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The Mathematics of Money Management: Risk Analysis Techniques for Traders : Ralph Vince



Every futures, options, and stock markets trader operates under a set of highly suspect rules and assumptions. Are you risking your career on yours? Exceptionally clear and easy to use, The Mathematics of Money Management substitutes precise mathematical modeling for the subjective decision-making processes many traders and serious investors depend on. Step-by-step, it unveils powerful strategies for creating and using key money management formulas--based on the rules of probability and modern portfolio theory--that maximizes the potential gains for the level of risk you are assuming. With them, you'll determine the payoffs and consequences of any potential trading decision and obtain the highest potential growth for your specified level of risk. You'll quickly decide: What markets to trade in and at what quantities When to add or subtract funds from an account How to reinvest trading profits for maximum yield The Mathematics of Money Management provides the missing element in modern portfolio theory that weds optimal f to the optimal portfolio.

Until now, money management practices have been driven by a loose collection of highly subjective rules of thumb. By failing to accurately understand the outcomes of their potential actions, many traders and serious investors have been operating blind. The Mathematics of Money Management injects a new degree of precision into your trading strategies. Based on the rules of probability and modern portfolio theory, it shows you how to create and use these money management techniques in the futures, options, and stock markets. And you don’t need to be a PhD to exploit these strategies. Every equation and formula is easy to understand, and practical examples are provided for immediate hands-on use of the trading techniques discussed. By wedding the precepts and practices of modern portfolio theory to the concept of optimal f, The Mathematics of Money Management shows how to gauge the payoffs and consequences of every potential trading action, before you take it. Armed with this information, you’ll obtain the greatest potential investment growth for your specified level of risk, no matter what your chosen market. You’ll use these time-tested strategies to:

- Evaluate the risks and rewards of any potential trading decision
- Accurately weigh and assign values to the components of any portfolio
- Determine exactly how many contracts to trade for a specific market and/or system
- Maximize profits under reinvestment trading
- Prognosticate future system performance

Now you can bid good-bye to unreliable money management assumptions and faulty decision making. Here’s the money management tool for making mathematically correct trading decisions.

Quantitative Risk Management : Concepts, Techniques & Tools ~ By Alexander McNeil, Rudiger Frey and Paul Embrechts





The implementation of sound quantitative risk models is a vital concern for all financial institutions, and this trend has accelerated in recent years with regulatory processes such as Basel II. This book provides a comprehensive treatment of the theoretical concepts and modelling techniques of quantitative risk management and equips readers--whether financial risk analysts, actuaries, regulators, or students of quantitative finance--with practical tools to solve real-world problems. The authors cover methods for market, credit, and operational risk modelling; place standard industry approaches on a more formal footing; and describe recent developments that go beyond, and address main deficiencies of, current practice.

The book's methodology draws on diverse quantitative disciplines, from mathematical finance through statistics and econometrics to actuarial mathematics. Main concepts discussed include loss distributions, risk measures, and risk aggregation and allocation principles. A main theme is the need to satisfactorily address extreme outcomes and the dependence of key risk drivers. The techniques required derive from multivariate statistical analysis, financial time series modelling, copulas, and extreme value theory. A more technical chapter addresses credit derivatives. Based on courses taught to masters students and professionals, this book is a unique and fundamental reference that is set to become a standard in the field.

Capital in the Twenty-First Century

What are the grand dynamics that drive the accumulation and distribution of capital? Questions about the long-term evolution of inequality, the concentration of wealth, and the prospects for economic growth lie at the heart of political economy. But satisfactory answers have been hard to find for lack of adequate data and clear guiding theories. In Capital in the Twenty-First Century, Thomas Piketty analyzes a unique collection of data from twenty countries, ranging as far back as the eighteenth century, to uncover key economic and social patterns. His findings will transform debate and set the agenda for the next generation of thought about wealth and inequality.

Piketty shows that modern economic growth and the diffusion of knowledge have allowed us to avoid inequalities on the apocalyptic scale predicted by Karl Marx. But we have not modified the deep structures of capital and inequality as much as we thought in the optimistic decades following World War II. The main driver of inequality--the tendency of returns on capital to exceed the rate of economic growth--today threatens to generate extreme inequalities that stir discontent and undermine democratic values. But economic trends are not acts of God. Political action has curbed dangerous inequalities in the past, Piketty says, and may do so again.

