Spencer Li

Book Summary: Fortune’s Formula by William Poundstone

thumbnail Book Summary Fortunes Formula The Untold Story of the Scientific Betting System That Beat the Casinos and Wall Street by William Poundstone

thumbnail Book Summary Fortunes Formula The Untold Story of the Scientific Betting System That Beat the Casinos and Wall Street by William Poundstone

Fortune’s Formula is a captivating book that delves into the world of scientific betting systems and how they have been used to beat casinos and Wall Street.

Written by William Poundstone, an author and journalist, the book uncovers the story behind the famous Kelly criterion, a formula developed by mathematician John Kelly that has been used by gamblers, investors, and even the military to make optimal decisions.

In this blog post, I will share all about this book and the author, key ideas from the book, and how you can apply it to your own trading & investing journey.

 

About the Author

Author William Poundstone is a well-known science writer and journalist. He has written several books on a variety of topics including science, mathematics, and technology.

He is also a contributing editor for the magazines Discover, New Scientist, and Scientific American. Fortune’s Formula is his most famous book, which has been translated into many languages and was a New York Times bestseller.

He is also known for his book “Priceless: The Myth of Fair Value (and How to Take Advantage of It)”.

What is the Book About?

The book is about the Kelly criterion, a formula that was developed by John Kelly in the 1950s.

Kelly was a mathematician who worked at Bell Labs, and his formula is a way to determine the optimal amount of money to bet on a given outcome.

The Kelly criterion takes into account the probability of winning and the potential payout. It has been used by gamblers, investors, and even the military to make optimal decisions.

The main message of the book is about how Kelly’s formula has been used to achieve success in a variety of fields, and how it can help people make better decisions in high-stakes situations.

10 Key Ideas from the Book

  1. The Kelly criterion is a formula that helps determine the optimal size of a bet in order to maximize long-term growth.
  2. The Kelly criterion was first described by John L. Kelly Jr. in the 1950s.
  3. The Kelly criterion has been used in gambling and investment.
  4. The book covers the history and development of the Kelly criterion.
  5. The book also covers the various applications of the Kelly criterion.
  6. The book explains how the Kelly criterion can be used to beat the casinos.
  7. The book also explains how the Kelly criterion can be used to beat Wall Street.
  8. The book provides examples of how the Kelly criterion has been used by successful investors.
  9. The book also provides examples of how the Kelly criterion has been used by successful gamblers.
  10. The book shows that the Kelly criterion can be used to maximize long-term growth.

10 Ways to Apply the Kelly Criterion

  1. To determine the optimal size of a bet.
  2. To maximize long-term growth.
  3. To beat the casinos.
  4. To beat Wall Street.
  5. To make better investment decisions.
  6. To make better gambling decisions.
  7. To maximize returns while minimizing risk.
  8. To improve one’s overall financial success.
  9. To make data-driven decisions.
  10. To maximize one’s edge over the market.

Other Important Points from the Book

  • The book provides a detailed historical account of the development of the Kelly criterion and its applications.
  • The book also provides examples of how the Kelly criterion has been used by successful investors and gamblers.
  • The book shows that the Kelly criterion can be used to maximize long-term growth while minimizing risk.
  • The book is suitable for readers who are interested in gambling, investing, and game theory.

Concluding Thoughts

In conclusion, “Fortune’s Formula” is a comprehensive book that provides a detailed historical account of the development of the Kelly criterion and its applications.

The book is suitable for readers who are interested in gambling, investing, and game theory.

The author, William Poundstone, provides a clear and easy-to-understand explanation of the Kelly criterion, and the book is full of examples of how the Kelly criterion has been used by successful investors and gamblers.

I would highly recommend this book for anyone who wants to learn more about the Kelly criterion and its applications.

Now that I have covered all the key learning points of this book, would you consider adding it to your reading list?

For those who have already read it, what are some of your key learning points?

Let me know in the comments below!

 

best books on trading and investing

If you would like to find more book summaries and recommendations, also check out: “Best Investing & Trading Books of All Time”

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Spencer Li

Book Summary: Forex Price Action Scalping by Bob Volman

thumbnail Book Summary Forex Price Action Scalping an in depth look into the field of professional scalping by Bob Volman

thumbnail Book Summary Forex Price Action Scalping an in depth look into the field of professional scalping by Bob Volman

“Forex Price Action Scalping” by Bob Volman is a comprehensive guide to the field of professional scalping in the foreign exchange market.

