Andrew Allentuck

Monday, February 25, 2002

Sniper Trading: Essential Short-Term Money-Making Secrets for Trading Stocks, Options, and Futures
by George Angell
John Wiley & Sons, 2002
242 pages
ISBN 0-471-39422-X

George Angell, a market trading guru, argues a fundamental point: that floor traders and stock specialists on exchanges know more than outsiders do about short term price movements. They dump positions when they go into the red, in contrast to outsiders who hold on in hopes of a turnaround.

The essence of Mr. Angell's argument is that the investor should find a broker or use an electronic brokerage service on the web to get low trading commissions. Then get out when stocks heads the wrong way. "I can remember several trading days when my losses were in excess of $10,000 each day. Each time, I took the loss because I knew the alternative, in going overnight, was to risk being out $20,000 on the next day's open."

It's obvious that stocks can go up as well as down and that there is no magic or evil in an overnight position. But to give Mr. Angell his due, loss minimization is a reasonable trading tactic.

He goes on to suggest that there are better and worse days of the week for trading. Monday, he says, is a harbinger of the week to come, Tuesday is a late rally day, Wednesday is the choppiest day, Thursday the weakest day, and Friday the reposition day.

Long term studies of market behaviour indicate that investors who buy and hold have larger returns than day traders. Economists who have studied the market have proven that tactics that rely on the January effect (small stocks tend to rise in January, but widespread anticipation now pushes them up in December or even earlier), NFL football results, and so onhave arbitraged away the gains of these techniques. There is not a lot to be gained by following calendar algorithms, in other words.

For the dedicated or addicted short term trader, Sniper Trading is catnip. Mr. Angell is warm and encouraging, his ideas frequently interesting if not necessarily right. Some of his suggestions are straight out of Las Vegas, e.g., after a big win, reduce your stake so that your gains are preserved. In spite of Mr. Angell's confidence, there is no evidence that anyone has figured out a way to beat the market over extended periods. But if you want to keep trying, read Sniper Trading.