A work of extraordinary ambition, originality, and rigor, Capital in the Twenty-First Century reorients our understanding of economic history and confronts us with sobering lessons for today.

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Thomas Piketty on Economic Inequality

"Every now and then, the field of economics produces an important book; this is one of them," writes Tyler Cowen in his Foreign Affairs review of Thomas Piketty's Capital in the Twenty-First Century. "Piketty's tome will put capitalist wealth back at the center of public debate, resurrect interest in the subject of wealth distribution, and revolutionize how people view the history of income inequality."
But Cowen deems Piketty's main prescription, a proposal for the global taxation of wealth, "an unsatisfying conclusion to a groundbreaking work of analysis that is frequently brilliant -- but flawed, as well."

Justin Vogt, deputy managing editor of Foreign Affairs, recently sat down with Piketty to discuss his analysis of inequality and his controversial policy proposals.

The Mental Strategies Of Top Traders



An honest depiction of the challenges of trading and a clear explanation of what it takes to succeed

Trading tends to be a winner-take-all activity where a small number of traders are very successful, while the majority either lose money or generate relatively small profits. In The Mental Strategies of Top Traders, author Ari Kiev identifies and analyzes the characteristics of successful traders and shows you how to cultivate these same characteristics.

Successful trading, Kiev asserts, requires an unusual and sometimes contradictory blend of intellectual and psychological abilities, including the willingness to take risks, but in a very controlled manner; the discipline to develop high-conviction trading ideas in the face of unpredictable markets and incomplete information; as well as a strong drive to win, but also accept failure. Here, you'll discover how to achieve all this, and much more.

- Provides advice and solutions for traders struggling with today's volatile and stressful markets
- Authoritatively identifies key mental strategies of top traders
- Written by Ari Kiev, a highly respected figure in the professional trading community
- Analysis is supported by comments from contemporary traders and portfolio managers, many of whom struggled with the markets of 2008

Designed with the serious trader in mind, this book will put you in a better position to excel in today's tumultuous markets.

Trade the News in Forex: How to Capitalize on the Biggest Moves in the Market
by Michael Duane Archer

How to profit from news that moves the Forex market

Trade the News in Forex shows readers everything they need to know to profitably trade specific Forex news events. It begins with a discussion of what constitutes Forex news, then highlights several common news trading techniques and outlines how broker dealers have worked to counter these measures. The author covers several more sophisticated techniques and systems, directs readers to a multitude of resources available, and outlines how to combine these techniques into a current trading strategy. There is money to be made trading Forex news, and this book will show readers exactly how.

Michael Archer (Golden,CO) has been an active Forex and commodity futures and Forex trader for over 30 years. He is the author of Getting Started in Forex Trading Strategies and coauthor of the first Getting Started in Currency Trading, Second Edition, The Forex Chartist Companion, and Charting the Major Forex Pairs, all from Wiley. He hosts the Forex Web site.

Technical Analysis: Power Tools for Active Investors

Unlike most technical analysis books, Gerald Appel's Practical Power Tools! offers step-by-step instructions virtually any investor can use to achieve breakthrough success in the market.

Appel illuminates a wide range of strategies and timing models, demystifying even advanced technical analysis the first time.

Among the models he covers: NASDAQ/NYSE Relative Strength, 3-5 Year Treasury Notes, Triple Momentum, Seasonality, Breadth-Thrust Impulse, and models based on the revolutionary MACD techniques he personally invented.

Appel covers momentum and trend of price movement, time and calendar cycles, predictive chart patterns, relative strength, analysis of internal vs. external markets, market breadth, moving averages, trading channels, overbought/oversold indicators, Trin, VIX, major term buy signals, major term sell signals, moving average trading channels, stock market synergy, and much more.

He presents techniques for short-, intermediate-, and long-term investors, and even for mutual fund investors.

Currency probe widens as US said to target markups

U.S. prosecutors are broadening their investigation of the foreign-exchange industry as they question salespeople at the world’s biggest banks on their practices, according to two people with knowledge of the matter.

