Spencer Li

What Does NFP Mean? The Non-Farm Payroll Report, Explained for Traders

Thumbnail What is the NFP Non Farm Payroll and How to Trade it

What Does NFP Mean? The Non-Farm Payroll Report, Explained for Traders

By Spencer Li, CFTe · Last updated: 1 October 2026

NFP stands for Non-Farm Payroll. It is the monthly count of how many jobs the US economy added or lost, published by the US Bureau of Labor Statistics (BLS) in a report called the Employment Situation. It counts almost every paid job in the country, government jobs included, and leaves out farm workers, the self-employed and people employed by private households.

The report usually comes out on the first Friday of the month at 8:30am New York time, which is 8:30pm in Singapore for most of the year and 9:30pm from November to mid-March.

For a few seconds after it lands, it is probably the most-watched number in finance. Stocks, bonds, gold and the US dollar can all jump in the same minute, because jobs drive spending, spending drives inflation, and inflation decides what the Federal Reserve does with interest rates.

It took me years to really appreciate that the market barely reacts to the number itself. It reacts to the surprise. That is how far the number lands from what economists expected, and once the idea clicks, most of what happens on NFP night starts to make sense.

What happens when the jobs report does not show up?

The easiest way to show how much the market leans on this one report is to tell you about the month it went missing.

In October 2025, the US government shut down because Congress had not passed its funding. The BLS is a government agency, so it stopped work along with everyone else. The October jobs report never came out. The household survey for that month was never even collected. The BLS has said it will not be collected afterwards either, so America’s job data now has a permanent gap where October 2025 should be.

I talked about this in my weekly outlook at the time, because the market did something quite strange. With no jobs report and very little other data coming out, traders had nothing to argue about, and the market just kept slowly creeping up. It turns out that a market with nothing to argue about is a fairly calm place.

When the delayed November report finally arrived on 16 December, traders suddenly had two months of payroll numbers to digest at once, and the arguments came back right on schedule.

So the NFP matters for two reasons, and only one of them is the data. The other is that the whole market uses it as a shared scoreboard. When the scoreboard disappears, everyone is left trading on guesswork.

Where does the NFP number come from?

The BLS builds the report from two separate surveys. It helps to know which number comes from which, because the two can tell quite different stories in the same month.

The first is the establishment survey, also called the payroll survey. Every month the BLS asks about 119,000 businesses and government agencies, covering roughly 622,000 worksites, how many people they paid in the pay period that includes the 12th of the month. The headline NFP number, the one flashing on every screen at 8:30pm, comes from here.

The second is the household survey, which works more like a small census, asking about 60,000 households who at home is working and who is out of work but still looking. That is where the unemployment rate comes from.

Because one survey asks employers and the other asks families, you can get a month where payrolls look strong while the household survey looks soft, and the debate on financial TV that night is mostly about which survey to believe. The payroll survey gets the headline because its sample is so much bigger, but a household survey that keeps disagreeing month after month is usually worth a closer look.

Both surveys are also seasonally adjusted. The BLS strips out the patterns that repeat every year, like shops hiring extra staff for Christmas and letting them go in January, so that what you see is the underlying trend rather than the calendar.

If you trade around a full-time job, you do not need to follow every survey to use this report. My free trading guides are a better place to start.

What are the five numbers inside the report?

Most people only ever hear the headline. The report actually carries five numbers, and in some months the headline turns out to be the least important of them.

NumberWhat it measuresA hotter-than-expected reading usually means
Non-farm payrollsJobs added or lost against last monthThe economy is growing and the US dollar firms
Unemployment rateShare of the labour force out of work and lookingA falling rate makes rate cuts less likely
Average hourly earningsPay per hour across payroll workersInflation worry rises, bond yields rise, stocks can fall
Participation rateShare of adults working or looking for workMore people are coming back into the job market
Average workweekHours worked per weekFirms need more hours from the staff they already have

To give you a sense of how big these numbers can get, the largest monthly fall in the history of the data came in April 2020. As the pandemic closed down whole industries, payrolls dropped by 20.5 million in a single month, and the unemployment rate jumped to 14.7%. No month since has fallen anywhere near that far.

Why does the surprise matter more than the number?

If you grew up in Singapore, you already understand this from results day in school. A B is good news if everyone expected you to get a C. It becomes a very different conversation at the dinner table if everyone expected an A. The grade is exactly the same, and the reaction depends entirely on what people expected.

The NFP works the same way. Before every release, economists publish a forecast, usually called the consensus, and you can see it for free on any economic calendar. Here is a made-up example with round numbers.

Say the consensus is 150,000 new jobs, and the report shows 90,000.

That is a miss of 60,000 jobs, or 40% below the forecast, and the market will usually move hard.

Now say that next month the consensus is 150,000 again, and the report shows 160,000. That is a beat of only 10,000, or about 7%, and the market barely blinks, even though 160,000 is a perfectly healthy number for the US economy.

So what you are really trading on NFP night is the gap between the number and the forecast. The number is the grade, the consensus is the expectation, and the price move is the conversation at the dinner table.

Why can good jobs news be bad for stocks?

This is the part that confuses most new traders, and I watched it play out again in June 2026. The jobs report came in good, and the market fell anyway, because people read a strong report as a sign that the Fed would hold off on cutting rates.

