Trading Chaos: Applying Expert Techniques to Maximize Your Profits (A Marketplace Book) [Hardcover]

Bill M. Williams (Author)

Book Description

ISBN-10: 0471119296 | ISBN-13: 978-0471119296 | Publication Date: June 30, 1995 | Edition: 1

A practical guide for making sense of chaos theory and applying it to today's financial markets. Enables traders and analysts to uncover hidden determinism in seemingly random market events and make accurate investment decisions with high probabilities for profit.

Editorial Reviews

From the Publisher

A practical guide for making sense of chaos theory and applying it to today's financial markets. Enables traders and analysts to uncover hidden determinism in seemingly random market events and make accurate investment decisions with high probabilities for profit. Supplies practical, real-world tools for applying chaos to global commodity, futures and options markets. Its unique organizational format introduces readers to the financial applications of chaos in five graduated stages, beginning with a clear nontechnical introduction all the way to chart analysis, fractals, Elliott Wave and advanced nonlinear dynamics.

From the Back Cover

TRADING CHAOS APPLYING EXPERT TECHNIQUES TO MAXIMIZE YOUR PROFITS

Chaos theory now stands at the cutting edge of financial decision-making methods. The product of years of scientific investigation into unpredictable phenomena, it has the potential to offer traders entirely new perspectives on the movements of markets—and less risky routes to greater, more consistent profitability. Unlike other books on the subject, Trading Chaos takes chaos analysis out of the realm of the abstract and makes complex concepts easy to understand and use. It offers you the most practical, comprehensive guide available to applying chaos theory to the real world of trading and investing.

In this breakthrough work, author Bill Williams gives you the benefit of his unique qualifications: 35 years of successful trading and a PhD in psychology. The instructional techniques used in Trading Chaos have been tested and refined in the workshops, seminars, and private tutoring sessions Dr. Williams has conducted in 12 different countries.

Designed for all traders—from beginner to experienced professional—Trading Chaos introduces you to the financial applications of chaos in five graduated stages, starting with a clear, nontechnical introduction (Level One: The Novice Trader) all the way to chart analysis, fractals, Elliott wave, and advanced nonlinear dynamics (Level Five: The Expert Trader).

Trading Chaos probes depths of human and economic behavior that other books do not even mention, including:

• A detailed examination of the underlying structure of the market
• How individual belief systems affect the way we trade
• How to determine "what the market wants"
• Most importantly—"how to want what the market wants"

Numerous charts, trading models, analysis spreadsheets, and review questions reinforce the key concepts and help insure full comprehension of the material.

Regardless of your current degree of expertise, Trading Chaos will take you to new levels of trading confidence and increased profit.

This practical guide to the powerful tools of chaos theory will help you make better, more profitable trades

"Bill Williams brings a unique background and experience to the commodity trading world. His approach to becoming a successful trader includes many fresh and fascinating concepts for traders of all experience levels."—Bruce Babcock Editor, Commodity Traders Consumer Report

"Bill Williams has demystified the Elliott Wave. His technical approach is an innovative and effective way to trade markets for novice and expert traders alike."—Bob Koppel Skylane Trading Group

"Trading Chaos by Bill Williams is an excellent guide to profiting from a market which is nonlinear in structure. The book is divided into logical levels of trading techniques useful to the novice and expert trader. I was genuinely surprised that the expert can still learn refreshingly new techniques at each level presented."—Timothy C. Slater Managing Director of Dow Jones Telerate Seminars

Trading Chaos takes chaos theory out of the abstract realm and into the real world of practical investment decision-making. Using the techniques in this remarkable book, you will uncover the hidden patterns of what appear to be the random, unpredictable movements of the commodity, futures, and options markets. Regardless of your current level of experience, expert commodity trader and trainer Bill Williams will give you the skills and insights to move to levels of trading ability you would not have imagined possible.

Clear, practical, and nontechnical—Unlike other books on chaos theory, Trading Chaos is designed to be easy to understand and use

Unique organizational format—Introduces the reader to the financial applications of chaos in five graduated stages, from Novice to Expert Trader

Expert advice on avoiding common psychological traps and pitfalls—Including such self-limiting afflictions as the "paralysis of analysis," "opinionitis," and the dangers of trading on individual belief systems

A wealth of supplementary materials—Charts, trading models, trade plans, analysis spreadsheets, and trading diaries illustrate and reinforce key concepts

See all Editorial Reviews

Product Details

• Hardcover: 288 pages
• Publisher: Wiley; 1 edition (June 30, 1995)
• Language: English
• ISBN-10: 0471119296
• ISBN-13: 978-0471119296
• Product Dimensions: 9.1 x 6 x 1.3 inches
• Shipping Weight: 1.4 pounds
• Average Customer Review: 2.8 out of 5 stars  See all reviews (20 customer reviews)
• Amazon Best Sellers Rank: #654,413 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews

57 of 59 people found the following review helpful:

3.0 out of 5 stars Thought Stimulating, but no Chaos found, November 18, 2000

By 

Wan (Shanghai, Hong Kong, U.S.) - See all my reviews

This review is from: Trading Chaos: Applying Expert Techniques to Maximize Your Profits (A Marketplace Book) (Hardcover)

This is a good book which makes you rethink about your current trading system if you are still using RSI, moving averages or market profile. But this is not too much about "Chaos".

