The Market Maker's Edge: Day Trading Tactics from a Wall Street Insider

When you buy a used book, you can tell a lot about the previous owner by what they decided to highlight. In the case of the copy I purchased, the person who originally purchased this title was intrigued by the discussion of trend following and support/resistance. Unfortunately for them, the advice this book gives in those areas is thoroughly ordinary. The fact they felt this title was worth selling is really the fault of their not realizing that it's the sections on position size, indicators, and gaps that are the really the world-class discussions in this book. To anyone who has really struggled with the problem of position sizing (how much of a stock to buy/sell), there is only one right answer: determine the position size based the combination of where your stop order will go combined with how much money you can afford to lose. Josh provides a straightforward and totally accurate way to do that, something you'll rarely find in any recommendations for day traders. If you don't recognize chapter 2, "Five Steps to Determine the Proper Position Size" as the only right way to trade, you need to keeping reading it over again until it's totally natural to you. If you trade and you're not familiar with thinking in terms of stop loss risk relative to position size, you need this book desperately. The chart-based examples in this book are mediocre, but the indicator ones are excellent. The biggest standout section (Chapter 17, "Oscillators and Reversal Indicators") covers a few of the popular technical indicators, showing you exactly how you could trade with them in a way most likely to be profitable. The little chart showing exactly what divergence between price action and an indicator looks like is worth the price of the title for those who don't know what that looks like--this is the clearest set of examples I've ever seen on this subject. Equally clear discussion of trading Moving Averages, Bollinger Bands, MACD Histogram, Stochastics, RSI, and Momentum follow. I agree with that author that he's hitting all of the indicators worth following for the short-term trader here. Focusing on this reliable set instead of some of the more bizarre things some traders follow is absolutely the right approach to trading. Additional good sections in here worth owning include a look into the mechanics of what makes an opening gap in terms of what's happening on the market-maker side and a very nice chart of popular economic reports (CPI, housing, employment, etc.) showing how the market will normally react to new reports in those areas. The main real problem with this book is that it was written before the switch to decimal notation on the exchanges, and it focuses a little too much on trading in terms of a fraction of a point. The author usually writes in terms of a percentage basis, the right way to look at stock movements, with a small conversion chart included for those not familiar with this approach. But there are a number of times where h

Of all the books I've read in the last year or so, "The Market Maker's Edge" is one of the best, if not the best. It contains specifics on how to trade, not just mechanics (e.g., buy when you see this or sell when you see that...) but reasons why. As most traders learn, there are two sides to every trade. This book explains the psychology at play on both sides. There are other good books, such as Tony Oz's. But unlike Tony Oz, this book is a different perspective. Where most give generalizations, this book gives specifics.Though fairly easy to read, I would not recommend this book as an introduction to trading. Otherwise, it is a "must read".

The book provides a good breadth of trading tactics that is at the right level to prepare people who are switching from an investor mindset to a short-term trading paradigm. Before reading this I was trying to bottom fish markets, more like a valued-investor. However the author can't emphasize more about the importance of recognizing the momentum and listening to the market. It's great not just for day trade but short term momentum trade. The level of TA is also appropriate as an introduction. Last thing is I really like is the treatment he put on the psychological preparedness.

I think I've read most of the books on daytrading out there. Too bad, I could have read just this one along with perhaps John Murphy's "Technical Analysis of the Financial Markets" and Velez and Capra's "Tools and Tactics for the Master Day Trader". Josh Lukeman very unselfishly shares his valuable insight of the daytrading game. Imagine how powerful your trading would be if your last job was being a market maker for MSCO. Lukeman gives you that insight. Obviously, a few of the reviewers above didn't "get it" because they were too busy looking for a simple solution to their trading woes to support their beliefs that someone else (the market maker) is to blame for their losses.If you're mature enough to accept responsibility for your trading, this book will give you the edge.

This book is well written and very simple to understand. I've been trading full-time for the past 3 years and have done very well. However, this book enabled me to simplify my trading screen and eliminate many technical indicators. My performance has improved--with less stress. The Holy Grail to successful trading doesn't exist, so stop looking for it. But if you want to learn (or reinforce) some sound trading principles and see things from a market maker's perspective, this is an excellent book.