The Department of Justice has been asking bankers and clients how much sales teams charge customers to exchange currency, the people said, asking not to be identified because the interviews are private. The move is the first indication prosecutors are probing sales practices.

According to more than a dozen current and former salespeople and traders interviewed by Bloomberg News, it’s common to charge what’s known as a hard markup, tacking on a small margin for a salesperson’s services. Some clients who make currency deals infrequently or in small amounts are known to pay little attention to the rates they get. The Justice Department is scrutinizing whether banks committed fraud by failing to disclose the practice properly to customers, the people said.

“Banks should always be transparent with their clients on pricing mechanisms,” said David Woolcock, chairman of the committee for professionalism at ACI, a Paris-based group representing 13,000 traders in 60 countries who helped write the industry’s code of conduct. “This does not sound like it is consistent with best practice nor ethical behavior.”

Time Stamps

The Justice Department has interviewed sales staff with their lawyers at bank offices in the U.S. over the past two months, according to one of the people. The agency is one of more than a dozen authorities around the world investigating the $5.3 trillion-a-day currency market following allegations that dealers at the world’s biggest banks traded ahead of their clients or colluded to rig the benchmarks that pension funds and money managers use to pay for foreign exchange.

Banks also have been digging through their own records and interviewing staff, including from sales, to show cooperation with the probes in bids for leniency should they lead to disciplinary action.

Banks aren’t required to provide time stamps showing when currency transactions are completed, as they do with equities, giving dealers an opportunity to mislead about the rate at which orders were executed. Spot foreign-exchange transactions also fall outside the European Union’s Markets in Financial Instruments Directive, or Mifid, which requires dealers to take all reasonable steps to ensure the best possible results for their clients.

Unsophisticated Customers

Peter Carr, a spokesman for the Justice Department, wouldn’t comment about which banks or practices the government is investigating.

Former employees interviewed by Bloomberg News said sales teams at Zurich-based UBS AG (UBSN) and London-based Barclays Plc (BARC) were aware of which companies were considered unsophisticated about currency trades and charged them more.

Goldman Sachs Group Inc. (GS)’s foreign-exchange Alpha team, which deals with hedge funds that specialize in equities and trade currencies infrequently, overcharged such clients as recently as 2011, according to two former employees at the New York-based bank who asked not to be identified. When a salesman received an order from such a customer, often by e-mail, he would execute it and wait to see if the market moved, the people said. If it did, he would charge the higher price.

The markup could be as much as 30 pips on a 10 million-euro ($13.6 million) trade into dollars, or 0.3 cent, the people said. A pip is the smallest possible price movement for a currency pair, or one-hundredth of a percentage point in the case of euros and dollars, which are priced to four decimal points.

‘Taking Action’

None of the banks has been accused of wrongdoing.

“We take these matters seriously, have looked into them and are taking action, as necessary,” said Tiffany Galvin, a Goldman Sachs spokeswoman.

Aurelie Leonard , a spokeswoman at Barclays, declined to comment, as did Richard Morton at UBS.

Banks don’t charge commissions or fees for currency transactions, so their profit is determined by how much better a rate they can get than what they offer clients. While some markup is inevitable and justified, the system is open to abuse as companies often lack the time or expertise to make sure they’re getting a fair deal and only ask for an e-mail confirmation of the order, according to the salespeople interviewed by Bloomberg News.

Market Moves

The process works like this: If a company gives a bank an order to swap $20 million into pounds at 9 a.m., a salesman can pass the request to a trader, who immediately carries out the transaction, or do the trade himself on the bank’s electronic platform. Rather than notify the client that the trade was executed, the salesman may wait to see how the market moves.

If the pound rises against the dollar by 10 a.m., the salesman will contact the client and say the bank transacted the order at the best possible rate and report it at the later price, costing the customer more.

In equities markets, by contrast, as soon as an order is executed, a ticket with a time stamp and a price from the exchange is generated automatically, leaving a trail an investor can follow.

More experienced foreign-exchange customers call in their orders and insist on staying on the phone while they’re placed so they can hear them go through, the people said. Hedge funds and companies more versed in pricing would pay only 1 pip more than the actual rate, the people said.

