The Trading Game: Playing by the Numbers to Make Millions [Hardcover]

Ryan Jones (Author)

Book Description

Series: Wiley Trading | Publication Date: April 15, 1999

Clear, concise, and practical, The Trading Game shows you how to harness the power of money management for any trading method "The goal of most futures traders is to make a million dollars as fast and as painlessly as possible. Unfortunately, few traders achieve this goal. In The Trading Game, Ryan Jones demonstrates how the proper application of his new money management strategy, Fixed Ratio Trading, can enable an average trading system to earn spectacular profits. My advice? Don't trade until you've spent as much time and effort on money management as you've spent on developing your entry and exit rules." -Tom Bierovic, Manager System Trading & Development Education, Omega Research, Inc. "Ryan Jones is on the cutting edge of the most important element in the art of speculation-be it stocks or commodities-money management." -Larry Williams, trader and author Long-Term Secrets to Shot-Term Trading "Money management is the most overlooked part of trading but is the key to building enormous wealth. Ryan Jones first overviews classical methods and then discusses a new paradigm which, combined with a reliable trading method, can lead to financial security." -Murray Ruggiero, President Ruggiero & Associates; contributing editor, Futures magazine "At last-a money management book that is not intimidating or boring. Ryan Jones has made a complex subject easier to understand and follow. I am especially excited for all independent traders." -Glen Ring, President, Glen Ring Enterprises editor of the widely respected View on Futures newsletter "Ryan Jones has always been one of the most innovative traders and creative minds in the industry. With the writing of The Trading Game: Playing by the Numbers to Make Millions, he has taken the science of money management and risk control to another level. I wholeheartedly endorse his efforts and recommend this new work required reading to anyone either just entering the trading arena, or already participating in it." -Ted Tesser, CPA and author, The Trader's Tax Survival Guide

Editorial Reviews

Review

"At last - a money management book that is not intimidating or boring. Ryan Jones has made a complex subject easier to understand and follow. I am especially excited for all independent traders" -- Glen Ring, President, Glen Ring Enterprises editor of View on Futures newsletter

"Money management is the most overlooked part of trading, but is the key to building enormous wealth. Ryan Jones first overviews classical methods and then discusses a new paradigm which, combined with a reliable trading method, can lead to financial security." -- Murray Ruggiero, President, Ruggiero & Associates contributing editor, Futures magazine

From the Inside Flap

"If traders plan on making serious money in [the] markets, it will boil down to one thing: how they manage their money. Outside of sheer luck, no one will make a tremendous amount of money.without a proper money management strategy. This is the basis of this book." -from the Preface Not a week goes by that investment experts don't offer us more "winning" trading methods and systems. Some work better than others, but they all seem to stop working sooner or later. To obtain-and maintain-an edge on a regular basis, savvy traders need an effective money/risk management plan. Based on sound trading principles, The Trading Game gives investors proven risk management techniques that are not only easy to understand and apply, but can lead to consistent and regular profits. Written by Ryan Jones, whose seminars on risk management are eagerly attended by traders nationally, this groundbreaking book shows you step-by-step how to increase your trading profits without necessarily increasing the performance of your trading system or method. By using the management techniques described, you can reap greater profits whether the method wins 25 percent of the time, 40 percent of the time, or 90 percent of the time. Unlike other books on risk management that tend to be loaded down with complicated formulas and technical jargon, The Trading Game presents the topic in a way that is clear, concise, and practical. Covering the why's, what's, when's, and how's, it walks you through the entire risk management process with complete details on everything from margin requirements and fixed fractional trading to market weighting and protecting profits. Along with a complete, workable method for making $1 million in five years or less, you'll find straightforward guidelines on determining how many trades to place, analyzing what their maximum drawdowns should be, and combining different markets and different systems for diversification. You'll also learn to assess whether you're a conservative or aggressive trader, what your goals are, and the degree to which you're able to tolerate risk. An invaluable guide for every trader and sophisticated investor, The Trading Game offers a powerful array of solutions to one of the most puzzling problems in trading: how to keep losses small so that profits accrue.

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Product Details

• Hardcover: 256 pages
• Publisher: Wiley; 1 edition (April 15, 1999)
• Language: English
• ISBN-10: 0471316989
• ISBN-13: 978-0471316985
• Product Dimensions: 6.4 x 0.9 x 9.5 inches
• Shipping Weight: 1.1 pounds (View shipping rates and policies)
• Average Customer Review: 3.2 out of 5 stars  See all reviews (32 customer reviews)
• Amazon Best Sellers Rank: #379,427 in Books (See Top 100 in Books)

More About the Author

Ryan Jones is considered one of the trading industries "most complete traders." Starting his trading career at the early age of 16, he had traded nearly every major market and strategy by the age of 21. At the age of 26, Mr. Jones signed a book deal with John Wiley, making him one of the youngest authors ever in the field of futures trading. His book, The Trading Game, Playing by the Numbers to Make Millions, is still considered the authority on the subject of trading and money management by many leading traders. Mr. Jones' advanced experience and knowledge across many trading fields such as technical analysis, option trading, money management, and the S&P, have lead to several trading feats, including turning a $15,000 account into over $107,000 in less than 90-days, short-term trading the S&P (real money). Ryan is also the creator of QuantumCharts.com, which provides charting and backtest trading strategy software. It uncovers profitable trading opportunities and creates simple or complex automated trading systems.

