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The Next Perfect Trade: A Magic Sword of Necessity

Alex Gurevich

4.15 · Rating details · 104 ratings · 7 reviews

'The Next Perfect Trade' articulates a set of principles that can be applied in discovering superior trades; those that will be profitable in the broadest range of economic scenarios. The book shifts focus from forces that drive markets to forces that drive successful trades. The robust performance of this approach has inspired the subtitle 'A Magic Sword of Necessity'.

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Kindle Edition, 176 pages

Published September 7th 2015

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Jan 27, 2017 Dixon Liang rated it it was amazing

A very unique trading book that I would recommend to anyone in the business. The author is definitely very qualified and effectively shares his framework of macro trading to the reader. There aren't very many books out there that do this. You don't necessarily have to agree with everything in his framework, but can take pieces here and there for your own improvement which is what the author intends. His trading style is definitely geared towards the longer term (a few years).

The book is split i A very unique trading book that I would recommend to anyone in the business. The author is definitely very qualified and effectively shares his framework of macro trading to the reader. There aren't very many books out there that do this. You don't necessarily have to agree with everything in his framework, but can take pieces here and there for your own improvement which is what the author intends. His trading style is definitely geared towards the longer term (a few years).

The book is split into three parts. In the first part, he discusses the qualities that he thinks makes an individual trade a good one. Among the qualities that he places emphasis are going with the trend and positive carry. He really points out that fighting against carry in most situations is a lost cause. It's clear that the author doesn't prefer the "fading" type of trades.

The second part discusses execution of the idea. It gets a little interesting here. The author doesn't seem to believe in the traditional notion of placing stops. His main argument is that too often, traders will get whipped around even their idea is correct. I can't say I agree with him, but given his trading horizon, it does make sense. His alternative is to simply cut down the position size. In this section of the book, he also goes into his sizing of his positions and how he trades specific markets (ex. adds to FX positions as they go in his favor vs. adds to interest rate positions as they go against him).

Finally, the third part of the book is probably the most unique and insightful. The author discusses what makes a trade dominant. He introduces us to "concurrent necessity". Macro trades are often linked and there is always a dominant trade (necessary).

He uses basic mathematical logic to argue his case. If A implies B, but B doesn't imply A, then B is the necessary. If being a salmon implies being a fish, but being a fish doesn't imply being a salmon, then being a fish is necessary. With regards to a trade, he uses the case shorting US front end rates vs. shorting EURUSD in 2014. He argues that shorting US front end rates is A, while shorting EURUSD is B. If the Fed tightens at a faster pace, then the dollar will rally (A implies B). However, if the dollar rallies, it does not necessarily mean higher US front end rates (B doesn't imply). Thus, shorting EURUSD (B) is the dominant trade. As a trader, you should always be seeking dominant trades.

To conclude, he calls the perfect a trade, a combination of two trades that share the qualities he has discussed in the book, but which neither may fail with the other succeeding.

It's a pretty quick read and definitely worthwhile for anyone in trading. ...more

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Sep 30, 2019 Andrew Taylor rated it it was amazing

Amazing concepts

So well though out and mind blowing in it’s clean logic this book is worth not just the reading time but the additional hours you spend making sure you understand Alex’s key points

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May 06, 2020 Benjamin Brey rated it it was amazing

Excellent

I think this book does an excellent job of laying out trade structuring and the logic required to make dominant trades.

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Feb 03, 2020 Akhil Jain marked it as to-read

Reco by me trader mentor- Jagan

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Dec 23, 2015 Kelly rated it really liked it

Investing as a general theme is one of the reading topics I've selected for 2016. After reading several classics that I hadn't yet read, I thought I would move on, since those classics didn't offer anything I wasn't already using in my financial life or had learned in business school or otherwise. After reading this, I realize there is more I can read and learn from. This book is more specific, advanced, and current than what I've been reading. Specifically, it covers how the author structures h ...more

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Jul 08, 2016 Ian rated it really liked it

I have very mixed feelings about this book. The author is a very intelligent person, and clearly knows his stuff. However his trading record is pretty mixed, among other things running a hedge fund that immediately went bust. After hitting it big with a long bonds trade recently, he's reached a Eureka state where apparently he seems to think he's conquered the markets.

There's some very interesting ideas here and I've noted a few things to consider when planning big macro trades myself. However ...more

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