Rating: 
Summary: Must have for systems traders
Review: Two hundred pages into "Winner Take All", you'll find Gallacher dissecting Ralph Vince's optimal F strategy for position sizing, pointing out the obvious ways in which it can result in dangerous levels of overtrading that can put you out of business. At the end is an illustration of a trader aiming a gun at his own head and blowing his brains out, with the caption "optimally f'd". While it sounds kind of tasteless written down this way, when I came across it the first time I was laughing so hard I had to put the book down and catch my breath for a minute.
That's the sort of work you'll find throughout this very contrarian text whose nominal focus is on commodities trading. The scathing commentary wouldn't be so helpful were it just being sensationalist, but the analysis throughout this book is spot on in addition to being extremely funny at times.
While Gallacher's coverage of commodities is solid, albeit fairly pedestrian, his discussion of trading gurus is simultaneously informative, entertaining, and controversial. Ralph Vince gets off pretty easy compared with how other revered industry fellows are lampooned. You'll find plenty of dirt on popular trading role models like John Murphy, W. D. Gann, Elliot, Larry Williams, Richard Dennis (and the turtles), Bruce Babcock, and Welles Wilder (not to mention a thoroughly deserved bashing of Neural Networks). Anyone who is following techniques proposed by those gentleman should consider reading "Winner Take All" just to make sure you're seasoning their claims with a healthy enough skepticism. As other reviews here claim, Gallacher may be doing his own manipulation on the data in order to prove his own points in this area, and you'd be wise to apply the same level of skepticism he brings to other figures to his own claims. Very interesting reading, and written in a thoroughly enjoyable style.
The centerpiece of the book is one of the most real-world discussions of an working trading system I've found. A standard trend-following breakout system is presented and shown to make 385% annually; pretty good, right? It's then shown rather realistically how commissions, slippage, and stop order issues will eat into that. Then, he analyzes the real capital required to actually run that system through its expected drawdowns. When
it's all done, that magic winning system is lucky to hit 17% across the amount of capital actually required to run it. Having built multiple trading systems myself with multi-hundred percent per year predicted results that actually lost money once the entirety of actual trading and money management was factored in, I'm shocked that more books on trading systems don't cover this topic. Note that some of the things that really bash the profits in the examples down are specific to commodities (like the limit down/up problem), but stocks have their own issues that are of equal magnitude (in my own systems, I've noted that the bid/ask difference on stocks going through a breakout on volume are dramatically higher than any model I've ever seen suggests).
In short, those looking for a healthy dose of anti-holy grail trading advice might do well to read "Winner Take All", and those building any sort of trading system should consider it essential. You won't get much advise on what to do unless you're specifically looking for information on trading commodities on fundamentals, but there's a lot of solid material on what to make sure you don't do.
Rating: 
Summary: an entertaining polemic
Review: When a book bills itself as "brutally honest" you are usually in for some interesting reading. Gallacher wastes no time in taking on a moral tone, exposing the idiocy of emotional losers who shouldn't even be in the markets and commodity broker crooks who add no value to the process and are good at nothing other than fast talk and sales techniques. While these opening observations are based on truth, they don't seem all that necessary. Do we really need to hear that there are a lot of dummies in the markets who shouldn't be trading or that there a lot of dishonest / incompetent brokers out there? Maybe I am off base to assume this is common knowledge. This book is at its most interesting in uncovering the fallacy behind some highly esteemed mythical legends. Elliott, Gann and Fibonacci, when it comes down to it, have no real substance behind their methods, and Gallacher does a good job of exposing that fact. He also shines some sunlight on the seemingly ubiquitous Larry Williams, painting him as a clear and complete fraud. While not touching the subject of Williams' legitimacy, I have always wondered who would believe in the trading abilities of a guy who sends out mass mailings once a month telling people how they can make ten grand a month in 30 minutes a day. In otherwords, I see Williams as dangerous only to the people mentally slow enough to believe his "share the wealth" claims, and thus not really worthy of book treatment. Gallacher is neither totally wrong nor totally right in his methodical destruction of technical analysis. What he overlooks is that fundamental analysts and many technical analysts actually have a similar problem: attempts to profit from predicting the future ultimately prove futile because the higher the probability that you are right, the lower the probability that you can make money off that knowledge before others do. Pure fundamental analysts are worse off then pure technical analysts, because it is impossible to get all the hidden factors right and not get hit by surprise developments along the way, whereas a pure technical analyst will at least have a graphic representation in chart form that makes use of all traders' and analysts' opinions. The true way to use technical analysis is not to try to predict the future, but only to measure probabilities of an event occurring, and then to place bets only when probability shows conditions to be favorable. That is to say, if event A happens under certain conditions, then the probability of profitable scenario B occuring, while still uncertain, may have increased enough to make the trade a worthwhile risk. Many chart patterns only follow through 50% of the time- but they can still be used profitably because rewards reaped can exceed risk taken through proper money management. This understanding that trading is a game of probabilities in which it is impossible to win 100% of the time is why good traders aren't bothered by routine losses. When Gallacher says "deliberately preparing for a loss is perverse, pessimistic, unnatural, yet correct," he shows me that he has a personal stake in being right and does not understand that trading is above all an odds game. Is it "perverse" or "pessimistic" for a poker player to expect not to win every hand? There is also the argument against Gallacher that technical traders have experienced much more high profile success, while 90% of employed research / fundamental analysts are inept at trading and could not trade their way out of a paper bag. Gallacher says "All the big winning plays I have seen in the market can be traced to a correct call on economic fundamentals." He must not read much. Take Richard Dennis, for example, who turned a few hundred bucks into hundreds of millions as a pure technical analyst, or Marty Schwartz, who was a failure as a fundamental analyst for 9 years but became one of the most consistently profitable traders of all time after making the switch to TA, or Ed Seykota, who turned 5K into 15 mil with a purely mechanical system.... and so on. Last of all, Gallacher leans on technical analysis himself near the end of the book. If he were a true fundamentalist, he would continue holding a position that was going against him until he was convinced that the fundamentals have changed. If the fundamentals haven't changed as you know them and you get out of a market only because the price is moving sharply the wrong way- guess what, you're using technical analysis whether you meant to or not! In conclusion, I have to say that most of Gallacher's beef with technical analysis is a straw man. He actually attacks poor trading habits- overtrading, risking too much on a trade, not taking losses etc., that are the hallmarks of bad trading, not technical analysis as a method. An entertaining book but one in which emotion was given a little too much free reign.
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