On a normal day, more jobs should be good for stocks, because more people working means more spending, more spending means more company profits, and profits are what stocks are priced on in the end.

But suppose the economy is already running hot and inflation is the thing everyone is worried about. Now a strong jobs number, especially with fast wage growth behind it, tells the Fed it has no reason to cut rates, and it may even need to raise them. Higher rates make borrowing more expensive for companies and households, and they make bonds look better against stocks. So the same news that feels like a win for the economy can send stocks lower.

Hence, before every release, I find it useful to ask what the market is actually afraid of right now. When the fear is a recession, a strong report brings relief. When the fear is inflation, the same strong report becomes a threat. The number is the same either way. Only the fear has changed.

Reading the market’s fear is a habit. Habits are easier to keep with a routine, and my free trading guides are where I would start building one.

Why do the revisions matter as much as the headline?

The NFP is one of the few numbers in finance that is allowed to change its mind. Every report also revises the two months before it, because more businesses send in their numbers late. Sometimes the revision is the story.

The clearest recent example came on 1 August 2025. The report showed only 73,000 jobs added in July, and in the same release the BLS revised May and June down by a combined 258,000 jobs. Later that day, the President fired the commissioner of the BLS.

I am not taking a side on the politics here. For a trader, the lesson is that a strong headline paired with a big cut to the previous months can read as a weak report overall. So it is always worth scrolling past the first number before deciding what the report is really saying.

Should you trade the NFP release itself?

On 1 August 2025, a trader on Reddit’s r/Daytrading asked a fair question: “Should NFP week be avoided or just the day?” The post went up about 16 minutes before the July report, which then arrived with 258,000 jobs revised away, so the timing was better than most.

For a swing trader, my answer is neither. The danger sits in the minutes around the release, not in the whole week, and as for trading the release itself, I would not start a beginner there. In the first few minutes after the release, spreads widen and price often spikes one way before reversing the other, and plenty of stops get hit on both sides of the same candle.

For most swing traders, the NFP works much better as context than as a trigger. I think of it as the Trigger, Context or Sit-out call, and the important thing is to make it before the release, never in the middle of it.

  1. Trigger. Trade the release itself. It is fast and expensive in spreads, and it suits professionals with tight execution far more than it suits someone trading after work.
  2. Context. Let the report tell you which regime you are in, whether the economy is heating up or cooling down, and then take clean setups in the days after, well away from the release minute.
  3. Sit out. Cut size before the number and step away from the screen. In Singapore it lands at dinner time, which makes this one surprisingly easy.

My own trading plan says to close or reduce positions before major news like the NFP, and to let the report shape the swing trades I take afterwards. That is really a mix of Sit out and Context.

That rule does not keep me off the market on NFP Friday. My own records show it. As at March 2026, counting from June 2024, 25 of the 475 closed trades in my public trade log were opened on an NFP release day, each sized at 10% of capital. Of those 25, 13 were winners, a 52% hit rate against 50% on every other day in the log. So NFP Friday was neither lucky nor unlucky for me. It was a Friday with more noise.

FAQ

What does NFP stand for?
NFP stands for Non-Farm Payroll. It is the monthly US jobs number from the Bureau of Labor Statistics, counting the jobs added or lost across the economy outside farming.

What time is the NFP released in Singapore?
It is released at 8:30pm Singapore time during US daylight saving, which runs from March to early November, and at 9:30pm the rest of the year. That is 8:30am in New York.

Does the NFP include government jobs?
Yes. It counts federal, state and local government employees. It leaves out farm workers, the self-employed and private household staff.

Why was there no NFP report for October 2025?
The US government shutdown stopped the BLS from working, so no October 2025 report was published. The household survey for that month was never collected, and the payroll figures came out late, with the November report on 16 December 2025.

Is a high NFP number good or bad for stocks?
It depends on what the market fears. In a growth scare, a strong number helps. When inflation is the worry, a strong number with fast wage growth can push stocks down, because it lowers the odds of a rate cut.

Which NFP number matters most?
The headline payroll number, in most months. When inflation is the worry, average hourly earnings can matter more, and the revisions to earlier months can change the whole read.

Which of the three calls do you usually make on NFP night, and has a jobs report ever caught you by surprise? Let me know in the comments.

For more on building a trading routine, start with my free trading guides. The inflation report works in a very similar way, and I cover it in What is the CPI.

About the author. Spencer Li is the founder of Synapse Trading and a Certified Financial Technician (CFTe) with 15 years of trading across stocks, forex, crypto, commodities and bonds. His trade log is public: every trade since April 2024, dated, losses left in. He has taught a 15-minute daily trading routine since 2014.

Education, not financial advice. Synapse Trading is not licensed by MAS to advise on investment products. Trading carries risk of loss, and past performance is not indicative of future results.

0 Comments/by
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

Fortune’s Formula by William Poundstone: the Kelly Criterion, and How Traders Actually Use It

Last updated: 3 July 2026 · By Spencer Li, CFTe

Fortune’s Formula by William Poundstone is the story of the Kelly criterion, a formula that tells you how much of your money to bet on a single opportunity to grow your bankroll fastest over the long run without going broke. John Kelly, a physicist at Bell Labs, published it in 1956. The book traces how it travelled from information theory to blackjack tables (Edward Thorp), to Wall Street, and into the hands of gamblers, investors, and the military. The core idea is simple: bet a fraction of your capital that scales with your edge. The bigger your advantage and the better your odds, the more you commit. No edge, no bet.