ACI’S Woolcock said that while it’s reasonable for a bank to charge a client a margin to cover the expense of doing a foreign-exchange deal, inflating a markup not aligned with when an order was actually executed isn’t acceptable.

FX Pricing

Some clients leave themselves open to being overcharged because they ask for what’s known as an at-best price, trusting a salesman to execute the order at the optimal market rate, the former salespeople said. More savvy ones request a two-way price, which shows guaranteed rates at which a client may buy or sell regardless of how the market moves. Most corporate customers ask for at-best prices, one of the people said.

“It’s the obligation of the customer to have some kind of knowledge,” said Jason Leinwand, head of foreign-exchange trading at Metropolitan Life Insurance Co. “You can’t just go in blind: ‘Well, I don’t understand FX so I’ll have my broker do it.’ There are still significant-sized companies that won’t spend $500,000 to put a person in the chair who could possibly save you as much as $15 million a year.”

‘Serious Repercussions’

In the U.K., where the markets regulator was the first to say it was looking into foreign-exchange industry practices, the lack of time stamps has been a point of contention for more than two decades with Austin Mitchell, the U.K. parliament member who sits on the Public Accounts Committee. He met with Financial Conduct Authority Director of Supervision Clive Adamson in March to press the matter. He said he was told the FCA can’t do anything unless someone comes forward with evidence of abuse.

Chris Hamilton, an FCA spokesman who confirmed that the meeting with Mitchell took place, declined to comment further.

“It’s vital that regulators look into this issue,” said Mitchell, 79. “This has serious repercussions for investors and businesses, and the solution is simple: Banks should provide time stamps of when they trade.”

The Holy Grail Trading System By James Windsor



The true story of a 100% mechanical automated forex trading system that returned over 1000% inside 13 months turning 10,000 GBP to over 100,000 GBP

In 2005 I discovered what I believed was the ultimate financial trading system using the foreign exchange market ( known as the forex market )

To be the ultimate 'Holy Grail' foreign exchange trading system it would have the ability to automatically trade and have zero discretion with no technical analysis or reliance on technical indicators. In short, a 100% mechanical trading system in which the person using it does not matter, the result will be the same.

It would be a currency trading system that takes away the problems of trading psychology. It does not care if you are having a bad day, are on holiday, or if you have had an argument with your partner in the last hour. The trading entries, exits, trailing stops and risk management must have no user input whatsoever. All the user has to do is switch it on and wait.

The trading forums of the internet are full of people searching for this ultimate trading system. Thousands of traders every day search, test and simulate for hours using forex analysis looking for this 'golden egg' laying goose. Most believe that such a trading strategy does not exist nor ever has. This book is here to prove to you that such a trading system did exist and was discovered by a few home based forex traders just like you.

It can be found again.

Here is our question to you.

"What would you do if you found such a simple day trading system?" One that worked month after month? One that had proved itself not just for weeks or months, but for years?

How much would you risk?
How would you trade it?
How would your emotions handle such a 'guaranteed' trading system?

Well, Not only does this trading book tell the story of how the trading system was built, it also gives you the full trading system and strategy, for the very first time.

The actual Forex trading methodology has remained a closely guarded secret for over 10 years! For the first time ever nothing is held back,

Fully Disclosed...

Trade by trade entry levels
Trading timeframes
Trade exit levels
Optimum risk management strategy
Trailing stop settings
Full results and account screenshots

Could you be the next trader to find a Holy Grail system? The clues are all here.

You Will Discover...

What changes you should be wary of when trading your forex strategies
What happens to your mind when all of your hard work comes together - the trading psychology
What happens when everything looks wrong
The true reason for a trading system failing (hint: it mostly isn't the system)

Their very personal story unfolds within these pages, step by step and month by month, demonstrating how their discovery changed them forever. With full disclosure for the very first time this book shows every trade, every change, every high and every low of a Forex trading system called simply 'Grail'

Who Should Buy This Book?

System traders
Foreign Exchange traders
Trading system developers
Home based retail traders
Those developing Forex autotrading strategies.

