Trading Systems and Money Management (McGraw-Hill Trader's Edge) by Thomas Stridsman

by Thomas Stridsman

A Guide to Trading and Profiting in Any Market Thomas Stridsman While most trading books simply tack money management onto the end of the book as an afterthought, Trading Systems and Money Management recognizes the importance of proven money management principles to the success of a trading program. This step-by-step guide shows how to use stops to improve profit taking and reduce losses, add filters such as moving averages and breakouts to improve entry and exit points, and practice basic money management techniques to improve the performance of any trading system.

Hardcover

First published January 1, 2003

Reviews

[Javier Villar · Rating 3 out of 5]

Good book. TradeStation users have so many sources to get info from! They can't complain!

The author stresses the importance of thinking in relative terms (%) instead of in absolute terms ($). Well, he doesn't seem to grasp that even with % one can't compare two different strategies, or two different markets. One can't even really compare two different trades with the same system within the same market! % doesn't take into account risk and depends on the size of the trade, which is variable.

The most sohisticated way I know is through R multiples. It's related to risk (which can be homogenized by some technical variable like volatility) and its unaffected by the position size. Rs still have limitations (like assuming total independence of trades), but it's an improvement.

This problems with size, testing and measurement metrics are in almost every book on published on trading.

Some things I found interesting:

- Average profit and SD.
- Volatility stops: SD and ATR based.
- "Money better used elsewhere" exits.

[Tadas Talaikis · Rating 3 out of 5]

Selection bias (you should test on all the stocks, including delisted, to know the *real* results), so, despite some ideas, no good as most of the literature.