Next Addition to Your Trading Library
Trade Like a Hedge Fund: 20 Successful Uncorrelated Strategies and Techniques to Winning Profits by James Altucher
Many retail traders get hammered with noise about not “catching the falling knife”, buying high and selling higher using tight stop losses as risk management. Pros buy at lows, trade gaps and use price-based stop losses sparingly. The quants, algorithmic and big money firms run stops and are long well before the breakout occurs, limiting upside potential. They have tons of data and information the little guy will never have. The retail trader can’t beat these folks. That’s ok, you don’t need to beat them. There are edges to exploit. You can still buy fear, sell greed and harvest volatility just like the pros. You can certainly think and successfully trade contrary to the masses.
One of the books that shaped my thinking in developing the Fibonacci Scaling System is James Altucher’s Trading Like a Hedge Fund: 20 Successful Uncorrelated Strategies and Techniques to Winning Profits. (As an Amazon Associate, I earn from qualifying purchases if you buy through my link). If you have any interest in expanding your horizons beyond buying breakouts or finding the cup with handle buying zone as touted in Investors Business Daily, you should read this book. Chapters/Systems that made me think were:
· The Bread and Butter Trade – Playing Gaps: No buying high/selling higher here. This is a system where when a stock gaps down pros move in (even in down markets) Buying fear.
· The QQQ Crash System – Buying the QQQ after a major move down.
· The Ten Percent Down – Panic 101 – Buying a stock that is 10 percent lower than yesterday’s close. A lot of the “gurus” will tell you to run.
None of these were based on buy high/sell higher. There was not 1 buy the breakout strategy.
Finally, just as influential as the systems he runs was the chapter titled “What Does Not Work”. He has an interesting take on the following:
· Gut
· Confirmation
· Candlestick Patterns
· Seasonality
· Low P/E High P/E
· Buying and Selling Options.
Happy Trading and Stay Tuned!
Al