Customer Reviews

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

5 star:		(4)
4 star:		(4)
3 star:		(2)
2 star:		(3)
1 star:		(7)

 

 

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".

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.

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.

In the first few chapters, he sounds so attractive, after that, you will find the author using new technical analysis words to describe the breakthrough of the resistance/support and claims this a new concept/idea, but he saying nothing on the book and if you are using his method to trade, you are not far from bankruptcy.
Eventually, you waste your money, then why don't send cheque to charities.

This book really is mistitled. Chaos theory for markets is not presented, so look elsewhere for that. The book does present a good theory for the psychology of trading such as "traders differ on value but agree on price" as motivation and explains the development of traders from novice, intermediate, and advanced (skip master and expert level)and the goals for each level. Unfortunately, the methodology for trading with a Chaos background is not touched upon.

Good filler read for background on trading and personal development. Poor on methodology for trading with Chaos. Perhaps Mr. Williams had an epiphany and contends all trades are done in Chaos, so traders should relax. To borrow a line from another author, "some trades will, some trades won't, so what, next trade please."

The five stars is only for the cover. However, the content of the book is pathetic. I have read many trading books and several chaos books and I can honestly say this book is neither. I fell for the enlightened self-similar structure cover and wasted my money. Don't repeat my mistake.

If you are interested in chaos and trading, start with Edgar Peters books such as Chaos and the Capital Markets.

The publisher, Wiley, should be ashamed to put out this sort of drivel. Bill Williams is a joke. If you think your trading style is based on your body type, then maybe this book will help you feel better about losing; otherwise skip it and Bill Williams, PhD.'s other lobotomized treatises on trading.

Sorry to say, this one's a disappointment. What do you want do? Make money, or read something that seems to offer a mystical solution. If the latter go ahead and buy it, though I doubt whether you will make any money consistently from the ideas. Is the author well intentioned? Probably, but then so is everyone in the how to get rich quick industry. If you bought this book out of greed then you will get what you deserve. I think far more is to be learned from a classic like Reminiscences Of a Stock Operator than this. The title is a lure as far as I could tell, having almost nothing to do with chaos in any deep way. But who knows, good ideas come from all sorts of strange sources.

As an avid student of Chaos Theory and Fractals, I found this book to be similar to his other one. Williams eludes to using fractals in his analysis but makes no reference to fractal dimensions, Koch curves, monsters or any of the original theories as proposed by Mandelbrot. He does present some scaling principles and their application to Elliot Waves, but this is under the assumption that the Elliot Wave is correct or that you believe in it. I do agree with some of the money flow theories Williams proposes, which is probably the most clearly explained and substantiated part of his trading theoriey. I recommend "Fractals and Scaling in Finance" by Mandelbrot and for software, "Fractal Finance" by Tetrahex. Both of these follow a similar system, although Fractal Finance does use a MACD which appears similar to Williams.

Williams uses big words (fractals, chaos, quantum mechanics) to impress the reader, but says nothing meaningful.I found this book a waste of time and money

This book is a total waste of time. The author makes no attempt to explain chaos theory other than to say is is a new way to look at information. The author should be ashamed of using the word chaos in the title of this book. His big claim to fame is saying he discovered the "Elliot Wave Fractal." The actual strategy is nothing more than a trend following system using 4 lagged moving averages and some simple rules.

ps - His second book is not much more than a copy of this one with a few new paragraphs.