The practical formula for an even-money bet is f = p − q, where f is the fraction of your bankroll to stake, p is your probability of winning, and q (which is 1 − p) is your probability of losing. For payouts that are not even money, it becomes f = (bp − q) / b, where b is the odds received (your reward-to-risk). For traders, the takeaway is not the algebra. It is this: size is a function of edge, and most people who blow up were not wrong about the trade, they were wrong about the size.

Here is what the book actually teaches, and how to use Kelly without it destroying your account.

What is the Kelly criterion?

The Kelly criterion is a position-sizing rule. It answers one question: given an edge, what fraction of my capital maximises the long-term growth rate of my bankroll?

Most people size by feel. They bet big when they feel confident and small when they are scared, which usually means biggest right before the loss that hurts most. Kelly replaces the feeling with a number. You feed in your win probability and your payout, and it returns the stake that grows your money fastest over a long series of bets.

The important word is long-term growth, not expected value. You can have a positive-expectation bet and still go broke if you size it too big, because one bad streak wipes you out before the math has time to work. Kelly is the line that separates “growing as fast as possible” from “growing, but flirting with ruin.” Bet more than full Kelly and your long-run growth actually goes down while your risk goes up. That is the part most people miss.

The story behind the book

John L. Kelly Jr. published the formula in 1956 in a Bell Labs paper on information theory. He was not trying to beat casinos. He was working on the rate at which information can be transmitted over a noisy line, and the same math turned out to describe how fast a gambler with an edge should grow a bankroll.

The person who carried it into the real world was Edward Thorp, the mathematician who used it to beat blackjack (the Beat the Dealer story) and later ran a hedge fund on the same principle. Poundstone follows the formula from Bell Labs to Las Vegas to Wall Street, with a cast that includes Claude Shannon (the father of information theory), mob-connected bookmakers, and the academics who spent decades arguing about whether Kelly was genius or recklessness.

William Poundstone is a science writer and journalist, a contributing editor at Discover, New Scientist, and Scientific American, and the author of Priceless: The Myth of Fair Value. Fortune’s Formula is his best-known book and was a New York Times bestseller.

A worked example: how Kelly sizing works in practice

Say you have a setup that wins 55% of the time and pays you 1-to-1 (you risk one unit to make one unit). Plug it in:

f = (bp − q) / b = (1 × 0.55 − 0.45) / 1 = 0.10

Full Kelly says bet 10% of your bankroll on that trade. On a $10,000 account, that is $1,000 of risk. To most traders, that is a terrifyingly large number, and that reaction is correct. Full Kelly is the maximum growth size, and it comes with brutal drawdowns. A run of bad luck at 10% per trade will cut your account in half and barely register as unusual.

That is why almost nobody trades full Kelly. They trade a fraction of it.

Full Kelly vs fractional Kelly

SizingStake on the example aboveLong-run growthDrawdown / ruin riskWho uses it
Full Kelly10% of bankrollFastest, in theorySevere, swings of 50%+ are normalAlmost nobody, in practice
Half Kelly5% of bankroll~75% of full Kelly’s growthRoughly half the drawdownMany professionals
Quarter Kelly2.5% of bankrollSlower but smoothLowConservative / uncertain-edge traders

The reason half Kelly is so popular is the trade-off it offers. You give up only about a quarter of your growth rate but you cut your drawdowns roughly in half. For a real human with a real stomach and a real career, that is a far better deal than chasing the theoretical maximum.

There is a deeper reason to size down too. Full Kelly assumes you know your edge exactly. You do not. Your “55% win rate” is an estimate from a finite sample, and it is probably optimistic. When your inputs are uncertain, betting the full Kelly fraction on a wrong number can put you above full Kelly on the real number, which is the worst place to be. Sizing down is your margin of safety against your own estimation error.

Personally, I never run more than a fraction of Kelly, and I cap it well below what the formula suggests. The formula gives you the ceiling. Your job is to stay comfortably under it.

How traders actually apply Kelly

You do not need to plug numbers into the equation before every trade. The useful part of Kelly is the principle, and it shows up in a few concrete habits:

  • Size scales with edge. A high-conviction setup with a strong reward-to-risk gets more capital than a marginal one. Same trader, same account, different size, because the edge is different.
  • No edge, no bet. If you cannot state why you have an advantage, Kelly says the optimal stake is zero. That is the formula telling you to stand aside.
  • Risk a fixed small fraction, not a fixed dollar amount. Risking 1% to 2% of your account per trade is, in effect, a conservative fractional-Kelly rule. As your account grows or shrinks, your position size moves with it.
  • Better odds and bigger edge both raise the size, but the size is capped. Even a great setup gets a ceiling, because a string of “great” setups can still lose in a row.

The thing Kelly protects you from is the single most common way traders die: being right about direction and wrong about size. You can have a genuine edge and still go to zero by betting too much of it on each trade. Kelly is the math that says exactly how much is too much.

Where the human edge comes in

A spreadsheet will compute the Kelly fraction in a second. What it will not do is tell you that your 55% win rate is really 51% once you stop cherry-picking your sample, or that you are about to override your own sizing rule because the last three trades won and you feel invincible. The formula is the easy part. Sizing honestly, against an edge you have not flattered, and holding that size when your gut is screaming to do otherwise, is the discipline. That is the discipline and sizing edge, one of the Five Edges no formula trades for you.

