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376 pages, Hardcover
First published January 1, 2020
I watch Fast Money religiously at 5 p.m. EST every day. I can't tell you how much money I've made off of that show. [...] There is one guy on the program named Brian Kelly, who I have now watched for years. He is wrong by such a larger percentage than random that it is hard to believe. I will never have a position on if he is recommending it. (p. 69)
Large long-term patterns no longer work. Trendlines no longer work. Channels no longer work. Symmetrical triangles no longer work. (p. 37)
there are also far fewer opportunities now than back in 2013 and 2014. Back then, many things were still relatively new, like quantitative easing and forward guidance. There was more uncertainty about what the central banks were going to do and how they were going to do it. Whereas now, the markets have central banks so nailed down that there is not as much opportunity to make money on central banks as there once was. The markets now are good at pricing in events before they happen. I make money by pricing in a surprise, and with fewer surprises, there are fewer opportunities. (p. 100)
increased market automation and high-frequency-trading algorithms have made execution harder and eroded my edge on some very short time frame strategies. (p. 142)
It is no longer possible to trade for the initial move off the headline because the algos will make the trade before I can. (p. 157)
One thing about event-driven trading is that if there isn’t an event to trade, there is nothing to do, and it is really boring. You can feel like you’re wasting your life. [...] I have found that I trade much better when I have a side project. If I have nothing else to do but trade events, and there are no events to trade, my mind runs wild. I need to focus my attention on something; otherwise, I will focus on the wrong things. (p. 104)
Trading to earn a consistent amount steadily may be an admirable goal, but it is not a realistic one. Market opportunities are sporadic. [...] If you try to force consistent profitability, you will be prone to take suboptimal trades, which will often end up reducing your overall profitability. (p. 177)
There will be periods in the markets where opportunities dry up, and there will be nothing to do. In those nothing periods, if you are looking for something to do, that is when you can create real damage to your account. (p. 129)
you don’t have to take every potential trade. You can wait for a trade where everything lines up in your favor. (p. 154)
Looking back, I think a big part of my success when I went back to trading was my ability to look past the noise and be patient. I wasn’t in the industry. It wasn’t my job, and I wasn’t under any pressure to trade. I could go six months without a trade, and I didn’t have to answer to anybody. (p. 239)
Don’t quit your day job. (p. 287)
Chipotle had become famous for having long lines at lunchtime. Chipotle was such a trendy brand that it was common for people to tweet about having lunch there. They would also frequently tweet about how they were waiting in line at Chipotle. I was able to gauge real-time foot traffic by monitoring word combinations, such as "Chipotle" plus "lunch," and "Chipotle" plus "line," in online conversations. Almost overnight, the mentions of these word combinations dropped by about 50%.
Hedge fund managers want something repeatable and systematic. They wanted to know how often this approach would generate tradable information with high conviction. I couldn’t give them a hard answer. (p. 253)
I’ve always struggled with how to distinguish between a routine drawdown and a system that has stopped working. (p. 278)
For instance, a mean-reverting pattern may give way to a momentum pattern. As this transition takes place, most market participants are caught off guard, and they will make costly mistakes. This sort of errors is the basis for many profitable strategies, because the actors on the losing side will typically become aware of their mistake once it is too late. Before they accept their losses, they will act irrationally, try to hold the position, and hope for a comeback. Sometimes they will even increase a losing position, in desperation. Eventually they will be forced to stop loss or stop out. Structural breaks offer some of the best risk/rewards. (p. 249)
if I knew everything I do now, I might never have tried trading in the first place. (p. 286)
I had six people working for me, and I hated it. I didn’t like managing people and being responsible for their success. (p. 72)
I wanted to find something where the success or failure would depend only on me, not my colleagues, my boss, or anybody else. If I make money, that’s great; if I lose money, it’s my mistake. (p. 320)