A Complete Guide to the Futures Markets: Fundamental Analysis, Technical Analysis, Trading, Spreads, and Options
by Jack D. Schwager

Apr 2001

Pure analysis

An old Chinese Proverb states that a mind all logic is like a knife all blade. (In other words, tough to grasp.) Schwager, an extremely intelligent and successful analyst, is something of a quant… the type of individual who enjoys crunching long series of numbers, sifting through data with a fine toothed comb, and finding hidden statistical correlations for their own sake. His writing style reflects this mindset.

While informative overall, Schwager at times tackles subjects of mind-numbing complexity and strays into the realm of the pedantic. (His example of how to fundamentally analyze the hog market is such a case.) I was amazed at the level of esoterica delved into in certain places in this book. After reading this book early on (a trader interviewed in Market Wizards recommended it highly), I was worried that I might have to learn some high level calculus if I were going to be a successful trader. (Don't worry, that's not the case.)

One of the things the successful trader has to do is learn to separate valuable information from noise, wheat from chaff. If you try to read every report and analyze every detail you come across, you will freeze like a deer in the headlights... or otherwise find yourself buried by an information avalanche.

My overall impression is that Schwager approaches markets the way a mathematics professor would approach a particularly thorny problem: with logic, rigor and a visible lack of passion. His strengths are in crunching the numbers and laying out basic facts and theories with precision and clarity. His weakness, and thus the weakness of this book in my opinion, is in poorly communicating the psychological and emotional elements of trading.

This is not to say the book has no value. It is packed with information, and also points out a number of the fallacies committed by traders (skilled and unskilled alike). It is a good reference book to have, something like an abridged encyclopedia of trading, one that can be referred to many times over to brush up on the finer points of a certain strategy or technical method.

I recommend this book for those seeking quantitative knowledge of the futures markets and mathematical breakdowns of the strategies. But if you buy and read this book, be aware that not all traders are so statistical and professor-like in their analysis.

Schwager humbly admits that he is not a good trader himself. I suspect this is because he tries to hide behind rigorous analysis rather than dealing with his emotions and psychology directly, and this book reflects some of that attempt. In conclusion I would say that this is an excellent reference guide, but cannot agree that it is "complete" because it glosses over the critical psychological and emotional elements.