The book provides an in-depth look into the techniques and strategies used by professional scalpers, as well as the mindset and discipline required to be successful in this high-pressure and fast-paced trading environment.

In this blog post, I will share all about this book and the author, key ideas from the book, and how you can apply it to your own trading & investing journey.

 

About the Author

Bob Volman is a professional trader with over 20 years of experience in the Forex market.

He is a recognized expert in the field of price action trading, and his books and educational materials are highly respected by traders and investors around the world.

What is the Book About?

The book covers a wide range of topics, from the basics of scalping and price action trading to advanced strategies and techniques for managing risk and maximizing profits.

The main message of the book is that scalping is a highly profitable but also highly challenging form of trading that requires a specific set of skills, knowledge, and mindset.

10 Key Ideas from the Book

  1. Understanding market structure and price action is crucial to successful scalping. This includes identifying trends, support and resistance levels, and chart patterns.
  2. Technical indicators such as moving averages and stochastics can be used in conjunction with price action analysis to identify entry and exit points.
  3. Discipline and risk management are essential to successful scalping. This includes setting stop-loss orders and limiting the amount of capital at risk on each trade.
  4. The psychological and emotional aspects of scalping can be challenging. Traders must learn to control their emotions and maintain discipline in order to be successful.
  5. The use of leverage can greatly increase potential profits, but it also increases risk. Traders must be aware of the potential dangers of using too much leverage and use it with caution.
  6. Scalping requires a high degree of focus and attention to detail. Traders must be able to quickly analyze charts and make decisions in real-time.
  7. To be successful, scalpers must be able to identify and trade specific chart patterns and price action setups.
  8. It is important to develop a robust trading plan that includes risk management strategies and a plan for managing losses.
  9. Traders must practice discipline and emotional control while trading. This includes sticking to a trading plan and avoiding impulsive decisions.
  10. Continuously learn and adapt to market conditions.

10 Ways to Apply the Teachings

  1. Use the information provided to identify and trade specific chart patterns and price action setups.
  2. Implement risk management strategies such as using stop-loss orders and position sizing.
  3. Develop a trading plan and stick to it.
  4. Practice discipline and emotional control while trading.
  5. Continuously learn and adapt to market conditions.
  6. Use technical indicators in conjunction with price action analysis to identify entry and exit points.
  7. Set stop-loss orders and limit the amount of capital at risk on each trade.
  8. Identify trends, support and resistance levels, and chart patterns.
  9. Use leverage with caution and be aware of the potential dangers.
  10. Be able to quickly analyze charts and make decisions in real-time.

Other Important Points from the Book

  • The importance of backtesting and developing a robust trading plan, as well as the need for a large amount of capital to make scalping a viable trading strategy.
  • Scalping requires a large amount of capital to be able to take advantage of small price movements, and traders should be aware that the potential for profits is also matched by the potential for losses.
  • Additionally, scalping is not suitable for those traders who are not comfortable with high-pressure and fast-paced trading.

Concluding Thoughts

In conclusion, “Forex Price Action Scalping” is an excellent resource for anyone interested in learning about professional scalping in the Forex market.

The book provides a detailed and in-depth look into the techniques and strategies used by professional scalpers, as well as the mindset and discipline required to be successful.

It is highly recommended for traders and investors who are looking for a comprehensive guide to the field of scalping. The book is suitable for both beginner and intermediate traders with some knowledge of the forex market.

It is also recommended for traders who are looking to gain more knowledge on how to read the price action in the market.

Now that I have covered all the key learning points of this book, would you consider adding it to your reading list?

For those who have already read it, what are some of your key learning points?

Let me know in the comments below!

 

best books on trading and investing

If you would like to find more book summaries and recommendations, also check out: “Best Investing & Trading Books of All Time”

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Spencer Li

Book Summary: Following the Trend by Andreas Clenow

thumbnail Book Summary Following the Trend Diversified Managed Futures Trading by Andreas Clenow

thumbnail Book Summary Following the Trend Diversified Managed Futures Trading by Andreas Clenow

“Following the Trend: Diversified Managed Futures Trading” is a book that delves into the world of managed futures, a specific type of investment strategy that involves the use of futures contracts.

Written by Andreas Clenow, a hedge fund manager with over 20 years of experience in the industry, the book provides a comprehensive overview of the managed futures market and the opportunities it presents for investors.

In this blog post, I will share all about this book and the author, key ideas from the book, and how you can apply it to your own trading & investing journey.

 

About the Author

The author, Andreas Clenow, is a hedge fund manager and the CIO of Zephyr Asset Management.

