Something Interesting to Read October 2016
The Little Book Of Trading : Michael W. Covel
The last decade has left people terrified of even the safest investment
opportunities. This fear is not helping would-be investors who could be
making money if they had a solid plan. The Little Book of Trading
teaches the average person rules and philosophies that winners use to
beat the market, regardless of the financial climate.
The market has always fluctuated, but savvy traders know how to make
money in good times and bad. Drawing on author Michael Covel's own
trading experience, as well as insights from legendary traders, the book
offers sound, practical advice in an easy to understand, readily
digestible way. The Little Book of Trading:
Identifies tools, concepts, psychologies, and philosophies that keep
people protected and making money when the next market bubble or
surprise crisis occurs
Features top traders in each chapter that have beaten the market for
decades, providing readers with their moneymaking knowledge
Shows how traders who beat mutual fund performance make money at different times, not just from stocks alone
Most importantly, The Little Book of Trading explains why mutual funds
should not be the investment vehicle of choice for people looking to
secure retirement, a radical realization highlighting the changed face
of investing today.
Forum on trading, automated trading systems and testing trading strategies
Something Interesting to Read June 2014
Muhammad Syamil Bin Abdullah, 2014.06.04 15:01
Financial markets are undergoing rapid innovation due to the continuing proliferation of computer power and algorithms. These developments have created a new investment discipline called high-frequency trading. Despite the demand for information on this topic, little has been published to help investors understand and implement high-frequency trading systems—until now.
Written by industry expert Irene Aldridge, High-Frequency Trading offers the first applied "how to do it" manual to building high-frequency systems.Covering sufficient depths of material to thoroughly pinpoint issues at hand, High-Frequency Trading leaves mathematical complexities to their original publications, referenced throughout the book.
Page by page, this accessible guide:
Discusses the history and business environment of high-frequency trading systems
Reviews the statistical and econometric foundations of the common types of high-frequency strategies
Examines the details of modeling high-frequency trading strategies
Describes the steps required to build a quality high-frequency trading system
Addresses the issues of running, monitoring, and benchmarking high-frequency trading systems
Along the way, this reliable resource skillfully high-lights numerous quantitative trading strategies—from market microstructure and event arbitrage to deviations arbitrage—and puts the creation and management of portfolios based on high-frequency strategies in perspective.
High-frequency trading is a difficult, but profitable, endeavor that can generate stable profits in various market conditions. But solid footing in both the theory and practice of this discipline are essential to success. Whether you're an institutional investor seeking a better understanding of high-frequency operations or an individual investor looking for a new way to trade, this book has what you need to make the most of your time in today's dynamic markets.
Trade Mindfully was written by Gary Dayton in 2014. Gary is a doctor of psychology, a trading psychology mentor, and a trader specializing in Wyckoff method and VSA in S&P futures and equities.
If you are struggling with some common psychological problems associated with trading — like the fear of loss or predisposition to oversize your trades — this book will offer definite steps to overcome them and become a better trader. Although, the author uses mostly futures and stock markets in examples throughout the book, the problems he is talking about and the solutions he offers are pertinent to all kinds of markets, including the spot foreign exchange one.
Mindfulness
The whole book is based on the concept of mindfulness. It is a way of focusing one’s mind and attention on the present state of some activity — be it trading, educational process, reading a book, assessing one’s internal state, and so on. Mindfulness is closely related to the subject of emotional intelligence (emotion detection and management). You might be familiar with this term if you have practiced meditation or perhaps used mindfulness-based training in sports. The book applies mindfulness to the process of trading to enhance it with a set of the High-Value Actions and High-Value Mental Skills (called so by Gary Dayton).
Mindfulness serves as the basis for dealing with emotions, making high quality preparations for the trades, focusing on the correct trade execution actions, and doing a fair
post-trading analysis. Mindfulness is a skill, which requires not only learning but also regular practicing. In his book, Dr. Dayton offers several exercises to train this skill. Most importantly, he shows how it is applied in trading to improve the whole process and with it the results.
The main idea of Trade Mindfully is that we cannot and should not fight our emotions or intrusive thoughts when trading. Doing so is futile and leads to stress and performance deterioration. With mindfulness we, as traders, can accept our emotions and disturbing thoughts, see them for what they really are — just feelings and thoughts — and deal with the trading situation based on our expertise, with all due attention and focus.
The Book
Trade Mindfully is divided into three parts. The first part introduces some important concepts, for example, intuitive mind and deliberative mind. It also describes various cognitive biases, emotions, and psychological obstacles traders deal with. It also talks about why we actually need our emotions to trade successfully.
