Trade Like a Hedge Fund: 20 Successful Uncorrelated Strategies and Techniques to Winning Profits Hardcover – March 8, 2004
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"Should you have this in your library? Most definitely, it...maps out exactly how to turn theory into profits." -- Gary B. Smith, TheStreet.com
From the Inside Flap
Trade Like a Hedge Fund changes all that. Written by hedge fund manager James Altucher, this technique-heavy introduction to the day-in, day-out world of hedge fund trading explores twenty trading systems, strategies, and techniques that active traders can use to uncover hidden pockets of inefficiency in any market. Altucher is well known to hedge fund managers and other market professionals for his regular contributions to TheStreet.com, and he wastes no time in getting right to the bread-and-butter trading strategies that form the foundation of today's well-documented hedge fund successes.
Learn the tips and techniques that allow fund managers and frontline traders to:
- Identify stocks that are gapping up or down, then trade those with the greatest short-term likelihood of filling that gap
- Intraday trade the NYSE tick indicator-perhaps the purest indicator of investor sentiment at any given second
- Provide impressive short-term trading profits using an innovative Bollinger Band--based trading system
- Buy a portfolio of less-than-five-dollar stocks-and average over 100 percent annual return
- Follow the low-profile movements of fixed-income investors for valuable clues to equity market direction
- Profit from playing stocks on the verge of being deleted-not added, but deleted-from major indices
- Profit from trading against common market fallacies that continually win praise even as they are continually proven wrong
Despite evidence to the contrary, hedge fund managers and traders are not magicians. But they are distinctive and savvy traders who-as opposed to staid, rules-driven mutual fund or portfolio managers-enjoy the freedom to employ virtually any strategy in search of trading profits for their high-wealth clients. Let Trade Like a Hedge Fund give you a rare first-person look inside the world of the hedge fund manager, and introduce you to numerous hedge-fund techniques and tactics that you can seamlessly-and profitably-integrate into your own trading program.
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His writing style is clear and not arrogant. Similar to Jim Cramer in style, his primary focus is trading profits -- not math, academics, or philosophical issues. Easy to read and hard to put down.
Similar to the Market Wizards by Jack D. Schwager, the author is writing about his own trading experiences (and not others interviewed by J. Schwager) and reveals the dynamics and challenges of making money as a fund manager.
In fact there are variations on most of the systems presented. I found some of the variations/systems to be interesting. I will be trading my own variations of his variations with my own money. Frankly I would not feel comfortable trading some of the systems presented and I will not. But those are my preferences and need not be yours. I am sure there is at least one system in the book that would suit your style. Given the potential profits the cost of the book is trivial.
Blindly following a system might make you money for the short to medium term. However the real strength I found in the book was to spur my imagination to modify his systems to suit myself, thereby turning them into my systems. Since they are now "mine", I am free to change them as conditions change going forward.
Now the downsides. First there is little in the book on money management. In some of his examples he uses 100% equity to put positions on. I doubt anyone in their right mind would ever consider doing this.
Continuing on the first downside there is little risk management expressed. For at least one of the strategies, you stay in until you make a profit or you eat your losses after 20 days. Staying in any position for 20 days should have you in a profit at some point, no matter why you entered it (making me wonder just how good the system is). But if the market never moved to your number in that time, it is likely you have lost quite a bit of money along the way. Yes you almost always win a relatively small amount, but when you lose, YOU LOSE BIG.
Even with the imperfections, I heartily recommend the book. However I do not recommend you follow it blindly. It is definitely not a beginners book. Before you trade these ideas, you really need some experience. You need to know how to manage your money and how to maintain some grace under fire. In other words if you aren't very disciplined you might end up paying a lot more to the markets than you paid for this book. But since you might be taking the other side of one of my trades....I won't be offended if you don't take my advice.
There are no futures or Forex ideas presented, although some of the ideas can transfer over.
Decent if you are looking for general ideas of other ways to trade profitably.
IMPORTANT: ALWAYS test any ideas you see on YOUR platform with YOUR data and VERIFY the system actually works the way the author says. I cannot tell you how many times I've seen an idea the author says makes decent $$ only to test it myself to find out that it doesn't work as stated if the author follows his/her own rules!