The Problem of HFT - Collected Writings on High Frequency Trading & Stock Market Structure Reform : Haim Bodek



This book explores the problem of high frequency trading (HFT) as well as the need for US stock market reform. This collection of previously published and unpublished materials includes the following articles and white papers:

1. The Problem of HFT - explains how HFTs came to dominate US equity markets by exploiting artificial advantages introduced by electronic exchanges that catered to HFT strategies

2. HFT Scalping Strategies - describes the primary features of modern HFT strategies currently active in US equities as well as the benefits these strategies extract from the maker-taker market model and the regulatory framework of the national market system

3. Why HFTs Have an Advantage - explains the critical importance of HFT-oriented special order types and exchange order matching engine practices in the operation of modern HFT strategies

4. HFT - A Systemic Issue - a discussion of the latest industry and regulatory developments with regard to exchange order matching practices that serve to advantage HFTs over the public customer

5. Electronic Liquidity Strategy - proposes a conceptual framework for institutional traders to achieve superior execution performance in HFT-oriented electronic market venues

6. Reforming the National Market System - proposes a 10-step plan for strengthening the operation of the US equities marketplace in order to serve the needs of long-term investors

7. NZZ Interview with Haim Bodek - addresses current topics and proposals for US equities market structure reforms

8. TradeTech Interview with Haim Bodek - addresses the current status of the HFT special order type debate

A Three Dimensional Approach To Forex Trading : Anna Coulling



If you aspire to becoming a full time forex trader, then this is the book for you. Even if your dream is perhaps more modest, and you simply want to have a second income trading the forex markets, then again, this book is for you. It has been written with one clear objective in mind. To explain how and why currencies move in the way that they do, using the combined power of relational, technical and fundamental analysis. Combine this with a three dimensional approach to trading itself, using multiple time frames and multiple chart analysis, and the world of foreign exchange will become crystal clear. Many aspiring traders, simply do not realize that the forex market sits at the heart of the financial world, which, when you think about it logically, is really common sense. After all, this is the biggest money market in the world, and if the financial markets are about one thing, they are about money. Making it, protecting it, or increasing the return. It’s no surprise therefore, that the forex market connects all the others. It is the central axis of the financial world, around which all the others spin. In the book, you will discover how changes in market sentiment in the primary markets of commodities, stocks, bonds and equities, are then reflected in the currency markets. This is something which often surprises novice traders. After all, why look at a stock index, or the price of gold, or a bond market? The answer is very simple. It is in these markets where you will find all the clues and signals, which then reveal money flow. After all, the financial markets are all about risk. In other words, higher returns for higher risk, or lower returns for lower risk. It really is that simple. And yet, how many forex traders ever consider associated markets. The answer is very few. You will be one of those enlightened traders who truly understands money flow and risk, and your confidence as a trader will grow exponentially as a result. And in case you were wondering, this is NOT another book explaining forex trading strategies. In fact there are none at all, surprising given the book's length. If this is what you are looking for, please DO NOT buy this book. It has been written for two specific audiences. The first is the novice forex trader, for whom this is a new market. The second is the forex trader who has attempted to trade in foreign exchange, but failed, and has been left confused by the apparent random and chaotic behavior of this volatile market. Reading this book will provide you with a deep understanding of how and why the markets move in the way they do. Whilst the forex market is a complex mix, it is not complicated, once you understand the people, their motives and the currencies themselves. Each chapter builds on the last in a logical sequence, and every topic is explained in a simple and clear way. Even those markets such as bonds, which few traders ever understand, are explained very simply. Every topic is illustrated with clearly annotated charts, to help and guide you as you learn. Equally important is the concept of change. Indeed you may have other books on your bookshelf written many years ago and explaining how the forex market works. Well, as you will discover, the rule book has been torn up. No longer is this a simple market of trending currency pairs. This all changed in the financial tsunami which engulfed the world in 2007/2008, and with it the forex world changed too! If this is news to you, then yet another reason to buy the book. Long gone are the days when currency pairs meandered their way higher and lower in long term trends, driven by interest rate differentials. To take advantage, you need to understand the forces which now drive the markets. A Three Dimensional Approach To Forex Trading will empower you with knowledge. Knowledge and confidence go hand in hand. Confidence breeds success, and success breeds money, which will then flow from reading the book - Anna