The second part is dedicated to psychological methods that traders can employ to deal with their emotions, anxiety, and distracting ideas. This is where mindfulness practice is introduced along with some exercises a trader can do to enhance his or her emotional capacities. This part also teaches how to defuse from the unnecessary thoughts and emotions and how to accept them without engaging in unproductive fights.
The third part presents the Before-During-After methodology for traders. It is based on three phases: High-Quality Preparation, Effective Execution, and Constructive Self-Assessment. Each of those three phases is based on its own set of High-Value Mental Skills and High-Value Actions. For example, the list of high-value mental skills for the preparation phase includes: perspective, personal awareness, self-motivation, and mental discipline. The list of actions for the same phase consists of: writing a trading plan, clarifying your role, demo trading, research, studying market behavior, identifying development needs, creating development goals, planning for the trading day/week ahead, and so on.
Practices & Exercises
Trade Mindfully is not just a book for reading and learning how to deal with your emotions in trading, this book is also a practical guide to train the necessary skills and to achieve your goals, step by step. Throughout the book, you will be encountering special exercises that have to be completed during various phases of your trading process. Some exercises can be completed in minutes, some will take you months as they involve long-term assessment of performance and method.
Additionally, you will find some practical exercises to train your mindfulness, emotion defusion, and acceptance skills. These exercises are to be done on a regular basis and take about 10–30 minutes per day. The author’s idea is that once you read the book, you do not stop at that point thinking that you have become a disciplined, emotionally stable trader — you continue practicing during your whole career as a trader. And this book serves well as a self-improvement manual for traders.
Forum on trading, automated trading systems and testing trading strategies
Something Interesting to Read December 2014
Sergey Golubev, 2014.12.02 07:24
Trade Your Way to Financial Freedom
by
Van Tharp
The bestselling holy grail of trading information-now brought completely up to date to give traders an edge in the marketplace
“Sound trading advice and lots of ideas you can use to develop your own trading methodology.”-Jack Schwager, author of Market Wizards and The New Market Wizards
This trading masterpiece has been fully updated to address all the concerns of today's market environment. With substantial new material, this second edition features Tharp's new 17-step trading model. Trade Your Way to Financial Freedom also addresses reward to risk multiples, as well as insightful new interviews with top traders, and features updated examples and charts.
by Diane Coyle
GDP is one economic model among several that could serve the purpose, but its use conveniently leads to policies that reflect the thinking of a particular school of economic monetary and fiscal policy advocates.
We all know that in operating a business we need to be able to measure the profits of our company and then adjust our prices and production to make sure that there are enough profits to adequately fund the company. That is a relatively straightforward process, since the amount of money in the bank at the end of the month is a real number.
GDP: A Brief But Affectionate History is a fascinating 140-page book that I cannot recommend highly enough. This is simply the best book on GDP that I’ve ever seen. You can read it on a few hours’ plane ride or a lazy Sunday afternoon. And Ms. Coyle actually makes a relatively dry subject interesting and at times a page-turner. She has a true gift.
Ms. Coyle starts with the predecessors to Adam Smith and takes us through the 17th century right up until today with the development of GDP, so we see the ebb and flow of ideas through time. Who knew the early developers of the model did not want to include defense spending, as they saw it as a wasteful, nonproductive activity? Or that Adam Smith thought the inclusion of services in the concept was misleading. “The provision of more services was a cost to the national economy, in his view. A servant was a cost to his employer, and did not create anything. Importantly, money spent on warfare or the interest on government debt was also being used unproductively. The nation’s wealth was its stock of physical assets less the national debt. National income was what derived from the national wealth.”
Will the Real GDP Please Stand Up?
GDP is a huge undertaking, full of rules, with almost as many exceptions to the rules, changes, fixes, and qualifications, so that, as one Amazon reviewer noted, GDP is in reality so complex there are only a handful of people in the world who fully understand it, and that does not include the commentators and politicians who pontificate about it almost daily. The quarterly release of GDP statistics is more akin to a religious service than anything resembling a scientific study. The awe and breathlessness with which the number is discussed is somewhat amusing to those who understand the sausage-making process that goes into producing the number. Whether the GDP reading is positive or negative, it often changes less in a given quarter than the margin of error in the figure itself, and it can be and generally is revised significantly – often many years later when almost no one is paying attention.
GDP Is a Political Construction
GDP has always been a political construction, subject to the ebb and flow of the intellectual and political climate, the need to raise taxes, and the military needs of the day. It is also a tool used to argue for or against income inequality (depending on what country you’re in).
GDP is a financial construct at its heart, a political and philosophical abstraction. It is a necessary part of the management of the country, because, as with any enterprise, if you can’t measure it you can’t determine if what you are doing is productive. That said, the act of measuring GDP precipitates the observer effect writ large.
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