter eight essentially rehashes the concepts already pointed out in chapters two and three: buy the dips in an uptrend; sell the peaks in a downtrend. Connors provides some back-testing results to further validate this strategy, which was interesting but again, not earth shattering by any means.
Finally, in chapter nine, Connors talks about a few interesting strategies using the RSI indicator. I also use the RSI and it is one of my favorite indicators and has helped me make money in the markets without question. I found this chapter helpful but still lacking in detail.
Chapter ten talks about a “Doubles” strategy that capitalizes on the idea of buying low and selling high in the direction of the underlying trend. This is the strategy that Connors wrote about in the February issue of Technical Analysis of Stocks and Commodities as applied to ETF trading. Ironically, his magazine article was much more thorough and interesting than the chapter he dedicated to it in his book.
Chapter eleven suggests that it is better to buy stocks toward the end of the month. He posts a few charts to illustrate the point but it is as simple as that.
Chapters twelve and thirteen talk about ideas to help time entries and exits. The reader has to wait until chapter thirteen before getting any alternative ideas on trading without having to use stops, which should have been included back in chapter six. I actually found both of these chapters of interest but once again, helpful details were lacking.
Chapter fourteen talks about the psychology of trading via an interview Connors conducted with a friend of his who is a retired Navy SEAL. It was interesting to read but did not provide any eye-opening thoughts and ideas.
Chapter fifteen sums up the entire book in three pages using sixteen bullet-points. This chapter IS essentially the book. If you read this chapter and nothing else, you would walk away with as much information as the person who took the time to read a handful of paragraphs and look at some aggressively sized charts.
In summary, I would recommend this book for anyone just starting in the trading business and/or the trader who can’t seem to trade profitably with any sort of an edge. The book will serve as a starting point and nothing more. An experienced, profitable trader should pass on this book, as you are sure to be disappointed.
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