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Trade Like a Hedge Fund: 20 Successful Uncorrelated Strategies and Techniques to Winning Profits (Wiley Trading) Hardcover – 23 Feb 2004


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Product details

  • Hardcover: 238 pages
  • Publisher: John Wiley & Sons; 1 edition (23 Feb 2004)
  • Language: English
  • ISBN-10: 0471484857
  • ISBN-13: 978-0471484851
  • Product Dimensions: 16.1 x 2.4 x 23 cm
  • Average Customer Review: 5.0 out of 5 stars  See all reviews (1 customer review)
  • Amazon Bestsellers Rank: 816,263 in Books (See Top 100 in Books)
  • See Complete Table of Contents

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" Trade Like a Hedge Fund" is to investing what Julia Child′s The Art of French Cooking is to cuisine." —Donald Luskin, SmartMoney.com, March 2004 "Should you have this in your library? Most definitely, it...maps out exactly how to turn theory into profits." — Gary B. Smith, TheStreet.com

From the Inside Flap

High–performing and highly leveraged, hedge funds are among today’s most talked–about subjects in the world of investing. But it’s not the hedge fund managers doing the talking. These secretive financial pros, while relentlessly pursuing every possible angle to provide their clients with far–better–than–average returns, are just as relentless in revealing as little as possible about the techniques they use to achieve those returns. Trade Like a Hedge Fund changes all that. Written by hedge fund manager James Altucher, this technique–heavy introduction to the day–in, day–out world of hedge fund trading explores twenty trading systems, strategies, and techniques that active traders can use to uncover hidden pockets of inefficiency in any market. Altucher is well known to hedge fund managers and other market professionals for his regular contributions to TheStreet.com, and he wastes no time in getting right to the bread–and–butter trading strategies that form the foundation of today’s well–documented hedge fund successes. Learn the tips and techniques that allow fund managers and frontline traders to: Identify stocks that are gapping up or down, then trade those with the greatest short–term likelihood of filling that gap Intraday trade the NYSE tick indicator–perhaps the purest indicator of investor sentiment at any given second Provide impressive short–term trading profits using an innovative Bollinger Band—based trading system Buy a portfolio of less–than–five–dollar stocks–and average over 100 percent annual return Follow the low–profile movements of fixed–income investors for valuable clues to equity market direction Profit from playing stocks on the verge of being deleted–not added, but deleted–from major indices Profit from trading against common market fallacies that continually win praise even as they are continually proven wrong Despite evidence to the contrary, hedge fund managers and traders are not magicians. But they are distinctive and savvy traders who–as opposed to staid, rules–driven mutual fund or portfolio managers–enjoy the freedom to employ virtually any strategy in search of trading profits for their high–wealth clients. Let Trade Like a Hedge Fund give you a rare first–person look inside the world of the hedge fund manager, and introduce you to numerous hedge–fund techniques and tactics that you can seamlessly–and profitably–integrate into your own trading program.

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The gap trade is the bread and butter trade for many day traders and hedge funds. Read the first page
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Front Cover | Copyright | Table of Contents | Excerpt | Index | Back Cover
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Most Helpful Customer Reviews

By carolg on 4 April 2013
Format: Hardcover Verified Purchase
This book is probably better for someone who has a bit of a background in trading. A thoroughly good read with a lot of insight but it really does help to know some of the terms used.
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Most Helpful Customer Reviews on Amazon.com (beta)

Amazon.com: 38 reviews
94 of 103 people found the following review helpful
Don't waste your time or money. 7 April 2005
By Joshua Dean - Published on Amazon.com
Format: Hardcover Verified Purchase
This is one of those rare books which are so thin, you can learn as much from their table of contents as from their actual contents. There are a number of things I didn't like about this book and its packaging, but I will only list two for brevities sake.

First, there are not "20 Successful Uncorrelated Strategies". "Technique 19" is simply a list of what the author believes doesn't work. "Technique 20" is a reading list of books the author likes; there are probably hundreds of Wall Street listmanias listing the same books. The other 18 present absolutely nothing new or interesting, most of them are simply "buy the dip" strategies.

Second, this book should rather be called "Trade Like James Altucher", unless you believe there are no longer any hedge funds that have discretionary traders or are willing to use options and go short. There is almost nothing in this book with regards to real money or risk management either. I suppose no one would have bought with that title though.

This is the only good sentence in the entire book: "Table 3.1 shows some recent large bankruptcies that were liquid enough to trade after filing Technique [sic] 11" (p. 49).

