Smart Traders -- A Systematic Trading Guide

Author: Kaufman
Publisher:
Publish Date: 2006-09-01
Features: This book is compiled by the renowned writer and trader Perry Kaufman, guiding readers to learn and master the essential techniques needed to understand market fluctuations. It helps readers understand the timing and application of various tools: from trend following to neural networks and expert systems. You will learn how to build a strong trading model that quickly adapts to market changes, how to analyze and understand the market, and many other aspects. You cannot dig a new hole by digging deeper into an old one. Trading is not an easy task. Finding a method that yields stable profits requires a lot of effort and great luck. Sometimes, when an effort fails, no matter how hard you try, you cannot find the answer; at other times, the market environment changes, and an originally successful trading system only blooms like a fleeting flower.
The book "Smart System Trading" attempts to take a realistic approach, seeking trading strategies that are applicable across a broad range and can adapt to market changes. We hope to achieve a horizontal solution rather than a single vertical one. Trying to prove that an exponential moving average (EMA) is better than a simple moving average (SMA) is meaningless. How accurate a method is really makes a big difference in indicating the future direction of prices. If a trading system works with an EMA but not with an SMA, the trader must question the effectiveness of the trend itself. As a realistic analyst, I can say that all analytical methods are not perfect, but many do have certain value. When estimating results, it may not be necessary to be precise to the tenth decimal place. In the face of the market, we must ask: Are we observing the true reasons behind price movements? Even if we face the same patterns and even know the reasons, can we expect the results?
In this book, we will discuss the necessity of finding logical solutions rather than answers derived from computer statistics. Trading systems cannot be perfect, but we need to know what to expect. Is a stop-loss the magic bullet for risk control, or just a source of blind confidence? Whether a stop-loss is good or bad is irrelevant; what matters is knowing the right answer. The book will also introduce new concepts, such as adaptive (or adaptive moving average) and the meticulous planning required to build a strong trading program.
The core idea of the horizontal solution is to view various simple methods from a new perspective, combining their strengths to improve most trading models. The book provides examples from foreign exchange, futures, stock, and stock index markets, demonstrating that these techniques are generally applicable to all markets and broader trading scenarios.