Should you read Fortune’s Formula?

Yes, if you want the story and the intuition behind position sizing. It is a narrative book, not a textbook. You will finish it understanding why sizing matters and where the idea came from, with a cast of memorable characters along the way. What it will not give you is a step-by-step trading manual, you have to translate the principle into your own rules yourself.

I would put it on the shelf next to the practical risk-and-sizing material, not in place of it. Read it for the why, then build your own fractional-Kelly rule for the how.

FAQ

What is the Kelly criterion in simple terms?
It is a formula that tells you what fraction of your money to bet on an opportunity to grow your bankroll fastest over the long run without risking ruin. The bigger your edge and the better your odds, the larger the fraction. With no edge, the optimal bet is zero.

What is the Kelly criterion formula?
For an even-money bet it is f = p − q, where p is your win probability and q is your loss probability. For non-even payouts it is f = (bp − q) / b, where b is the reward-to-risk odds. The result, f, is the fraction of your bankroll to stake.

Why do professionals use fractional Kelly instead of full Kelly?
Full Kelly gives the fastest theoretical growth but produces severe drawdowns and assumes you know your edge exactly. Half Kelly keeps about 75% of the growth while roughly halving the drawdown, and it leaves a safety margin for the fact that your edge is only an estimate.

Who wrote Fortune’s Formula and what is it about?
William Poundstone, a science writer and journalist. The book tells the history of the Kelly criterion, from John Kelly at Bell Labs through Edward Thorp’s use of it to beat blackjack and run a hedge fund, and how the same math applies to gambling and investing.

Can the Kelly criterion be used for stock trading?
Yes, as a position-sizing principle rather than a precise formula. Most traders apply it as a conservative fractional version, risking a small fixed percentage of the account per trade, and sizing up only when the edge and reward-to-risk genuinely justify it.

Now that you have the formula and the half-Kelly trade-off, the real question is the one most people skip: what is your honest edge, before you flatter it? Get that number right and the sizing takes care of itself. Let me know in the comments how you size your trades.

And if you want the wider reading list this book sits on, see the pillar: Best Investing and Trading Books of All Time.

Want the system the sizing plugs into? Grab the free 15-Minute Swing Trading Starter Kit. It is the exact routine I use to scan once a day and trade any market in 15 minutes, sizing included.

About the author. Spencer Li is the founder of Synapse Trading and a Certified Financial Technician (CFTe) with 15+ years of trading across stocks, forex, crypto, commodities, and bonds. His trade log is public: every trade since April 2024, dated, losses left in. He has taught a 15-minute daily trading routine since 2014, one system for any market.

Education, not financial advice. Synapse Trading is not licensed by MAS to advise on investment products. Trading carries risk of loss; past performance is not indicative of future results.

Related

Best Investing and Trading Books of All Time (pillar) · Position sizing and risk management · Beat the Dealer by Edward Thorp · The Five Edges

0 Comments/by
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

Forex Price Action Scalping by Bob Volman: Book Summary and Review

Last updated: 3 July 2026 · By Spencer Li, CFTe

“Forex Price Action Scalping” by Bob Volman is a practical, no-fluff manual for trading forex on very short timeframes using raw price action, no lagging indicators, on a tight bid-ask spread. It is best for traders who already know the basics and want a disciplined, repeatable scalping method, not for beginners or anyone uneasy with fast, high-pressure decisions. The core message is honest: scalping (taking many small, quick profits on tiny price moves) is a real skill, not a shortcut, and it asks for sharp focus, strong risk control, and emotional discipline most people underestimate. Volman teaches you to read the chart itself (support, resistance, the round number, the false break) rather than chase signals. My short verdict: a genuinely good book if scalping is the game you want to play, and a useful read even if it is not, because the price-action thinking carries over. Just go in knowing scalping is one of the harder paths in trading, not the easiest.

Here is what the book covers, what is worth keeping, and who should actually read it.

Who is Bob Volman?

Bob Volman is a professional trader with more than 20 years in the forex market, and he is widely respected for his work on price action (reading the chart’s own movement instead of relying on indicators). He trades and teaches a pure, discretionary style, and his books are treated as serious reference material by price-action traders. When someone with that long a track record sits down to write out exactly how he reads a one-minute chart, it is worth a careful read.

What is the book about?

The book is a complete walkthrough of one thing done well: scalping forex with price action.

It starts at the basics (what scalping is, how to read price action) and builds toward a full method, with specific setups, entry and exit rules, and a heavy focus on risk and mindset. Volman does not sell it as easy money. The main message is the opposite: scalping is potentially profitable but genuinely demanding, and it only works if you bring the right skills, knowledge, and discipline. That honesty is the best thing about the book.

10 key ideas from the book

These are the takeaways I would underline if I were reading it again.

