Trade with the Odds: How To Construct Market-Beating Trading Systems
Trading is all about managing probabilities. In Trading with the Odds, Anthony Trongone explains that the quest for developing a perfect system, which drives most traders, is fruitless. Instead, traders should focus on developing the analytic and trading skills necessary to stay in tune with the constant evolution of the financial markets. In this book, Trongone emphasizes the importance of testing and monitoring trading strategies and raw market data as a means of developing an edge over other traders who are unwilling to get their hands dirty and dig into the data on a continuing basis.
Importantly, he shows that Excel, a program almost all traders are familiar with, can be utilized to measure virtually every important aspect of trading system performance and to search for tradable market patterns. In addition, the book includes several applications that will allow you to calculate current market conditions and market patterns based on time of day, intermarket relationships, and other factors.
- Advocates an analytical approach which evolves in concert with changing market conditions
- Explains why it's hard to make money from off-the-shelf systems and indicators
- Provides in-depth analysis of other major industries generating worthwhile IPOs
- Includes applications that allow users to calculate recent market patterns
Underlying Trongone's approach is the conviction that traders must constantly innovate in response to the market, and those that rely on static analysis, will fail to achieve the results they expect.
CHAPTER 1 Invest in Yourself, Not a Trading System 1
CHAPTER 2 Playing the Percentages 11
CHAPTER 3 Performance Measures 19
CHAPTER 4 Extracting Performance Results 45
CHAPTER 5 Monitoring Performance 69
CHAPTER 6 Breaking Down a Stock or Commodity 87
CHAPTER 7 Quantifying Risk 109
CHAPTER 8 Trading in Trendless Markets 121
CHAPTER 9 Integrating Variables into a Moving Average 141
CHAPTER 10 Going against the Grain 161
CHAPTER 11 Restrictive Trading Systems 181
CHAPTER 12 Identifying the Shifting Characteristics of Volume 199
CHAPTER 13 Predictor Variables 221
CHAPTER 14 Cross-Hedging Strategies 243
CHAPTER 15 Formulating Trading Decisions 271
CHAPTER 16 Preparing for Success 285
Technical Appendix 291
About the Companion Website 305
About the Author 307
Dr. Anthony Trongone earned his PhD from NYU in 1987. He is a Certified Financial Planner as well as a Commodity Trading Advisor. He is one of the Master Educators for eSignal and has written over sixty articles for various trading publications, including twenty-three articles for Technical Analysis of Stocks & Commodities. Besides his extensive trading experience that includes trading equity futures in the commodity pits, his twenty-five years teaching graduate courses in finance, psychology, and quantitative methods in the United States as well as many cities in China and Taiwan, has given him a dynamic perspective on trading the equity markets. Trongone is an intraday trader who attributes much of his success to consistently playing the percentages along with making trading decisions without the emotional distractions, which often hamper our ability to achieve mastery over the markets.