Automotive Holiday Deals Books Holiday Gift Guide Shop Men's Cyber Monday Deals Week Learn more nav_sap_SWP_6M_fly_beacon Indie for the Holidays egg_2015 All-New Amazon Fire TV Luxury Beauty Gifts for Her Amazon Gift Card Offer mithc mithc mithc  Amazon Echo Starting at $49.99 Kindle Voyage Cyber Monday Video Game Deals Outdoors Gift Guide on bgg
How Markets Really Work: Quantitative Guide to Stock Mark... and over one million other books are available for Amazon Kindle. Learn more

Enter your mobile number or email address below and we'll send you a link to download the free Kindle App. Then you can start reading Kindle books on your smartphone, tablet, or computer - no Kindle device required.

  • Apple
  • Android
  • Windows Phone
  • Android

To get the free app, enter your email address or mobile phone number.

  • List Price: $49.95
  • Save: $13.14 (26%)
Only 15 left in stock (more on the way).
Ships from and sold by Gift-wrap available.
How Markets Really Work: ... has been added to your Cart
Condition: Used: Very Good
Comment: This book is in great condition. Its dust jacket is bright and clean. There is a very small tear on the top edge on the back of the dust jacket. The pages are crisp, unmarked and clean. This is a really lovely copy!
Sell yours for a Gift Card
We'll buy it for $16.21
Learn More
Trade in now
Have one to sell? Sell on Amazon
Flip to back Flip to front
Listen Playing... Paused   You're listening to a sample of the Audible audio edition.
Learn more
See all 3 images

How Markets Really Work: Quantitative Guide to Stock Market Behavior Hardcover – March 6, 2012

30 customer reviews

See all 2 formats and editions Hide other formats and editions
New from Used from
"Please retry"
"Please retry"
$27.02 $26.73

$36.81 FREE Shipping. Only 15 left in stock (more on the way). Ships from and sold by Gift-wrap available.

Frequently Bought Together

  • How Markets Really Work: Quantitative Guide to Stock Market Behavior
  • +
  • Short Term Trading Strategies That Work
  • +
  • High Probability ETF Trading: 7 Professional Strategies To Improve Your ETF Trading
Total price: $136.71
Buy the selected items together

Editorial Reviews


"Those who want to improve their trading of the markets in the very short run would benefit from this book." (Seeking Alpha, March 21st, 2012)

From the Inside Flap

Presenting a unique but simple philosophy for looking at the financial markets, How Markets Really Work, Second Edition: A Quantitative Guide to Stock Market Behavior is the one-stop resource for individual and professional traders, investors, money managers, and anyone else interested in better understanding the markets and how they function. Although predominantly focusing on short-term market actions, the trading strategies introduced and explained here can be applied equally well to longer-term investment opportunities.

Designed to help readers identify where market averages have given investors an edge and how to exploit those edges over and over again, the book is based on one central theme: buying short-term weakness has outperformed buying short-term strength over the past fifteen years. Revised and updated, this Second Edition includes three new chapters to further its comprehensive scope. These include coverage of an oscillator for identifying overbought and oversold market conditions, coverage of long-term market behavior that definitively illustrates that low-volatility stocks outperform high-volatility stocks, and an all-new short-term strategy for trading in S&P 500 stocks.

Packed with decades of market wisdom from financial experts Larry Connors and Cesar Alvarez, the book tackles common beliefs about investing head on, finding that much of what the trading world takes for granted is simply not true. Utilizing an illustration-rich format that clearly demonstrates market action, How Markets Really Work refutes the value of volume, shows that the rule of thumb for determining market strength—a market that rallies for a few days in a row is strong while one that drops over the same period is weak—is a faulty indicator, and much more.

Predicated on the belief that, contrary to common wisdom, markets don't change, How Markets Really Work, Second Edition takes a clearheaded look at the facts of the last twenty-plus years to help you understand the real history of the financial markets and how you can profit from them.


Looking for the Audiobook Edition?
Tell us that you'd like this title to be produced as an audiobook, and we'll alert our colleagues at If you are the author or rights holder, let Audible help you produce the audiobook: Learn more at

Product Details

  • Hardcover: 192 pages
  • Publisher: Wiley; 2 edition (March 6, 2012)
  • Language: English
  • ISBN-10: 1118166507
  • ISBN-13: 978-1118166505
  • Product Dimensions: 7.4 x 0.7 x 10.3 inches
  • Shipping Weight: 1.2 pounds (View shipping rates and policies)
  • Average Customer Review: 4.1 out of 5 stars  See all reviews (30 customer reviews)
  • Amazon Best Sellers Rank: #295,029 in Books (See Top 100 in Books)

More About the Author

Discover books, learn about writers, read author blogs, and more.