He has over 20 years of experience in the industry, and has been a frequent speaker at industry conferences and events.

He has also been interviewed and quoted in several financial publications.

What is the Book About?

The book explains the ins and outs of managed futures, including the types of contracts that are typically used, the benefits and risks of this type of investment, and how to create a diversified portfolio that incorporates managed futures.

Clenow also provides examples of real-world managed futures strategies, including those that he has used successfully in the past.

The main message of the book is that managed futures can be a valuable addition to a diversified investment portfolio, but it requires a thorough understanding of the market and the various strategies used in the industry.

10 Key Ideas from the Book

  1. Managed Futures is a type of investment that uses futures contracts to bet on the direction of price movements in various markets.
  2. The strategy is based on the belief that prices in different markets tend to trend in a particular direction and that by following these trends, investors can make profitable trades.
  3. The book covers the basics of managed futures, including the types of contracts used, the benefits and risks of the strategy, and how to create a diversified portfolio that incorporates managed futures.
  4. Clenow provides real-world examples of managed futures strategies, including those that he has used successfully in the past.
  5. The author also covers the importance of risk management in managed futures and how to set up a risk management plan.
  6. The book also discusses the importance of diversification in managed futures, which can help to mitigate risk.
  7. The author also provides an overview of the managed futures industry and the various players involved.
  8. The book also covers the performance of managed futures over time and how to evaluate the performance of different managed futures strategies.
  9. Clenow also explores the various types of managed futures funds, including commodity trading advisers (CTAs), and the pros and cons of each.
  10. The book concludes with a discussion of the future of managed futures and the opportunities and challenges that the industry may face in the years to come.

10 Ways to Apply the Teachings

  1. Start by researching different managed futures strategies and funds to find one that aligns with your investment goals and risk tolerance.
  2. Create a diversified portfolio that incorporates managed futures along with other types of investments.
  3. Understand the types of contracts and markets that are used in managed futures and the risks and benefits associated with each.
  4. Develop a risk management plan to help manage your exposure to risk in managed futures.
  5. Stay informed about the latest developments and trends in the managed futures industry.
  6. Use a combination of technical and fundamental analysis to evaluate the performance of different managed futures strategies.
  7. Consider working with a managed futures expert or financial advisor to help you navigate the industry.
  8. Keep in mind that past performance is not a guarantee of future results and that managed futures can be volatile.
  9. Be prepared to adjust your managed futures portfolio as market conditions change.
  10. Monitor your managed futures portfolio regularly and make adjustments as needed.

Other Important Points from the Book

  • The book delves into the mathematical and statistical concepts behind trend following and managed futures trading, making it accessible to readers with a background in finance or mathematics.
  • The author provides a detailed analysis of the potential risks involved in managed futures investing and discusses risk management strategies that can be used to mitigate these risks.
  • The book includes a section on the different types of managed futures funds and the pros and cons of each, including commodity trading advisors (CTAs), mutual funds, and exchange-traded funds (ETFs).
  • The author provides insight on how to evaluate the performance of managed futures funds, including the use of metrics such as the Sharpe ratio, drawdown, and the information ratio.
  • The book also provides a discussion on the current market conditions and how they may impact managed futures funds.
  • The author provides examples of how to implement the strategies discussed in the book, including how to set up a portfolio of managed futures funds, and how to select and monitor managed futures funds.

Concluding Thoughts

In conclusion, “Following the Trend: Diversified Managed Futures Trading” by Andreas Clenow is a comprehensive guide to the managed futures industry, providing a detailed overview of the strategies and performance of managed futures funds.

The author emphasizes the importance of diversification in managed futures investing and provides a number of case studies and real-life examples to illustrate the concepts discussed in the book.

I would recommend this book for investors, traders, and portfolio managers who are interested in learning more about the managed futures industry, as well as for anyone interested in diversifying their portfolio with managed futures.

Now that I have covered all the key learning points of this book, would you consider adding it to your reading list?

For those who have already read it, what are some of your key learning points?

Let me know in the comments below!

 

best books on trading and investing

If you would like to find more book summaries and recommendations, also check out: “Best Investing & Trading Books of All Time”

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Spencer Li

Book Summary: Flash Boys: A Wall Street Revolt by Michael Lewis

thumbnail Book Summary Flash Boys A Wall Street Revolt by Michael Lewis

thumbnail Book Summary Flash Boys A Wall Street Revolt by Michael Lewis

“Flash Boys: A Wall Street Revolt” is a non-fiction book written by Michael Lewis, a well-known author and financial journalist.

