Customer Reviews

Mechanical Trading Systems: Pairing Trader Psychology with Technical Analysis (Wiley Trading)

5 star:		(10)
4 star:		(2)
3 star:		(2)
2 star:		(1)
1 star:		(2)

 

 

The book is written in a clear, direct language - the author speaks to you, not at you. While leafing through a pile of trading books, I was stopped it in my tracks when I opened this volume. I got out my yellow highlighter and read attentively from cover to cover, taking notes. The author's unique approach was to combine traders' psychology with different types of trading; this book showed me something new about myself and other traders.

Weissman begins by explaining why "...natural and comfortable trading, using entry levels as reference points, ensures small profits and large losses. We need to reprogram ourselves to be comfortable with the unknowable and uncertain future. It helps to remind ourselves that the entry level is significant to us alone and that the sense of discomfort we feel as the market moves into previously unknown territory is entirely subjective and illusory."

Weissman outlines the three basic trader personality types: trend-following, mean-reversion [counter-trend], and day-trading. You need to be comfortable with yourself to trade well. You need the right system for your trading personality - and the author offers a rich menu for every type of trader. The author's practical, shrewd observations hold up a psychological mirror for traders. He points out that with trend-trading, just a few trades account for the bulk of profits, which means you cannot take time off from mechanical trend trading. Mean-reversion traders capitalize on temporarily unsustainable levels of euphoria or panic; they need an especially strong discipline not to overstay positions. Day-trading is labor-intensive, demands quick-mindedness and frequent vacations to avoid burnout.

The author shows how to test trend-following and mean-reversion (counter-trend) systems, as well as day-trading systems. He deals in depth with the benefits and pitfalls of system development and price risk management.

"Successful trading entails fighting natural inclinations toward comfort, security, impatience, perfection, fear, and greed. We can never control the markets, only how much risk we will assume in them." Weissman stresses the importance of keeping a trading journal. He confirms something that very few people appreciate - that at a very high end systematic and discretionary trading have a great deal in common.

Weissman's gentle but persistent insistence on both knowing yourself and stepping out of your comfort zone can have unusual results. In my case, it led me to develop a semi-mechanical system for day-trading e-minis!

If you are looking for a get rich quick scheme where you get ready made systems that will turn your measly $2K into $500K in a year, keep searching.
How refreshing that this author has avoided the temptation to sell tons of books by promising that mechanical trading systems presented in a book will accomplish this ridiculous claim!
Instead this book teaches you how to build mechanical trading systems. Not only does it provide readers with tools that are applicable to all systems (trending, mean reverting, etc.,), but it also shows you how to build these systems according to your individual trading personality.
Finally it avoids the typical trader "war stories". Instead of colorful, useless stories of the crash in 1987, this book actually sticks to the point... teaching you how to develop systems that fit your personality.

Only now I got the idea of buying some books about automated trading.
My problem was the programming language. I did my backtesting with Excel and EFS (eSignal) and sometimes with MetaStock which is pretty much like Excel in my opinion.
Programming language doesn't really matter. If you want to write codes and backtest them you have to run a trading software first. Your trading software dictates your programming language. Then you're browsing the support forums for help on that language, and for help on finding profitable strategies as well.
Reading other peoples' questions and answers gave me a lot of new ideas for new strategies or for modifying existing ones. I have about two dozens strategies in my folder to modify to my needs and liking and then to backtest them.

So this book didn't come up with anything new to me. The strategies presented here are very basic and simple and almost all of them are based on technical indicators NOT on price action (except for one little code which should give the reader/trader a start for better ideas). Also there aren't really much ideas at all here. This book is small. The main premise of this book is to give the reader basic ideas to build upon, e.g. the author encourages the reader to test other exit conditions. This is why I think it's for beginners.
This book is good in telling you which type of strategy would suit you best when you're a long term investor or a short term trader.

I'd like to give this book three stars really because the author's take on psychology is actually really good.
But then the last chapters on system development, analysis and optimization are boring and too general. All in all this book is much too general. And I think those 5 Star reviews are mostly overrating.
Better read books by Perry Kaufman or Thomas Stridsman if you are serious about writing codes or have already some coding experience.
I also advise you to browse your software's help and support forums.

Sorry Mr Weissman.

I find it refreshing that this is NOT a how to beat the market and get rich quick book. Richard Weissman is a trader who knows how to make disciplined trades while managing his risk and his emotions. He makes it very clear that this is not the same as investing; instead his process is focused on exploiting short-term trends and break outs using a mechanical system that strips the subjectivety and emotion from the trade. He also discloses that the proprietary strategies he personally trades differ from those employed in the book (as another reviewer notes). That's not the point. It's up to you to build your own strategy that fits your style, risk appetite and current market conditions. Weissman is giving you the guidance and discipline to achieve this since no techincal strategy works all the time and requires refinement as you become more experienced.

I recommend this for the serious trader who wants to learn more about risk-managed trading.

If you trade, this book is worth every penny of the price. It maps out the whole spectrum of trading systems based on time frames and personality traits. I hope that it will finally force sellers of trading systems to "raise the bar" from where they are now - which assumes that "one system fits all", to where they should be, "let me build a system that matches your trading style". -

Save your money! I was very disappointed! I've been a student of technical analysis and mechanized trading methodologies for years, and Mr. Weissman's book presents nothing new. He mostly references previous works (some classical) by such authors as Perry Kaufman, John Murphy, Robert Pardo and Welles Wilder. He, of course, references his own publications. The few methods he does present are poorly explained and have been better developed, tested and documented by such other excellent authors as Martin Pring, and Colby and Meyers. I have donated Mr. Weissman's book to my local library. Maybe some beginning student of technical analysis will find it useful.

This book has some interesting, well researched and concluded ideas on trader psychology which make this title worth the spend. The mechanical trading system aspects though are not brought together well and in fact it is difficult to grasp what the author is saying at times.Perhaps in a future revision the author will join the dots a little for the common man?

As every trader knows, there's a wide gamut of books available about our passion, running from the ridiculous to the outstanding. This book is one of the best examples of a truly useful approach, blending deep systems thinking with insights on trader psychology. Weissman has clearly experienced the quest for a system that works, as he outlines not just what to do, but why it works and what it means about trader psychology and behavior. His overview of trading systems is thorough and comprehensive, and will be very helpful for those who've seen all the esoteric indicators but need some guidance on applying them, as well as for experienced traders who seek deeper understanding of a disciplined, systemetized approach that minimizes destructive emotions. For those "random walk-ers" who believe that technical analysis is a myth, Weissman clearly describes what the charts tell us about the trader on the other side of the trade, and the professionals who try to mask their actions but can't hide from the tape. Clear and friendly style, and obvious real-world experience, differentiate this from the torrent of "Day Trading for Fun and Profit" books that either retread the basics or offer dense and useless "Fibonacci retracements during a solar eclipse" approaches. Buy, read, and learn...then apply and improve your results!

This is the only trading book you will ever need - it covers trader psychology, system development, technical analysis and price risk management. It deserves to share the shelf with classics like Market Wizards and Reminiscences of a Stock Operator. I wish it had been published at the beginning of my trading career!

It is a so so book. Now it is very easy to design and develop a such trading system purely based on well defined technical indicators and optimize the system to maximize the possible profit.

I would like to see more advanced techniques but that kind of book may cost a lot more money.