Algorithmic Short Selling with Python: Refine your algorithmic trading edge, consistently generate investment ideas, and build a robust long/short product

by Laurent Bernut, Michael Covel (Foreword)

Leverage Python source code to revolutionize your short selling strategy and to consistently make profits in bull, bear, and sideways markets If you are in the long/short business, learning how to sell short is not a choice. Short selling is the key to raising assets under management. This book will help you demystify and hone the short selling craft, providing Python source code to construct a robust long/short portfolio. It discusses fundamental and advanced trading concepts from the perspective of a veteran short seller. This book will take you on a journey from an idea (“buy bullish stocks, sell bearish ones”) to becoming part of the elite club of long/short hedge fund algorithmic traders. You'll explore key concepts such as trading psychology, trading edge, regime definition, signal processing, position sizing, risk management, and asset allocation, one obstacle at a time. Along the way, you'll will discover simple methods to consistently generate investment ideas, and consider variables that impact returns, volatility, and overall attractiveness of returns. By the end of this book, you'll not only become familiar with some of the most sophisticated concepts in capital markets, but also have Python source code to construct a long/short product that investors are bound to find attractive. This is a book by a practitioner for practitioners. It is designed to benefit a wide range of people, including long/short market participants, quantitative participants, proprietary traders, commodity trading advisors, retail investors (pro retailers, students, and retail quants), and long-only investors. At least 2 years of active trading experience, intermediate-level experience of the Python programming language, and basic mathematical literacy (basic statistics and algebra) are expected.

376 pages, Paperback

Published September 30, 2021

Reviews

[Jake Losh · Rating 3 out of 5]

I received a copy of this book for free.

Overall, this book was good. The author mixes in a good amount of pop culture references and finance jargon, which play well with me based in the US, but not sure how they'd fly in other markets. It's a good primer on using Python for trading and technical analysis applications and also portfolio management concepts (which were my favorite sections). I liked how the author peppers in their personal experiences throughout the book.

Chapters 1-3 could be cut. I don't think someone would pick up a book with “Algorithmic Short Selling” in the title who was opposed to the concept. The title is also a little bit misleading because the book really deals more with long / short portfolio construction and trading and not simply short selling.

Four things I really appreciated about the book:
1. The author sharing anecdotes from their experiences navigating crises and major market events
2. The author’s “voice”; lots of funny references to pop culture and colorful finance creole
3. The author’s focus on “boring” fundamentals such as risk management and portfolio management system concepts, presented in a way that’s very interesting and relevant to practitioners
4. The minimal number of libraries used throughout the book, which is nice because package management and dependencies in Python are a pain

Point 4 probably needs some elaboration, because, in general, Python code in the book is hard to read, with unintuitive variable and field names. I get the sense that the author’s primary language was something else that had more restrictions on syntax and formatting. Relatedly, I didn’t really like the tendency of showing a function definition followed by “see Github for full code”. I think some better ways to approach this would be to spend time defining a package up front or in an appendix and then referencing that package going forward.

[Rob · Rating 4 out of 5]

Extremely solid introduction to TA in general, plus lots of short-specific insights that I never heard before

[Serhii Kushchenko · Rating 3 out of 5]

This book offers several valuable nuggets of wisdom that make it worth a read. I especially liked the pre-mortem technique to apply before entering a trade. However, the overall quality of the book falls short. Don't expect this book to give you a ready-made system to screen stocks. At best, you will get some food for thought. The so-called floor and ceiling method, allegedly invented by the author, appears to lack substantial merit. The book's Python code readability is very bad.