The book was first published in 2014 and quickly became a New York Times bestseller.

The book is a detailed examination of the inner workings of the stock market and how high-frequency trading (HFT) has changed the game for investors.

In this blog post, I will share all about this book and the author, key ideas from the book, and how you can apply it to your own trading & investing journey.

 

About the Author

Michael Lewis is a well-known author and journalist who has written several books on finance and economics. Some of his other popular books include “The Big Short” and “Moneyball”.

He is known for his ability to take complex financial concepts and explain them in a way that is easy for the general public to understand.

What is the Book About?

The book is about the rise of high-frequency trading and the impact it has had on the stock market.

The main message of the book is that the stock market is rigged in favor of a select group of insiders who use HFT to gain an unfair advantage over other investors.

The book follows the story of Brad Katsuyama, an up-and-coming trader who becomes frustrated with the unfairness of the market and decides to take action.

10 Key Ideas from the Book

  1. High-frequency trading (HFT) involves using powerful computers and sophisticated algorithms to buy and sell stocks at lightning-fast speeds.
  2. HFT firms have an unfair advantage over other investors because they have faster access to information and can make trades faster.
  3. HFT has led to increased volatility and decreased market liquidity.
  4. The stock market is rigged in favor of HFT firms and against other investors.
  5. Some traders and investors have banded together to fight against HFT and level the playing field.
  6. The book is centered around the story of Brad Katsuyama, a young trader who becomes frustrated with the unfairness of the market and decides to take action.
  7. The book also explores the role of the stock exchanges in the HFT problem.
  8. The book highlights the potential dangers of HFT and the need for regulatory reform.
  9. The book is written in an engaging and easy-to-understand style.
  10. The book is not just about the stock market, it is also about the importance of integrity and fairness in the financial system.

10 Ways to Apply the Teachings

  1. Understand how HFT works and the impact it has on the stock market.
  2. Be aware of the potential dangers of HFT and the need for regulatory reform.
  3. Learn about the importance of integrity and fairness in the financial system.
  4. Understand the role of the stock exchanges in the HFT problem
  5. Read the book to understand the story of Brad Katsuyama and learn from his experiences.
  6. Understand the importance of leveling the playing field for all investors.
  7. Learn about the potential dangers of high-speed trading and why it is important to address them.
  8. Understand the importance of integrity and fairness in the financial system.
  9. Take note of the actions of traders and investors who are fighting against HFT to level the playing field
  10. Use the information provided in the book to make more informed investment decisions.

Other Important Points from the Book

  1. The book is not just about HFT, it also provides a broader perspective on the financial system and the need for integrity and fairness.
  2. The book was written in 2014, so it does not cover more recent developments in the world of HFT and stock market regulation.
  3. It is important to remember that the book is written from the perspective of the author and may not represent all viewpoints on the topic of HFT.

Concluding Thoughts

In conclusion, “Flash Boys: A Wall Street Revolt” by Michael Lewis is a detailed and eye-opening look at the high-frequency trading (HFT) industry and its impact on the financial markets.

The book provides a compelling and easy-to-understand narrative of the rise of HFT and the ways in which it has led to a loss of trust in the markets.

The author presents a convincing argument for the need for regulatory reform to increase transparency and fairness in the markets, and highlights the story of Brad Katsuyama and IEX as a potential solution to the problems caused by HFT.

The book is well-written and accessible to readers with little background knowledge in these areas, making it an excellent choice for anyone looking to learn more about HFT and the impact it has on the markets.

Additionally, this book is recommended for anyone looking to understand the financial markets and the role of technology in shaping the future of finance, as well as the role of big Wall Street banks in shaping the financial industry and their relationship to HFT.

Now that I have covered all the key learning points of this book, would you consider adding it to your reading list?

For those who have already read it, what are some of your key learning points?

Let me know in the comments below!

 

best books on trading and investing

If you would like to find more book summaries and recommendations, also check out: “Best Investing & Trading Books of All Time”

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Spencer Li

Book Summary: Fibonacci and Gann Applications in Financial Markets by George MacLean

thumbnail Book Summary Fibonacci and Gann Applications in Financial Markets by George MacLean

thumbnail Book Summary Fibonacci and Gann Applications in Financial Markets by George MacLean

“Fibonacci and Gann Applications in Financial Markets” by George MacLean is a comprehensive guide to understanding and applying two of the most powerful tools in technical analysis: Fibonacci ratios and Gann angles.

