Trading Systems That Work: Building and Evaluating Effective Trading Systems (Hardcover)

~ (Author) "Which system-testing measures are likely to work and which are not?..." (more)
Key Phrases: fixed fractional money management strategy, largest historical loser, longest flat time, Black Jack, Gold Digger, Lng Flat (more...)

Editorial Reviews

Product Description

Today's computer trading programs can be a godsend to traders looking for an extra edge. They can also be filled with dangerous--and expensive--pitfalls for the uninitiated. Trading Systems That Work reviews and analyzes today's major software programs, and helps traders determine which will work best for their personal trading style and habits--and which could actually work against them.

Emphasizing Tradestation and Excel (the two most popular software trading programs), this valuable guidebook covers all aspects of building, understanding, and evaluating a system. Traders will keep Trading Systems That Work handy for its: *Clear, step-by-step assistance with intricate systems *Techniques to evaluate the true performance of any system

From the Back Cover

Guidelines for Designing and Building a Unique, Powerful, and Profitable Trading System

Successful trading is more than just a series of single, isolated activities, each fighting its own battles in a dog-eat-dog marketplace. It is instead a system, in which all components work together to ensure that each trade is well protected, easy to implement, and capable of generating a steady stream of low-risk trading returns.

Trading Systems That Work shows you how to combine today's best available information and techniques into a simple system that works for you­­across all markets and market conditions. Look to this clear, step-by-step book for:

• Guidelines for implementing a consistent money management program
• Portfolio composition techniques to ensure maximum profit potential­­while minimizing exposure to unnecessary risk
• Strategies to exercise proper risk management through stop losses, profit objectives, and more

Whether you are a multimillion-dollar institutional investor or an independent trader with a $10,000 account, your trading system­­and your comfort with that system­­will spell the difference between long-term success and failure. Let Trading Systems That Work help you design a strategic, well-thought-out trading system, one that puts you in complete charge of your trading fortunes.

When it comes to designing a trading system, serious traders don't have time to reinvent the wheel. Instead, they generally incorporate the proven, time-tested systems and techniques of others into their own­­a personalized system that takes into account their trading budget, risk tolerance, action requirements, time horizon, and abilities to accept market- and system-specific anomalies. Trading Systems That Work is the first book to evaluate many of today's most influential techniques and, emphasizing trading software programs TradeStation and Excel, cover all aspects of researching, building, understanding, and evaluating your own trading system.

After covering the logic and reasoning that underpin a successful system, international trading consultant and writer Thomas Stridsman uses a set of proven system-building tools, plus his own highly innovative analysis techniques and findings, to provide:

• Step-by-step techniques for researching and building a mechanical (100% rule-based) trading strategy
• Clear step-by-step techniques to evaluate the true performance of any system
• Methods to measure drawdown, both within individual trades and for entire strategies
• All computer coding, along with spreadsheet formulas and equations
• Optimal exit techniques regardless of the market or current market conditions

Trading Systems That Work is the book for traders who have taken a few gut-punches, realize the game is not as easy as it seems, and want to pinpoint exactly what it is they need to solve the puzzle. More than just another cookie-cutter book extolling ready-made technical analysis indicators or a foolproof trading system, it instead examines the entire trading process, the importance of fully understanding that process, and the necessity of employing sound, sensible, fixed-fractional money management strategies to consistently profit from that process.

Manageable system building protocols, money management and portfolio composition guidelines, basic entry and exit techniques­­Trading Systems That Work shows you how to tie the many different stages and strategic decisions of trading into a unified, profitable system. Whether you are looking to design and use a fast, intraday, market-specific trading system or one that is steady, long-term, and universal, its many valuable insights and innovations will­­once and for all­­put you on the right track to an understandable, profitable methodology.

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Product Details

• Hardcover: 358 pages
• Publisher: McGraw-Hill; 1 edition (November 20, 2000)
• Language: English
• ISBN-10: 007135980X
• ISBN-13: 978-0071359801
• Product Dimensions: 9.2 x 7.5 x 1.3 inches
• Shipping Weight: 1.9 pounds (View shipping rates and policies)
• Average Customer Review: 3.6 out of 5 stars  See all reviews (17 customer reviews)
• Amazon.com Sales Rank: #173,119 in Books (See Bestsellers in Books)

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Customer Reviews

Most Helpful Customer Reviews

85 of 89 people found the following review helpful:

5.0 out of 5 stars Every trader will benefit, December 18, 2000

By	Eugene H. Steele "daytradewithmecom" (Fort Lauderdale, Fl United States) - See all my reviews (REAL NAME)

The title of the book should be the subtitle: Building and evaluating effective trading systems rather than Trading systems that work. If you purchase the book thinking you have purchase a collection of trading systems that work you will be disapointed. However if you have an interest in evaluating trading systems than this is the book for you and should join similar books as the Encyclopedia of Trading Strategies by Katz. The great fun in reading this book is in the Author's opinions about everyone else. Here are a few choice comments,"There is no way you can use TradeStation as a standalone tool to build a complete straegy" p.339 "If all of these indicators do not work--"p.51 and my favorite "No wonder then that your software supplier,system vender, or market guru of choice says that your worst draw down is still to come-and they do not even know how to calculate it."p.38 This is not a man that is afraid to express his opinion. The especially good points of the book are the arguments for percentages rather than points in evaluation and the TradeStation easy language (who ever thought that up has an great imagination)code to add information to an excel sheet to get it right. If this is the subject you are interested in buy it. You will not be disapointed.

45 of 46 people found the following review helpful:

5.0 out of 5 stars A great book with a mediocre title, March 17, 2001

By	Trading systems developer (Kennesaw, GA USA) - See all my reviews

This is a wonderful book. But the title is IMO going to attract people that are looking for black box systems that will make them a mint. That isn't what this book is about. It should have been called something like, _Building and Evaluating Good Trading Systems_, or some such.

I agree completely with the other reviewers and won't restate what they said. But as an owner of TradeStation I can tell you that there is a real need to have someone spell out--in CODE (both for TradeStation and for Excel)--how to *really* evaluate a trading system. Stridsman tells you point blank which of TS's performance eval stats you should look at, and which ones are worthless.

Highly recommended.

55 of 58 people found the following review helpful:

5.0 out of 5 stars Best Book on Evaluating a Trading System, November 20, 2002

By	C.P. Cavafy - See all my reviews

I have to laugh at the "Doubt" review below because anyone who thinks that you can make more money as an author than as a decent trader is misguided (unless your name is S. King or D. Steele). By the time the publisher and distributor extract their pound of flesh, the author is left with a meager cut. When an author writes a book, several other factors must be considered: ego, sharing knowledge, recognition, leaving a legacy, etc. Did the reviewer actually read the book or just paint a broad stroke?

A mechanical or system trader has plenty of time to focus on other tasks throughout the day in between executing orders. In fact, the reason why many system traders fail is because they spend their time babysitting positions and get sucked into making emotional decisions, i.e., taking the quick profit or ignoring the stop loss. It is so easy to sabotage a system, especially if you feel the need to exercise control over the trading decisions (that's 99% of us).

Stridsman's book is important because it provides the framework surrounding a trading system. You can plug any trading system into his evaluation model and generate all of the required performance metrics. Further, a trader who understands the details of the system and understands its behavior gains more confidence in trading the system. I recommend this book and Ralph Vince's "Mathematics of Money Management" for further understanding.