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.
Introduction:
Many traders use the latest in electronic trading programs, and many have over 100 technical indicators, but the majority of traders use very few of them. Most indicators give you similar results, because either they play on running with momentum or use some form of trading between the bands. Still one important aspect is missing—you cannot run a statistical analysis of current market conditions.
For example, after absorbing heavy early morning causalities 30 minutes after the ringing of the opening bell, the market claws back, sharply cutting its percentage loss by three-fifths. Given this information, would you take a long position from 10:00 to the closing bell? Most trading programs are not capable of performing an analysis giving you the winning percentage and summary statistics, nor can they produce a scattergram reflecting the past performance of this trading condition.
A charting program cannot give you these statistics, but by using the functions contained in Excel you can quickly produce this information. Furthermore, the indicators in other programs are restrictive because the focus of prediction is on a single variable. Within the pages of this book, most of the studies implement a multiplicative approach. For instance, a moving average may be encouraging you to take a long position, but is its buy signal getting stronger or weaker? Along with this information, a system should be able to factor in other variables such as trading volume. Each indicator, by itself, is suggestive, but many variables working together offer a more conclusive analysis.
This book supplements what is missing in other trading programs. By using Excel with your existing trading platform, it expands the investor’s ability to assess current market conditions. Since my forecasting procedures afford you more flexibility to study market dynamics, they are a more powerful weapon.
Unlike most trading books, which regiment practically every click of your mouse, this one gives you the autonomy to make your own trading decisions. Certainly there are guidelines and discussions on what to do and what not to do, but its value comes from allowing you to use your own aptitude to create the systems that work best for you. After all, the efficacy of even the best systems are questionable if they are incompatible with your risk tolerance, trading experience, emotional disposition, or your ability to follow their guidelines because of your busy schedule and daily demands.
There is always some material basis on which to begin your analysis. This book gives you a working knowledge of the assessment functions in Excel, how to run the analysis, and a discussion on the interpretation of your findings, as well as a discussion on placing orders on the basis of your conclusions, not arbitrary decision making.
Contents:
- Invest in Yourself, Not a Trading System
- Playing the Percentages
- Performance Measures
- Extracting Performance Results
- Monitoring Performance
- Breaking Down a Stock or Commodity
- Quantifying Risk
- Trading in Trendless Markets
- Integrating Variables into a Moving Average
- Going against the Grain
- Restrictive Trading Systems
- Identifying the Shifting Characteristics of Volume
- Predictor Variables
- Cross-Hedging Strategies
- Formulating Trading Decisions
- Preparing for Success
Trade with the Odds: How to Construct Market-Beating Trading Systems By Anthony Trongone pdf