But what disappoints me most about this book is not that it is content free, but that it wastes the time and money of those who really are interested in learning. This book, I speculate, was meant to exploit the members of TheStreet.com and its children. Like another reviewer said, my copy is available for burning. I recommend Perry Kaufman's book instead, it may be twice the pirce, but has a thousand times the content.
134 of 151 people found the following review helpful
Insider Tips That Won't Land You in Jail 7 Mar 2004
By Brett Steenbarger - Published on Amazon.com
Format: Hardcover
James Altucher is a professional money manager and a contributor to TheStreet.com who has assembled a collection of "20 successful uncorrelated strategies and techniques" for trading the markets. His first book effort is one of the most practical trading guides I have encountered.
What sets "Trade Like a Hedge Fund" apart is that we don't have to take the author's word that these strategies are successful. Included in every chapter are the specific rules for each strategy and the tested trading results over the recent past. I particularly like the fact that he has tested the results across broad market indices and individual equities. For example, Altucher creates his own version of the famous "Turtle" trend- following system and tests it on the S&P 500 Index, the NASDAQ 100 stocks, and a basket of uncorrelated stocks. This very much helps display the robustness of the underlying trading concept.
Among the specific strategies disclosed and tested are a unique method for trading the spread between S&P and NASDAQ stocks; an intraday method for trading the Cumulative NYSE TICK; a short-term trading system that makes use of Bollinger Bands; a technique for allocating money to bonds; and a straightforward method for arbitraging preferred and common stock of companies.
Where I think this book is strongest is in illustrating how a professional hedge fund manager thinks about the markets. Many of the strategies are designed to take advantage of extremes in the market, where inefficiencies are most likely to be present due to traders' panic and overconfidence. Altucher's creativity in searching for these inefficiencies stimulates the reader to engage in a similar search. Reading the chapter on the NYSE TICK, for example, I soon developed my own promising variation on the author's strategy.
Are there weaknesses in the book? I found the text to be clearly written and well-illustrated with charts and tables. The systems were designed and tested with the Wealth Lab program, but the specific code for each of the systems is not included in the text. An exception is the pairs trading system, which is one of the most creative strategies in the book. The strategies are geared more for swing and intermediate-term trading than "day-trading", with the TICK system a notable exception. My sense is that creative researchers could adapt some of Altucher's ideas to shorter-term trading--particularly the pairs trading technique and the strategy for buying market "crashes".
Altogether, "Trade Like a Hedge Fund" belongs to a genre of books inspired by the work of Victor Niederhoffer (who Altucher acknowledges in his introduction). The focus is on scientifically-tested trading concepts, not discretionary, subjective ones. Where Altucher may differ from Niederhoffer is in his willingness to adapt traditional technical analysis tools (such as Bollinger Bands and gaps) to quant trading. As a matter of disclosure, let me say that I have corresponded with Altucher about his ideas, but this review was not solicited by him or his editor (who happens to be my editor as well). The best thing I can say about the text is that it has given me ideas for my own research and trading. I can't say that about many trading books.
Brett Steenbarger
[...]
56 of 61 people found the following review helpful
Well worth the money 22 Aug 2004
By William Rockwell - Published on Amazon.com
Format: Hardcover Verified Purchase
On it's surface this is a book about 20 specific trading systems. But if that is all you get from it, you probably missed the big picture I believe the author was trying to convey. Like every book, there is good and bad. My review will be in the same order.

In fact there are variations on most of the systems presented. I found some of the variations/systems to be interesting. I will be trading my own variations of his variations with my own money. Frankly I would not feel comfortable trading some of the systems presented and I will not. But those are my preferences and need not be yours. I am sure there is at least one system in the book that would suit your style. Given the potential profits the cost of the book is trivial.

Blindly following a system might make you money for the short to medium term. However the real strength I found in the book was to spur my imagination to modify his systems to suit myself, thereby turning them into my systems. Since they are now "mine", I am free to change them as conditions change going forward.

Now the downsides. First there is little in the book on money management. In some of his examples he uses 100% equity to put positions on. I doubt anyone in their right mind would ever consider doing this.

Continuing on the first downside there is little risk management expressed. For at least one of the strategies, you stay in until you make a profit or you eat your losses after 20 days. Staying in any position for 20 days should have you in a profit at some point, no matter why you entered it (making me wonder just how good the system is). But if the market never moved to your number in that time, it is likely you have lost quite a bit of money along the way. Yes you almost always win a relatively small amount, but when you lose, YOU LOSE BIG.

Even with the imperfections, I heartily recommend the book. However I do not recommend you follow it blindly. It is definitely not a beginners book. Before you trade these ideas, you really need some experience. You need to know how to manage your money and how to maintain some grace under fire. In other words if you aren't very disciplined you might end up paying a lot more to the markets than you paid for this book. But since you might be taking the other side of one of my trades....I won't be offended if you don't take my advice.
23 of 24 people found the following review helpful
Completely useless & unprofitable strategies 5 April 2009
By Michael - Published on Amazon.com
Format: Hardcover
The strategies in this book are so pathetic it's laughable. After taking hours of my time to program them into my computer and backtest them, I now feel I know more about trading than the author. I have not found one strategy that works. Now don't get me wrong, I didn't expect to buy a book with profitable strategies, but I did expect some rigor in the test results and some useful ideas that I could use.

Many of these strategies will give you a trade once a month and he backtests them for 4 years. Some strategies you will get only 50 trades in the 4 years. Some of them were profitable from 1999-2003 but then stopped working. And some of them I just can't get anywhere close to his results. Don't forget the drawdowns, because he doesn't use stops so the drawdowns are huge. And if you try to add a stop then it is even worse.

For example, his simple bollinger strategy: buy when the low touches the lower BB with 20 day period and 2 stddev and then sell when it reaches the MA. This is so simple I was sure that I didn't mess up the programming.

Results:

His: 72% winning trades
Mine: 65%

His: 7% avg profit, -12% avg loss
Mine: total profits / total losses = 1.01

Mine: ROI is 0%

This strategy barely breaks even. Which is not surprising since it's way too simple. The others are just as bad. My favorite is buying a stock that just declared bankruptcy. This wonderful technique has only 6 trades! The author doesn't know anything about statistics and I can't believe he knows anything about trading either.

Don't waste your money on this book.
18 of 19 people found the following review helpful
Careful! 5 Nov 2008
By William - Published on Amazon.com
Format: Hardcover Verified Purchase
I backtested most of the strategies listed in this book going back over a much longer period than the author used and found that most of them either lost money or made tiny profits.
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