Top positive review
In-depth Review of Rule-Based Non-Emotional Trading Methods
8 January 2016
The book is best suited to self-directed traders/investors and individuals who are mathematically inclined and who are looking for a systematic rule-based methodology to manage their money while eliminating the emotional component of the equation. The author provides methods for three trader types: asset-allocators, semi-automatic traders comfortable with leverage and derivatives, and staunch systems traders using trading rules. Readers need to understand that they need to have adequate time available to develop and then back-test a rule-based approach. This book provides everything needed to develop a sound trading approach.
Over the course of 300 pages, Carver divides the text into four-parts consisting of detailed explanations of how to set up a systematic trading system covering first the theory behind it, then how to use the toolbox safely, followed by the specific framework to use, and lastly the practice needed to make it work effectively.
As the author illustrates, developing a profitable trading system is not a simple task that can be completed in a couple of hours. It is a time-consuming learning process containing critical elements that must be weaved together, tested, and then tried out in real-time. It is not for the faint of heart or those that give up easily because of the time commitment. Above all, it is necessary to spend the time to develop an objective trading system that will work well going forward, not just back-test very well.
Carver believes that one of the keys to making money in the markets is to avoid mistakes such as making your trading system to complex, being overly optimistic concerning likely returns, taking unnecessary risks, and trading too frequently.
Most of the chapters begin with a short summary, then use examples, charts, tables, and explanations to bring home the key points. All the key components and concepts of developing a systematic trading system are explored including: trading rule development, position sizing, forecasting, risk management, Sharpe ratios, skew, standard deviation, volatility, back-testing and over-fitting, asset allocation, correlation, curve fitting, and much more. Additionally, there is an appendix that contains useful resources – books and data sources, as well as a nine-page glossary of terms. Readers can also download a complimentary copy of the eBook edition.
Individuals who are serious about developing a personalized systematic trading approach will find this book to be a complete guide to the subject matter with unique insights of the author. He was previously a portfolio manager for a large systematic-oriented hedge fund, who now trades his own money in the futures and equities markets.