  1. Reading market structure and price action is the foundation. Trends, support and resistance, and chart patterns come first, before anything else.
  2. Indicators are a supplement, not the engine. Tools like moving averages and stochastics can support your read on entries and exits, but the price action leads.
  3. Discipline and risk management are non-negotiable. Stop-loss orders and strict limits on capital at risk per trade are what keep you in the game.
  4. The psychology is the hard part. Controlling your emotions and holding discipline under pressure is harder than spotting the setup.
  5. Leverage cuts both ways. It can magnify profits and losses in equal measure, so use it with caution.
  6. Scalping demands total focus. You need to read charts fast and decide in real time, with no room to drift.
  7. You trade specific setups, not vibes. Success comes from identifying and trading defined chart patterns and price-action setups.
  8. A robust trading plan is built in advance. That plan must include risk rules and a clear plan for managing losses before they happen.
  9. Stick to the plan and avoid impulsive trades. Discipline means following your own rules even when the screen tempts you.
  10. Keep learning and adapting. Markets shift, and the scalper has to keep adjusting to current conditions.

How do you apply the teachings?

A book is only useful if it changes what you do at the screen. Here is how to put Volman’s ideas to work.

  • Trade defined chart patterns and price-action setups, not gut feel.
  • Build in risk management from the start: stop-loss orders and position sizing on every trade.
  • Write a trading plan, then actually follow it.
  • Practise discipline and emotional control as a skill, the same way you practise the setups.
  • Keep learning and adapt to current market conditions.
  • Use indicators alongside price action to refine entries and exits, not to replace your read.
  • Cap the capital at risk on each trade, and let the stop-loss enforce it.
  • Train yourself to spot trends, support and resistance, and patterns quickly.
  • Treat leverage with respect, and know its dangers before you size up.
  • Build the speed to analyse a chart and decide in real time.

The honest catch: scalping is capital-hungry and high-pressure

There are a few things Volman is upfront about that I want to repeat, because they are the parts people skip.

Scalping aims at very small price moves, so the math only works at size. That means it tends to need a larger amount of capital, and the same leverage that lifts the profit lifts the loss. The potential for gains is matched, bar for bar, by the potential for losses.

And it is not for everyone. If you are not comfortable with fast, high-pressure, screen-glued decision-making, scalping will grind on you. There is no shame in that. Knowing it is not your style is itself a useful conclusion to reach from reading the book.

Should you read it? A quick decision table

You are…Read it?Why
A complete beginnerLaterStrong price-action foundations help first; the scalping detail will overwhelm you
An intermediate trader wanting a defined methodYesThis is the sweet spot: a complete, rules-based scalping system to study
A swing or position traderOptional, but usefulYou will not scalp, but the price-action reading (false breaks, round numbers, support/resistance) transfers cleanly
Someone who hates fast, high-pressure tradingProbably notThe method demands real-time focus you may not want to live in daily
Looking for easy, passive returnsNoScalping is one of the more demanding paths, not a shortcut

Where the human edge comes in

Here is the part I keep coming back to. A platform can plot every level, flag every round number, and even auto-mark a clean false break for you. The reading is getting cheaper every year. What no tool hands you is the discipline to size the trade, the patience to skip the marginal setup, and the emotional control to take the stop without flinching. Volman spends as much ink on mindset as on setups for exactly this reason. The chart pattern is the easy part. Trading it like a professional is the judgment, and that is the first of the Five Edges no scanner can trade for you.

My take

Personally, I rate this book highly within its lane. It is honest, specific, and it teaches you to read the chart rather than worship an indicator, which is a habit that pays off whatever timeframe you end up trading. I do not personally scalp as my main game, I prefer low-risk swing trading where I can scan once a day and act calmly. But I still got value from how clearly Volman lays out price-action reading, and I would recommend it to any intermediate trader who is curious about short timeframes. Just keep your eyes open about the capital and the pressure it asks for.

FAQ

Is “Forex Price Action Scalping” by Bob Volman good for beginners?
Not as a first book. It is best for intermediate traders with some forex knowledge. A complete beginner should build price-action foundations first, then come back to the scalping detail.

What is forex price action scalping?
It is a style of trading forex on very short timeframes (often the one-minute chart) by reading raw price action, support, resistance, round numbers, and false breaks, to take many small, quick profits, without relying on lagging indicators.

Do you need a lot of capital to scalp?
Generally yes. Scalping targets very small price moves, so the strategy tends to need more capital to be worthwhile, and the leverage that boosts profits boosts losses just as much.

Is the price-action method in the book useful if I do not want to scalp?
Yes. The way Volman reads charts (false breaks, round numbers, support and resistance) carries over to swing and position trading, even if you never trade a one-minute setup.

Is scalping profitable?
It can be, but it is one of the more demanding styles. It requires sharp focus, strict risk management, and emotional discipline, and the potential for losses matches the potential for gains. It is a skill, not a shortcut.

Now that you have the summary, would you add this one to your reading list? And if you have already read it, what stuck with you most? Let me know in the comments.

If you want the wider shortlist, read the pillar: Best Investing and Trading Books of All Time.

Want a calmer way to trade than scalping? Grab the free 15-Minute Swing Trading Starter Kit, the exact routine I use to scan once a day and trade any market in 15 minutes.

About the author. Spencer Li is the founder of Synapse Trading and a Certified Financial Technician (CFTe) with 15+ years of trading across stocks, forex, crypto, commodities, and bonds. His trade log is public: every trade since April 2024, dated, losses left in. He has taught a 15-minute daily trading routine since 2014, one system for any market.