Customer Reviews

Most Helpful Customer Reviews

17 of 18 people found the following review helpful By Rob Hanna - Quantifiable Edges on August 11, 2012
Format: Hardcover
The original "How Markets Really Work" has long been one of my favorite trading books of all time. It came out shortly after I began doing a lot of my own quantitative research. The concepts in the book were simple, effective, and, for me, inspiring. I referred back to that book many times over the next few years and my copy is filled with highlights and notes.

Upon reading the second edition I have not been disappointed. Larry reviews all of the edges he identified in the first edition and shows how they have evolved since. I enjoyed placing my books side-by-side and going through the first several chapters. Additionally, he's added a few more chapters which should make the second edition a worthwhile purchase for anyone who already owns the first. One of these chapters discusses Larry's research with regards to the2-period RSI indicator, another looks at historical volatility and its impact on individual stock returns, and the third shows a nice example of a rotational system that could be built using the ideas in the book.

I often say a trading book is worthwhile if you can get at least one good idea from the book that you can apply to your trading and improve your returns. Two good ideas make for a very good book. "How Markets Really Work" has a bundle. For traders who enjoy system building or quantitative research you have a goldmine of ideas here which make for excellent starting points. But even traders who don't conduct their own market studies would be well advised to have an understanding of the concepts presented in this book. And the fact that it's written in such simple terms is a real plus. It's perhaps one of the few quantitative books that requires almost no knowledge of math.

Anyway, it's long been an inspiration to me, and now that there is a second edition I suspect it will be an inspiration to many new traders as well.
Comment Was this review helpful to you? Yes No Sending feedback...
Thank you for your feedback.
Sorry, we failed to record your vote. Please try again
Report abuse
26 of 33 people found the following review helpful By David Merkel on March 22, 2012
Format: Hardcover
Do you want to make money in the short run? Beat the markets? This could be the book for you.

I am a longer-term investor, but this book looks at a lot of strategies that are commonly understood by traders, and finds that the traders are wrong.

What are we talking about? For the most part the book indicates that momentum strategies fail in the short run. That's not as radical as it sounds because the academic literature documents a short term reversal effect (one month) for stocks that are moving dramatically.

But this book shows the effect in many ways, looking at:

Changes vs 5 & 10-day highs/lows
When markets make higher highs or lower lows over three days
Days up or down in a row
Market Breadth
Large move up or down
Number of 52-week highs versus lows

When these factors are strong, the market tends to be weak in the short run.

Then there are these factors:

Put/Call ratio

They have little effect on future returns in the short run. But what does have effect in the short run?

Low Vol beats High Vol

High VIX relative to trend indicates a short-term rally, as does a low RSI(2) score. As for the low volatility, it takes a different approach, segmenting the market by historical volatility, and no surprise, low volatility wins.

At the end the book tries to draw all of the ideas into a trading strategy, but I have no idea how good it is, because I have no idea how many strategies they tested before announcing the one that fit the past the best.
Read more ›
1 Comment Was this review helpful to you? Yes No Sending feedback...
Thank you for your feedback.
Sorry, we failed to record your vote. Please try again
Report abuse
8 of 9 people found the following review helpful By E. Chan on August 31, 2012
Format: Hardcover
Larry Connors' books are one of the few trading books that I enjoy reading cover-to-cover. The main reason for this is that his strategies are simple and clearly exposed, leaving no leeway for confusion, and my experience tells me that simple strategies are usually the ones that work in live trading. The clear exposition also means that you don't have to take the authors's own word for the performance of these strategies -- you can easily backtest them yourself. The possibility of exactly replicating and backtesting those strategies yourself not only allow you to verify that the claim is true, but that the strategies pass a true out-of-sample test based on unseen data.

Actually, speaking of out-of-sample test, this 2nd edition of Larry's original work which was published in 2004 is a massive exercise in just such a test. He and his co-author Cesar Alvarez took all of the original strategies, and ran them through new data, and proved that they continue to work well. Few authors bother to subject their own work to such rigorous challenge.

This book is about how mean reversion works better than momentum in equities, or more precisely, equities index, and I largely agree with the authors' conclusions. Mean-reverting strategies are certainly much easier to find in equities. They typically have higher Sharpe ratio, and therefore their backtests have higher statistical significance too. The authors provide a range of different simple indicators that can capture various aspects of mean-reversion, and my recommendation is that you should mix and match them to maximize their power. Equally useful, the authors presented indicators that do not appear to work, such as the "HILO Index".
Read more ›
Comment Was this review helpful to you? Yes No Sending feedback...
Thank you for your feedback.
Sorry, we failed to record your vote. Please try again
Report abuse

Most Recent Customer Reviews

Set up an Amazon Giveaway

Amazon Giveaway allows you to run promotional giveaways in order to create buzz, reward your audience, and attract new followers and customers. Learn more
How Markets Really Work: Quantitative Guide to Stock Market Behavior
This item: How Markets Really Work: Quantitative Guide to Stock Market Behavior
Price: $36.81
Ships from and sold by