The book provides a clear and thorough explanation of the mathematical principles behind these tools, as well as practical examples of how to use them in real-world trading scenarios.

In this blog post, I will share all about this book and the author, key ideas from the book, and how you can apply it to your own trading & investing journey.

 

About the Author

The author, George MacLean, is a well-known expert in the field of technical analysis, with over 20 years of experience in the financial markets.

He has written extensively on the subject of Fibonacci and Gann analysis and is a highly respected figure in the trading community.

What is the Book About?

The book is divided into three main sections. The first section covers the basics of Fibonacci and Gann methods, including their history and development.

The second section delves into the application of these methods in the financial markets, including how to use them to analyze charts and identify potential trades.

The final section offers advanced techniques for using these methods, including how to combine them with other indicators for improved results.

The main message of the book is that Fibonacci and Gann methods can be powerful tools for traders and analysts looking to gain a deeper understanding of market trends and identify potential opportunities for profit.

The author emphasizes the importance of combining these methods with other indicators for improved results and stresses the need for a thorough understanding of these methods before applying them in real-world trading situations.

10 Key Ideas from the Book

  1. Fibonacci ratios, such as the Golden Ratio, can be used to identify key levels of support and resistance in the market. For example, a stock’s price may experience a significant resistance at the 61.8% Fibonacci retracement level.
  2. Gann angles can be used to identify potential trend changes and potential entry and exit points for trades. For example, a downward slope in a Gann angle may indicate a potential trend change from bullish to bearish.
  3. Combining Fibonacci and Gann methods with other indicators can improve the accuracy of market analysis and increase the chances of success in trading. For example, by combining Fibonacci retracements with a momentum indicator, a trader can confirm a potential trade setup.
  4. The author stresses the importance of understanding the underlying principles behind these methods before applying them in real-world trading situations.
  5. Fibonacci and Gann methods are based on historical market data and patterns, so they are most effective when used in conjunction with other forms of analysis.
  6. Fibonacci retracements can be used to identify potential price targets, such as the 100% retracement level.
  7. Gann squares and Gann fans can be used to identify key levels of support and resistance in the market.
  8. Gann angles can be used to identify potential trend changes and potential entry and exit points for trades.
  9. The author advises to not rely solely on Fibonacci and Gann methods, but to use them in conjunction with other forms of analysis.
  10. The author advises that traders should use caution when applying these methods in real-world trading situations, as market conditions can change quickly.

10 Ways to Apply the Teachings

  1. Study the history and development of Fibonacci and Gann methods to gain a deeper understanding of their underlying principles.
  2. Learn how to use Fibonacci ratios and Gann angles to analyze charts and identify potential trades.
  3. Practice applying these methods in a simulated trading environment before applying them in real-world situations.
  4. Combine Fibonacci and Gann methods with other indicators to improve the accuracy of market analysis.
  5. Learn how to use Fibonacci retracements and Gann fans to identify key levels of support and resistance.
  6. Use Gann angles to identify potential trend changes and potential entry and exit points for trades.
  7. Develop a trading plan that incorporates Fibonacci and Gann methods and stick to it.
  8. Practice discipline and patience when using these methods, as success with them takes time and practice.
  9. Keep a trading journal to track the results of using these methods and make adjustments as needed.
  10. Continuously educate yourself about the market and these methods to stay updated with new developments.

Other Important Points from the Book

  1. Fibonacci and Gann methods are not foolproof and may not always provide accurate results.
  2. These methods are best used as part of a larger trading strategy that incorporates other indicators and analysis methods.
  3. Traders should use caution when applying these methods in real-world trading situations, as market conditions can change quickly.

Concluding Thoughts

In conclusion, “Fibonacci and Gann Applications in Financial Markets” is a valuable resource for traders and analysts who are looking to gain a deeper understanding of market trends and identify potential opportunities for profit.

I would recommend this book to traders and investors who are interested in technical analysis and are looking to improve their understanding of how to use Fibonacci and Gann methods in their trading strategies.

It’s important to note that the author stresses the importance of understanding the underlying principles behind these methods and not relying solely on them, but to use them in conjunction with other forms of analysis.

Now that I have covered all the key learning points of this book, would you consider adding it to your reading list?

For those who have already read it, what are some of your key learning points?

Let me know in the comments below!

 

best books on trading and investing

If you would like to find more book summaries and recommendations, also check out: “Best Investing & Trading Books of All Time”

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