Education, not financial advice. Synapse Trading is not licensed by MAS to advise on investment products. Trading carries risk of loss; past performance is not indicative of future results.

Related

Best Investing and Trading Books of All Time (pillar) · Trading in the Zone by Mark Douglas (review) · Reminiscences of a Stock Operator (review) · Definitive Guide to Price Chart Patterns

0 Comments/by
Spencer Li

Book Summary: Following the Trend by Andreas Clenow

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

“Following the Trend” by Andreas Clenow: Book Summary, Key Ideas, and Who Should Read It

Last updated: 3 July 2026 · By Spencer Li, CFTe

“Following the Trend: Diversified Managed Futures Trading” by Andreas Clenow is a practical guide to systematic trend following, the strategy of using futures contracts across many markets to ride large price moves in either direction. Clenow, a hedge fund manager and CIO of Zephyr Asset Management with over 20 years in the industry, walks you through how managed futures actually work, why diversification across markets is the engine of the whole approach, and how to evaluate performance honestly using metrics like the Sharpe ratio and drawdown. The core thesis is simple: prices in different markets tend to trend, and a diversified, rules-based system that follows those trends can be a valuable addition to a portfolio. The catch is that it requires real understanding and the stomach for long, painful drawdowns. Personally, I rate it as one of the clearest, least hyped books on the subject. It is best for traders and portfolio managers who want the mechanics of trend following, not beginners looking for a first trading book.

Here is what the book teaches, the ideas worth keeping, and who should actually read it.

What is “Following the Trend” about?

The book explains the ins and outs of managed futures (a strategy that trades futures contracts to bet on the direction of price moves across stocks, bonds, currencies, and commodities). Clenow covers the types of contracts typically used, the benefits and risks of the approach, and how to build a diversified portfolio that incorporates trend following.

What makes it useful is that he does not stop at theory. He shows real-world examples of strategies he has used himself, walks through the mathematics behind trend following, and is honest about where it goes wrong. The main message is that managed futures can earn a real place in a diversified portfolio, but only if you understand the market and the strategies underneath it.

This is not a get-rich book. It is a how-the-machine-works book.

Who is Andreas Clenow?

Andreas Clenow is a hedge fund manager and the CIO of Zephyr Asset Management. He has over 20 years of experience in the industry, has been a frequent speaker at industry conferences, and has been interviewed and quoted across several financial publications.

That background matters for how you read the book. Clenow writes from inside a real fund, not from the sidelines, so the risk-management and portfolio-construction chapters carry weight that a purely academic treatment would not.

The 10 key ideas, in one table

I find a book like this is easier to hold in your head as a list of claims than as prose. Here are the ten ideas that do the heavy lifting, and why each one matters.

#Key ideaWhy it matters
1Managed futures uses futures contracts to bet on the direction of price moves across many marketsIt is directional and systematic, not a stock-picking exercise
2Prices in different markets tend to trend, and following those trends can be profitableThis is the entire thesis the strategy rests on
3The book covers contract types, benefits, risks, and how to build a diversified portfolioGives you the full mechanics, not just the highlights
4Clenow shows real strategies he has used successfully himselfGrounds the theory in a practitioner’s actual book
5Risk management is central, and you need a defined plan before you tradeTrend following lives or dies on how you control losses
6Diversification across markets is what mitigates riskSpreading across uncorrelated markets is the core engine
7He maps the managed futures industry and the players in itContext for where your strategy sits in the wider market
8The book examines performance over time and how to evaluate strategiesTeaches you to judge a system, not just admire its returns
9He compares fund types, including commodity trading advisers (CTAs)Helps you choose the right vehicle for your goals
10It closes on the future of managed futures, its opportunities and challengesFrames the strategy as evolving, not a finished answer

A few of these deserve a closer look.

Diversification is the strategy, not a garnish

The single most important idea in the book is that diversification across many markets is not a nice-to-have. It is the engine. A trend follower wins because, across dozens of uncorrelated markets, a few large trends pay for the many small losses. Run the same system on one or two markets and you have removed the thing that makes it work.

Risk management before returns

Clenow spends real time on setting up a risk-management plan, because trend following produces long stretches of small losses while you wait for the big trends. Without a plan that sizes positions sensibly and caps your exposure, the drawdowns will shake you out before the payoff arrives.

Judge a system by more than its returns

The book teaches you to evaluate performance with metrics like the Sharpe ratio (return per unit of volatility), drawdown (the peak-to-trough fall in your account), and the information ratio. The point is that a headline return tells you almost nothing on its own. How much pain you took to earn it is the real story.

How to actually apply it

The book gives you a clear set of moves to put the ideas to work. Distilled, they come down to this:

  • Research different trend-following strategies and funds, and pick one that fits your goals and risk tolerance.
  • Build a diversified portfolio that pairs managed futures with other types of investments.
  • Learn the contracts and markets used, and the specific risks and benefits of each.
  • Write a risk-management plan before you put money on, then size positions to it.
  • Combine technical and fundamental analysis when you evaluate a strategy.
  • Monitor the portfolio regularly and adjust as market conditions change.

Do note that, Clenow is blunt on one point worth repeating: past performance is not a guarantee of future results, and managed futures can be volatile. The drawdowns are real, and they are long.