The author spent tremendous amount of time explaining why the technical indicators used nowadays are useless. He also quoted a very good example classifying the errors that typical traders usually commit : the swinging bell theory -- We cut losses and later found our original prediction being correct. Then we try to "solve the problem" by allowing a larger cut-loss. However, next time when we make a large loss by using the larger cut-loss, we again try to "solve the problem" by reducing the allowed cut-loss again. This pattern is recurring and just like a swinging bell. The writer did a very good job explaining the drawbacks of technical indicators nowadays and why traders lose.

After reading the first half of the book, I was almost persuaded not to use any technical indicators with linear parameters again. Yet, disappointingly, the author goes on to advertise his first and ever introduced indicator: Market Facilitation Index (MFI), together with other LINEAR-PARAMETIZED indicators. He claimed that the first stage of trading should use these indicators and should target at break-even. Since it is highly recommended by the author and is claimed to be able to win consistently, I have spent 8 hours programming his trading system in my computer, and tested with 2 years Hong Kong Hang Seng Index Futures trading data. Guess the results? The max. gain approximates the max. loss! Well, at least it proves that writer is right -- the target of this stage is break-even ONLY! Yet it makes no difference between other technical indicators. This is a disappointing section of the book.

In later part, the author used MACD to clarify the confusion of using Elliot Wave Theory to count the waves. This is nice. Yet the fact that MACD being a linear-parameter indicator seems to be contradictory to what the author is asserting. Besides, after almost half of the book describing the fantasy of Chaos and Fractals, when it comes to the part for its application to the stock market, the author surprisingly concluded that Elliot Wave Theory is the fractal for stock market. If this is the case, I wonder why the author did not put a better title for the book as "Wave Theory", since there seems nothing related to "chaos" in his trading system.

The author did point out a "fractal" pattern in the book after his 35 years of analysis and sorting process by the computer. The result, unfortunately, was disappointing. I found it useless in the historical data of HSI futures. If the fractal pattern proposed by the author is Fractal A, I may say I have found another Fractal B, which is -- in the past 30 years, for every turning points, there was 99.9% that you could found a "HIGH" or a "LOW". It is true, right? But it's not useful.

For the section 11 and 12, it seems that the author wants to teach us how to put ourselves in an environment that better controls our psychology. This part is so far so good. I didn't benefit much from this part as I don't know how I could control to switch between left brain and right brain during trading. The only thing I want to ensure is my brain still works.

Overall, the book is thought-stimlulating. I benefited from knowing the "scientific reasons" why the popular technical indicators do not work, although I never thought they will work in the past. I also benefited from learning to use MACD to clarify the confusion of Elliot wave counting. Yet the book could be better if the author rewrite it in more concise way. My last word, this book is a good-buy if you don't take it too serious about "Chaos".

24 of 27 people found the following review helpful:

1.0 out of 5 stars Title is misleading., May 3, 1999

By A Customer

This review is from: Trading Chaos: Applying Expert Techniques to Maximize Your Profits (A Marketplace Book) (Hardcover)

The title of the book is misleading. The author in effect says "financial markets behave in a fractal/chaotic manner, therefore the markets are not efficient, and therefore technical analysis works and here's my trading system." The connection between fractal/chaos theory and the author's trading system is absurd. The discussion of fractal/chaos theory is cursory and infantile. The remainder of the book is the author's trading system based on technical analysis. It appears the author is simply trying to capitalize on the buzzwords "fractal" and "chaos".

If you want a thorough review of fractal/chaos theory, I really recommend Edgar Peters' books or Trippi's book.

Now, with that said, the author presents an interesting trading system based on BEHAVIORAL aspects of the market. The author relates the lessons of trading that every beginning trader should know. From a BEHAVIORAL finance standpoint, the book is great and I would recommend it. On the other hand, does the reader want to be an investor or a trader? If you're not on the floor, don't try to be a trader. Trust me.

My one-star rating is based on the book's treatment of fractal/chaos theory in the financial markets. It doesn't.

15 of 16 people found the following review helpful:

1.0 out of 5 stars The book has the wrong title!, December 13, 2000

By 

AmazonShopper (NC, USA) - See all my reviews

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This review is from: Trading Chaos: Applying Expert Techniques to Maximize Your Profits (A Marketplace Book) (Hardcover)

I was greatly disappointed with this book. One would think it is about chaos theory and its applications for the financial markets, but all it has on the subject is one page of text! When I read the book, I had a strong feeling that the author didn't know what he was talking about when it came to chaos, and that's why he had so little to say. If you really want to get familiar with chaos theory and how it can help analyze the markets, your best bet is Peters' "Chaos and Order in the Financial Markets". Better yet, if you have some mathematical background, "Chaos and Nonlinear Dynamics in the Financial Markets" by R.Trippi offers some serious discussion on the subject.