Customer Reviews

Most Helpful Customer Reviews

42 of 42 people found the following review helpful:

2.0 out of 5 stars Apples and Oranges, July 7, 2001

By A Customer

This review is from: The Trading Game: Playing by the Numbers to Make Millions (Hardcover)

Unfortunately Ryan did a poor job with this one. This is not necessarily the easiest subject to explain, but it is the most important one for trading. There are several instances in his spreadsheets and examples where he isn't clear, and makes some incorrect comparisons. Mostly where he compares trading one contract vs. fixed ratio and fractional ratio - in relation to the drawdowns in each example. Run the numbers in a sim.

There are a couple other areas that I take serious issue with as well. One is porfolio weighting. Again he compares apples and oranges with his example of trading 1 S&P and 1 Corn vs. 1 S&P and 3 Corn. He states there is no reason to equalize positions and goes to great lengths to prove his point. He doesn't take into account the portfolio size and the unequal affect on gains and losses that come from not equalizing the positions, the point of which is supposed to be to reduce drawdowns and risk while increasing profits. Of course in hindsight having a heavier weighting in the S&P improved profits, (which he tries to use as an example to prove his point) but you don't know that ahead of time. Equalizing the positions equalizes the diversification and smoothes the equity curve. It is fine to overweight a certain market if you are doing it for a reason, like you expect it to outperform, but don't claim that it doesn't matter and there's no reason to do it.

Another thing he says is that Risk of Ruin isn't important "it just is." I can't even comment on that one.

This same type of thing, faulty reasoning, happens in several areas. If you are already familiar with money management and are sharp enough to catch these you might learn something.

As for the people complaining about his system, he includes a basic trend following system, it's a very good one. This is obvious to anyone that has done any mechanical system testing/trading. And his money management techniques are good too. No complaints there.

Larry Williams has a couple recent stock and futures books out. Both books have the same chapter on money management where he briefly explains "optimal F" (fixed fraction) and Jones' "fixed ratio". Then adds his own preference. One of those might be a better read. And Dr.Tharps "Trade Your Way To Financial Freedom" does a good job with position sizing. I'd read these first. And if you do get this one, make sure you run your own spread sheets.

42 of 47 people found the following review helpful:

5.0 out of 5 stars One of the most important trading books ever!, July 18, 1999

By 

CD - See all my reviews

This review is from: The Trading Game: Playing by the Numbers to Make Millions (Hardcover)

If I had to recommend one book to read on trading, this would have to be it. While it does not cover every aspect of trading, it is the only book I have read that can actually deliver what the title implies. The author discusses all of the popular methods of money management in use by private and professional traders alike. There are times when the detailed and exhaustive examples can make the most enthusiastic reader bleary eyed. However, this is done for the benefit of the reader. The author is convinced that his method of money management is superior to traditional methods and takes pains to prove this with a comprehensive and step by step analysis of each. Additionally, he describes and gives the rules to a simple trading system that actually works better than most of the high-priced systems for sales in popular trading magazines. I have personnally back tested the system oulined in the book using his "Fixed Ratio" money management approach using TradeStation 2000i. I optimized the system parameters to a small degree to reflect them as a function of the respective markets in which it was being tested but still attempting to avoid curve-fitted results (i.e. the moving-average parameters in the SF may have been 24 and 5 days as opposed to them being 21 and 3 days in bond futures). I used this method with a stop-loss (also being a function of the market) in the following markets: TQ, SF, ED, ES and DX. I chose these markets for their relatively low margin requirements. Tested over the past four years yielded approximately $1,400,000. The author claims that if one has a system that generates at least $20,000 per year, that that amount can be parlayed into $1,000,000 in five years. Judging from the results from my own tests, this book delivers that and then some. What is interesting about Fixed Ratio money management is that it is independent of the system being used. You can add any number of systems and any number of markets and as long as the systems all generate a profit, the results just keep getting better and better. This is the result of allowing your equity to grow geometrically, with only a modest increase in your risk. You actually stand to increase your return by several hundred percent while you increase your risk by a few meager percentage points. If you are prepared psychologically to trade futures, equities or options then I urge you to purchase this book. Otherwise, get yourself mentally ready to trade by reading "The Disciplined Trader," by Mark Douglas (books by Ari Kiev and Van K. Tharp are also good) then return to this book/subject. It is revolutionary.

23 of 24 people found the following review helpful:

3.0 out of 5 stars Finally a system for the little guy!!, May 14, 2004

By 

Charles T. Dowis "cdowis" (USA) - See all my reviews
(REAL NAME)   

This review is from: The Trading Game: Playing by the Numbers to Make Millions (Hardcover)

I read this book with mixed feelings. First, after looking at some of the reviews, I wondered if we were reading the same book. Now I know why -- the writing is terrible. Some sections I had to read 3 or 4 times before I even began to understood what he was talking abou. It does not surprise me that several reviewers obviously were clueless on what he was talking about. This book desperately needs a re-work.

My second reaction was "Finally a system for the small accounts". Most of the money systems I've seen are designed for major accounts (e.g. "don't risk more than 2% on a trade" -- yeah, right!) The trader with $10,000 or less should find a very workable system to manage his account. His system handles important issues of how to build equity on the way up, and another section on handling downturns, including streaks. He gives a good discussion on other money management techniques as well.

Wow!

It will take several.... several readings for it to make sense, but, believe me, it is well worth the effort. Hopefully we can look forward to a second edition that makes sense.