Description
By (author) Carver Robert
Short /annotation:
This is not just another book with yet another trading system. This is a complete guide to developing your own systems to help you make and execute trading and investing decisions. It is intended for everyone who wishes to systematise their financial decision making, either completely or to some degree.
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This is not just another book with yet another trading system. This is a complete guide to developing your own systems to help you make and execute trading and investing decisions. It is intended for everyone who wishes to systematise their financial decision making, either completely or to some degree. Author Robert Carver draws on financial theory, his experience managing systematic hedge fund strategies and his own in-depth research to explain why systematic trading makes sense and demonstrates how it can be done safely and profitably. Every aspect, from creating trading rules to position sizing, is thoroughly explained. The framework described here can be used with all assets, including equities, bonds, forex and commodities. There is no magic formula that will guarantee success, but cutting out simple mistakes will improve your performance. You”ll learn how to avoid common pitfalls such as over-complicating your strategy, being too optimistic about likely returns, taking excessive risks and trading too frequently. Important features include: – The theory behind systematic trading: why and when it works, and when it doesn”t.-Simple and effective ways to design effective strategies. – A complete position management framework which can be adapted for your needs. – How fully systematic traders can create or adapt trading rules to forecast prices. – Making discretionary trading decisions within a systematic framework for position management. – Why traditional long only investors should use systems to ensure proper diversification, and avoid costly and unnecessary portfolio churn. – Adapting strategies depending on the cost of trading and how much capital is being used. – Practical examples from UK, US and international markets showing how the framework can be used.Systematic Trading is detailed, comprehensive and full of practical advice. It provides a unique new approach to system development and a must for anyone considering using systems to make some, or all, of their investment decisions.
Table of contents:
Preamble Preface – Systematic trading and investing – Who should read this book – Overview – what is coming Introduction – September 2008: The Billion Dollar Day – January 2009: Why (most) humans make poor traders – The black box is simpler than you think – An open source revolution – An open source systematic framework PART ONE: THEORY The good, the bad and the ugly of systematic trading – Humans should be great traders – in theory — The death of rational economic man — Why we run losses and stop out profits – Introducing a systematic rule for trading — Stick to the rules and don”t meddle — Overcoming instinct – why ”contra” instinctive behaviour works — Why subjective ”systems” don”t work – Commitment mechanisms – how do we stop ourselves ”meddling”? — Automation – the use of dogs in finance and engineering – Systematic trading in financial institutions The commitment problem does not go away… — . but there are benefits – The ideal systematic trading shop – Two more tricks to reduce meddling — Abstraction — Ignorance – Designing systems to discourage meddling – the three virtues — Trust your system — Understand the limits of your ignorance — Sleep at night: Position size is as important than position sign – When is meddling acceptable? — Unacceptable meddling — Acceptable meddling – Irrationality in trading system development – the three sins — Overfitting — Overtrading — Overbetting Systematic strategies – Why do strategies ”work”? — Risk premia — Frictions and barri
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