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Mechanical Trading Systems: Pairing Trader Psychology with Technical Analysis



Mechanical Trading Systems: Pairing Trader Psychology with Technical Analysis

Richard L. Weissman

ISBN: 978-0-471-73097-2 December 2004 217 Pages


A wide variety of flexible trading systems that combine sophisticated technical analysis with trading psychology theory
Mechanical Trading Systems examines the development process for choosing and using mechanical trading systems in conjunction with trader psychology. This book discusses the advantages and disadvantages of mechanical trading systems; the dangers in system development and how to avoid them; the optimal methods for back-testing trading systems; position sizing and other risk quantification tools; and methods of improving rates of return on investments without significantly increasing risk. Most importantly, through a detailed examination of various types of unsuccessful trader personality traits (e.g., fearfulness, greed, and impatience), the book recommends different types of trading systems for a diverse array of trader types.
Richard L. Weissman (Port Richey, FL) has seventeen years' experience as a trader and developer of trading systems. He currently provides independent consultation an d training services to traders and risk management professionals in the areas of technical analysis, risk management, and trader psychology.

CHAPTER 1: Dispelling the Myths and Defining the Terms-Mathematical Technical Analysis and Mechanical Trading Systems.

CHAPTER 2: Mathematical Technical Analysis - A Building Block for Mechanical Trading System Development.

CHAPTER 3: Trend Following Systems- A Matter of Fortitude.

CHAPTER 4: Mean Reversion Systems- A Matter of Patience.

CHAPTER 5: Short Term Systems- A Matter of Quick Mindedness.

CHAPTER 6: Knowing Oneself: How to Challenge Your Knowledge 105

CHAPTER 7: System Development and Analysis: Benefits and Pitfalls 115

CHAPTER 8: Price Risk Management: Schools of Price Risk Management and Other Considerations.

CHAPTER 9: Improving the Rate of Return: Improving Returns by Expanding the Comfort Zone.

CHAPTER 10: Discretion and Systems Trading: Discretion within a Mechanical Framework.

CHAPTER 11: Psychology of Mechanical Trading: Trading Systems and Transformational Psychology.


References and Further Reading.


"The book is highly recommended for almost anyone involved in trading, forecasting, or studying the markets." (Technical Analyst, July/August 2005)