Where the human edge comes in

A modern platform can backtest a trend-following system in seconds and show you a gorgeous equity curve. That part is close to free now. What it will not do is sit you in the chair through an 18-month drawdown without flinching, or stop you from abandoning the system at the exact moment it is about to work. The rules are the easy part. The discipline to hold position sizing steady and follow the system through the ugly stretches is the hard part, and that is the human edge a backtest can never trade for you.

Should you read it? My honest take

Personally, I would put this on the shelf for anyone serious about systematic trading, but I would not hand it to a complete beginner. It assumes you are comfortable with the idea of futures, position sizing, and reading a performance table. If you have that footing, it is one of the clearest, least hyped books on trend following you can buy, precisely because Clenow writes from inside a real fund and does not dress up the drawdowns.

If you are still picking your first trading book, start elsewhere and come back to this one once the basics are second nature.

For more book picks in the same vein, see our roundup of the best investing and trading books of all time, and if you want the structured reading path, the Synapse book and reading list maps them by level.

FAQ

What is “Following the Trend” by Andreas Clenow about?
It is a practical guide to systematic trend following and managed futures, the strategy of trading futures contracts across many markets to ride large price moves. It covers contracts, diversification, risk management, and how to evaluate performance.

Is “Following the Trend” good for beginners?
Not really. It assumes you are already comfortable with futures, position sizing, and reading performance metrics. Beginners should start with a foundational trading book and come back to this one later.

Who is Andreas Clenow?
A hedge fund manager and the CIO of Zephyr Asset Management, with over 20 years in the industry. He is a frequent conference speaker and has been quoted across several financial publications.

What is the main lesson of the book?
That diversified, rules-based trend following can earn a place in a portfolio, but only with disciplined risk management and the patience to sit through long drawdowns. Diversification across many markets is the core engine.

What metrics does the book use to judge a strategy?
It uses the Sharpe ratio, drawdown, and the information ratio, to make the point that a headline return means little without knowing how much volatility and pain it took to earn.

Now that you have the key ideas, would you add “Following the Trend” to your reading list? And if you have already read it, what stuck with you most? Let me know in the comments.

Want a system you can actually run? Grab the free 15-Minute Swing Trading Starter Kit. It is the exact routine I use to scan once a day and trade any market in 15 minutes.

About the author. Spencer Li is the founder of Synapse Trading and a Certified Financial Technician (CFTe) with 15+ years of trading across stocks, forex, crypto, commodities, and bonds. His trade log is public: every trade since April 2024, dated, losses left in. He has taught a 15-minute daily trading routine since 2014, one system for any market.

Education, not financial advice. Synapse Trading is not licensed by MAS to advise on investment products. Trading carries risk of loss; past performance is not indicative of future results.

Related

Best investing and trading books of all time (pillar) · Synapse trading book and reading list · What is trend following? · Risk management for traders

0 Comments/by
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

Flash Boys by Michael Lewis: Summary, Key Ideas, and What Traders Can Learn

Last updated: 3 July 2026 · By Spencer Li, CFTe

“Flash Boys: A Wall Street Revolt” is Michael Lewis’s 2014 non-fiction book arguing that the US stock market is rigged in favour of high-frequency trading (HFT) firms (traders who use very fast computers and algorithms to buy and sell in fractions of a second). It follows Brad Katsuyama, a trader who discovers that his orders are being front-run by faster players, and who responds by building IEX, a fairer exchange designed to neutralise the speed advantage. The core claim is simple: a small group of insiders pay for a head start measured in milliseconds, and they use it to skim from everyone else. The book became a New York Times bestseller and put HFT into mainstream conversation.

For a swing trader or long-term investor, the practical takeaway is calmer than the headline. You are not competing with these firms on speed, so the rigging Lewis describes barely touches a trade you hold for days or weeks. What the book is really worth reading for is the lesson underneath the technology: know the structure of the market you trade in, and do not assume the playing field is level.

Here is what the book covers, the key ideas, and where it actually matters for how you trade.

What is Flash Boys about?

The book is about the rise of high-frequency trading and what it did to the stock market. Lewis’s central argument is that the market is rigged in favour of a select group of insiders who use HFT to gain an unfair advantage over ordinary investors.

The story is told through Brad Katsuyama, an up-and-coming trader who becomes frustrated when he notices something strange: every time he tries to buy a large block of stock, the price moves away from him before his order fills. He works out that faster traders are seeing his order on one exchange and racing ahead to other exchanges to trade before he gets there. That is front-running, dressed up in fibre-optic cable.

Rather than just complain, Katsuyama builds a solution. He and his team create IEX, a new exchange with a deliberate speed bump (a tiny delay that cancels out the head start the fastest firms had paid for). The book frames IEX as a potential fix for the problem it spends most of its pages describing.

About the author: Michael Lewis

Michael Lewis is a financial journalist and author known for turning complex finance into stories regular readers can follow. His other well-known books include “The Big Short” (the 2008 housing collapse) and “Moneyball” (data versus gut in baseball).

His strength is the same in all three: take a closed, jargon-heavy world and explain it through a few characters you actually care about. That is why Flash Boys reads like a thriller even though the subject is market microstructure. Do note that this is also its limitation, which I will come back to.

The 10 key ideas, at a glance

The original post listed the book’s main points. Here they are grouped so you can see what is a claim about the market versus what is a claim about the people in it.

