Hi, I'm looking for the best books written about risk management. I currently see this as one of the weakest points in my trading. I don't think I'm risking enough, but I'm unsure if how much is the right amount of risk to take. Any book or course suggestions would be great. Cheers, Xtreme...
Well, "best" depends in part on what sort of quant and trading backgrounds you have. Some of my long-time favorites are: 1. Van Tharp, Special Report on Money Management, IITM, 1997 or later 2. Eddie Kwong (ed.), The Real Holy Grail: Money Management Techniques of Top Traders, TradingMarkets, 2001 3. Nauzer Balsara, Money Management Strategies for Futures Traders, Wiley, 1992 4. Ryan Jones, The Trading Game, Wiley, 1999 All of these are very much relevant to forex as well, and probably stocks. If you cover those, preferably in that order, you should be well on your way to mastering this key area. The 2 well-known books by Ralph Vince, while very interesting if you are math-oriented, are not that practical, in my view.
Berstein's books "Risk" and "Capital Ideas" are must reads imo. http://www.amazon.com/gp/product/0471295639/102-6924341-9312168?v=glance&n=283155&s=books&v=glance http://www.amazon.com/gp/product/06...168?v=glance&n=283155&_encoding=UTF8&v=glance As far as intraday trading goes, a simple 1% - 3% of equity per trade is probably fine for most. nitro
The following are part of the modern risk management lore starting with the development of the Kelly formula, Black/Fischer/Scholes and ending with Long Term Capital Management. It is amazing to see how small this world of ideas on risk management was the influence of these ideas in the marketplace. Kelly formula and its application to the markets and betting. http://www.amazon.com/exec/obidos/t...103-5873858-2395059?v=glance&s=books&n=507846 The next generation of MIT students at play: http://www.amazon.com/exec/obidos/t...bs_b_2_1/103-5873858-2395059?v=glance&s=books The 3rd generation of risk theory applied to the markets 'When Genius Failed': http://www.amazon.com/exec/obidos/t...bs_b_2_1/103-5873858-2395059?v=glance&s=books Each book by itself is interesting. Together they make a great weekend reading. More fun reading than anything that can be used to trade on Monday morning. Enjoy!
Yeah, "Bringing Down the House" was a lot of fun to read, especially for a non-fiction book. Sony Pictures just announced that it'll be made into a film, called -- what else? -- 21.
LateApex, can you tell me a bit about Eddie Kwong (ed.), The Real Holy Grail: Money Management Techniques of Top Traders, TradingMarkets, 2001? I have never heard of him, is it worth purchasing, what area does the book focus on? Thanks, Eric
Well, it's a collection of 15 pieces, arranged into 5 chapters, by some of the familiar names: Mark Boucher, Jeff Cooper, Kevin Haggerty, Dave Landry and others. Eddie Kwong is the editor, and Editor-in-Chief of TradingMarkets.com. The best part about the book -- besides a variety of perspectives we get -- is that it offers a practical, hands-on, trader's orientation throughout, with lots of charts and numerical examples. For a more detailed overview of its contents, see one of the reviews on Amazon, by TM itself. This book is on my short list, so, of course, I do recommend it.
As an aside, if you liked "Bringing down the house" Mezrich just wrote a follow-up called "Busting Vegas" that is just as good. He also wrote a really entertaining book about some US college kids who go to Tokyo to trade in the 90's, "Ugly Americans".