The Laws of Trading is different. All of our relationships and decisions involve trading at some level. This is a book about decision-making through the lens of a professional prop trader. For years, behavioral and cognitive scientists have shown us how human decision-making is flawed and biased. But how do you learn to avoid these problems in day-to-day decisions where you have to react in real-time? What are the important things to think about and to act on? The world needs a book by a prop trader who has lived, breathed and taught trading for a living, drawing upon years of insights on the trading floor in real markets, good and bad, whether going sideways, crashing, or bubbling over.
Author’s Introduction:
I hope that the examples, arguments, and analysis in this book will appeal to a wide variety of readers:
- Those interested in a career in trading, or more broadly in finance. It is exceedingly difficult for outsiders to get a good sense of what goes on in investment banks and trading houses. That is why lifting the veil should help prospective traders understand if this is a career for them.
- Interested outsiders, for the same reasons as above. Much ink has flowed recently on subjects surrounding trading, and the vast majority of the writing has been done by people who are clueless about what goes on in the trenches.
- Retail investors, whose need for reliable information about financial markets is the greatest. Almost always, the most useful trading tip for retail investors is “do less,” and this book aims to explain why (a) that’s so difficult and yet (b) so critical.
- People whose job it is to make rational decisions. Management, broadly considered, is the job of making good decisions under uncertainty. The ideas and techniques in this book can help people think about those decisions more clearly and powerfully.
- People who work in trading-adjacent markets, whose numbers have exploded in the last decade. Areas as diverse as advertis-ing, power generation, and even the new gig economy require a good knowledge and understanding of trading concepts in order to be navigated safely and profitably.
- Rationalists, and indeed anyone interested in the process of making rational decisions. Since decision-making is the essence of trading, financial markets are the most competitive cauldron in which to test ideas about how to make decisions.
- People who make financial decisions (i.e. virtually anyone). The world of trading provides a clean venue in which to learn about quite universal thought processes useful in any financial decision. Whether it’s buying a car or a house, figuring out where to live, or looking for a job, the world of trading has much to say about how to think about important decisions.
Contents:
- Motivation
- Adverse Selection
- Risk
- Liquidity
- Edge
- Models
- Costs and Capacity
- Possibility
- Alignment
- Technology
- Adaptation
The Laws of Trading: A Trader's Guide to Better Decision-Making for Everyone By Agustin Lebron pdf