#Key ideaWhat it means
1HFT runs on speedPowerful computers and algorithms buy and sell at speeds no human can match
2Speed is an edge you can buyFaster firms see information and reach exchanges sooner, so they trade first
3The market is fragmentedOrders travel across many exchanges, and the gap between them is where HFT operates
4Lewis says the market is riggedStructured to favour HFT firms over ordinary investors
5HFT affects volatility and liquidityThe book argues it can increase volatility and reduce real liquidity
6The exchanges are part of the problemThey sell speed and access, so their incentives are not neutral
7Brad Katsuyama is the protagonistA trader who finds the problem and decides to act
8IEX is the proposed fixAn exchange with a speed bump to cancel the HFT head start
9The deeper theme is integrityThe book is as much about fairness in finance as it is about technology
10It calls for reformMore transparency and regulation to level the playing field

If you only remember one row, make it #4 and #8 together: Lewis defines a problem (the market is rigged for speed) and offers a concrete answer (a fairer venue), which is what makes the book feel like more than a complaint.

Does high-frequency trading affect ordinary traders?

For a day trader scalping a few ticks, market structure matters, and Flash Boys is directly relevant. For a swing trader or investor, it matters far less than the book’s tone suggests.

The skim Lewis describes is measured in fractions of a cent over milliseconds. If you are entering on a daily chart and holding for a week, that fraction of a cent disappears into noise. Your real risks are your entry, your stop, your position size, and your own behaviour, none of which an HFT firm touches.

So read Flash Boys for awareness, not anxiety. Personally, the lasting value for me was the reminder to understand the plumbing of any market before trusting it, not the fear that a robot is picking my pocket on a multi-day swing.

How to actually apply the book

The original “10 ways to apply” list mostly repeated the key ideas. Stripped down, there are really three uses for this book as a trader.

  1. Understand market structure. Know that the market is fragmented across exchanges, that speed and access are sold, and that the venue you trade on has its own incentives. You do not need to beat HFT; you need to not be naive about how the machine works.
  2. Calibrate your method to your speed. Flash Boys is a warning to anyone whose edge depends on being fast. If your strategy needs millisecond execution to work, you are racing people with better hardware and deeper pockets. A slower, structural edge sidesteps that race entirely.
  3. Keep integrity in view. The book’s quieter argument is about fairness and trust. As a trader, the version of that you control is your own discipline: an honest trade log, rules you actually follow, and no stories you tell yourself after a loss.

What the book gets right, and where it is thin

Flash Boys is well written and genuinely accessible, which is its biggest strength and the reason I recommend it. You can hand it to someone with zero finance background and they will finish it.

But it is one perspective, told as a clean good-versus-evil story, and real markets are messier than that. HFT also tightens spreads and adds liquidity in normal conditions, which the narrative underplays. And it was written in 2014, so it does not cover what has happened in market structure and regulation since. Read it as a vivid introduction and a strong argument, not as the final word.

Where the human edge comes in

A faster computer will always beat you to a millisecond trade. That race is lost before you start, and Flash Boys is 300 pages of proof. So do not compete there. The edge that does not depend on hardware is judgment: choosing a timeframe where speed stops mattering, sizing the trade, and following your own rules when the market is loud. The machines own the milliseconds. The days and weeks are still yours, and that is the first of the Five Edges no algorithm can trade for you.

FAQ

What is Flash Boys by Michael Lewis about?
It is a 2014 non-fiction book arguing that high-frequency trading firms have rigged the US stock market in their favour by paying for a speed advantage. It follows trader Brad Katsuyama as he uncovers the problem and builds IEX, a fairer exchange, in response.

Is Flash Boys based on a true story?
Yes. It is non-fiction. Brad Katsuyama and the IEX exchange are real, and the book reconstructs real events around the rise of high-frequency trading.

What is high-frequency trading in simple terms?
High-frequency trading (HFT) is using very fast computers and algorithms to buy and sell huge numbers of shares in fractions of a second, profiting from tiny price differences and from being faster than everyone else.

Should swing traders or long-term investors worry about HFT?
Not much. The advantage HFT firms have is measured in milliseconds, which has almost no effect on a position you hold for days, weeks, or years. It matters most for very short-term, high-speed strategies.

Is Flash Boys worth reading?
Yes, as an accessible introduction to market structure and a strong argument about fairness in finance. Just read it as one well-told perspective, written in 2014, rather than a complete or neutral account.

Now that you have the summary, would you add Flash Boys to your reading list? And if you have already read it, what stuck with you? Let me know in the comments.

If you want more like this, read the pillar: Best Investing and Trading Books of All Time.

Want the system, not the speed race? Grab the free 15-Minute Swing Trading Starter Kit. It is the exact routine I use to scan once a day and trade any market in 15 minutes, no fast computer required.

About the author. Spencer Li is the founder of Synapse Trading and a Certified Financial Technician (CFTe) with 15+ years of trading across stocks, forex, crypto, commodities, and bonds. His trade log is public: every trade since April 2024, dated, losses left in. He has taught a 15-minute daily trading routine since 2014, one system for any market.

Education, not financial advice. Synapse Trading is not licensed by MAS to advise on investment products. Trading carries risk of loss; past performance is not indicative of future results.

Related

Best Investing and Trading Books of All Time (pillar) · The Big Short book summary · Reminiscences of a Stock Operator summary

0 Comments/by