I bought this book because I had read that it was a classic. I was not disappointed. It is an intelligent and detailed introduction to the futures markets.

The book begins by discussing the various participants in futures markets and the history of the markets’ development. It then discusses various technical aspects of the markets and the practice of hedging. This was all covered in more detail than I had read before. What I learned from it was at the margin, but I did learn.

The section on the behaviour of futures prices discusses empirical evidence about how the prices behave — inconclusive — and seems rather keen on the efficient market hypothesis. It is useful because it is so negative. It seems written to hammer home the point that trading is hard, and you have to have good answers to the questions raised by this section before attempting it.

Then the book moves on to “playing the game”. There are sections on fundamental and technical analysis which are too encyclopaedic to be really helpful, but which raise ideas that one could test out for incorporation into a trading plan. The section on spread trading brought some useful light into what had for me been a murky area; the following section on options took me back over old ground. “Playing the Game” finishes up with chapters on “The Game Plan” and “Money Management”. The former mostly counsels against excessive daftness (don’t just wander into the first brokerage house you see and start placing trades on gut feel); the latter talks about the importance of having a positive expectation for your trading system. This chapter is pleasingly clear-headed and one of the most useful in the book.

There is a short section on “Who Wins, Who Loses, And Why”. I suspect that this was included merely to enable the publisher to use it as a subtitle on the front cover. Various studies are discussed, but they lead to no clear conclusion.

There are then two chapters on client servicing and compliance for futures brokers. I skimmed these.

Finally, there are just under 200 pages on a large number of futures markets. These are not exciting reading but a useful reference source — I learnt things about the cattle industry that I have never heard before, for example. This section alone seems enough to justify the book, although I confess that I haven’t read the majority of it yet.

Conclusion: This is an exhaustive, and slightly exhausting, introduction to the futures markets. I would recommend it over any other introductory book that I have read for someone who really wants to understand these markets, because it is the most clear-headed and detailed account I have come across. For a beginner, it is a one-stop shop for quite a lot of knowledge; for the finance professional, it is opinionated enough to be interesting, deep enough to teach you something new and a good reference source on unfamiliar markets. I will go back to the chapters on money management and specific futures, and am keeping the book on my desk.

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