Book Description

Praise for the exchange-traded funds manual

"Exchange-traded funds are the hottest finance innovation of the past decade. Gary Gastineau, who played a critical role in their development, demystifies the working of these instruments, lucidly describes their advantages and disadvantages, and guides investors on their use. This gem of a book will be the ETF bible for years to come."
–Burton Malkiel, Chemical Bank Chairman’s Professor of Economics, Princeton University

"This is the first comprehensive book on exchange-traded funds.The author displays an institutional and practical knowledge of exchange-traded funds that makes this book necessary reading for not only the knowledgeable investor but for the professional researcher seeking to understand these relatively new investment vehicles."
–Martin J. Gruber, Nomura Professor of Finance
Stern School of Business, New York University

"Gary Gastineau is a national treasure. Exchange-traded funds are the wave of the future, and Gary has been instrumental in their development from day one. His knowledge is encyclopedic, and his style and subtle humor make it all accessible to the reader."
–Wayne H. Wagner, Chairman, Plexus Group, Inc.

"In Gary Gastineau’s brilliant work in illuminating the reader on exchange-traded funds, he provides rich insights into the process and methodology of adding value and cites a convergence of market forces that creates a compelling story for the use of ETFs for those who choose to add value."
–Stephen C. Winks, Publisher, Senior Consultant

"The introduction of exchange-traded funds was one of the success stories of

Wall Street in the 1990s. Gary Gastineau was a key contributor to this success, and his book is an important benchmark on both the current status of this important new category and the vast potential of its next-generation products."
–Salvatore Sodano, Chairman and Chief Executive Officer
American Stock Exchange ... Read more

Reviews (2)

Good practical reference work
Gary Gastineau, a managing director at Nuveen Investments and the author of The Options Manual (1988), has written the most detailed account available in print of open-ended exchange-traded funds: how they work, what are their distinctive characteristics, who trades them (largely, specialists, market makers, and hedge funds), who owns them (largely, brokerage firms clearing and carrying the ETF shares for specialists, market makers, or hedge funds), and what are their advantages and disadvantages over other sorts of investment for various investors.

This is no gripping page-turner, in the league of Jack Schwager's "Wizards" series. But it doesn't need to be. Mr. Gastineau's manual is directed chiefly at investment advisers and financial planners as a reference volume, and it serves that purpose quite well. Advisers and planners, and of course their clients, face a bewildering variety of issues pertaining to these relatively new vehicles-issues of tax efficiency, risk management, trading costs and spreads, etc. In many offices, this book will be a welcome aid in sorting out all of that.

A brilliant, comprehensive and readable compendium on ETFs
Exchange Traded Funds are simply the biggest development for the average retail investor in the past decade. No more need to pay huge fees for opaque mutual funds/unit trusts. Just go to an exchange, buy the fund and hey presto you can track indices and have total price transparency for as long as the exchange is open.

I championed ETFs in my book "Capital Market Revolution" and I am delighted to see that ETF pioneer Gary Gastineau has produced a terrific, comprehensive book on every aspect of Exchange Traded Funds.

If you have any questions about ETFs, they will be answered by this book...

Patrick L Young
author "Capital Market Revolution"
CEO, erivatives.com ... Read more

Book Description

A bestselling classic (more than 200,000 copies sold in hardcover and paperback) that delves into the minds of some of the world's most successful traders. ... Read more

Reviews (67)

Inspirational and educational - a must have for your library
I first read this book in 1991 and I was so pumped up that I read it again a year later. The tales of these professionals kept me riveted and the relaxed, conversational style of the book makes it an easy read. I learned several of my most hard-and-fast disciplines from this book ("cut your losses, let your winners run", "know your 'uncle' point", "have patience to wait for the right trade to come along"). Favorite interviews were Michael Marcus, Paul Tudor Jones, Ed Seykota, Larry Hite, William O'Neil and Jim Rogers. Surprisingly, what you gather from the compilation of interviews is that despite a focus on different investment time horizons or securities, there are common keys to success across most of these guys, many of whom achieved legendary status. I came away from this book realizing that you must take these well-established rules and apply them in a disciplined fashion to your personal investment style. You will not be good at all things (stocks, options, commodities, shorting, etc.). So, find what your personal strength is and apply these disciplines to achieve success. I still make investing mistakes (believe me!). But I've made a lot fewer of them because of the lessons I learned from this book. Three other points:

1) This book turned me on to Reminiscences of a Stock Operator, my all-time favorite book about the markets (check it out in Amazon).
2) The book is a bit dated, so some of the people (e.g., Robert Prechter) and newsletters (e.g., Zweig Letter) referenced by the interviewees are no longer around or have lost status.
3) The New Market Wizards falls short of the standard set by this book, but the sequel is still probably worth reading.

A Great Book to Learn about Important Trading Rules
Getting into the mind of some of the best traders, they all have several things in common. When reading Market Wizards, you keep saying to yourself, "Yes, that makes sense." Just make sure you follow these rules in the real world. A little older, the same rules still apply today. It is even fun to read about how some of the trading was done over 10 years ago. Definitely an investment classic. This book should be read by everyone who is serious and committed to managing at least a portion of his or her own money.

Must Read
Being successful in life is simple. Find someone who is doing, or has what you want, and then model their behaviors. If you strive to be a sucessful trader then read this book.

Market Wizards is a compliation of interviews with very successful traders. There are little gems of information throughout the book. Read the book and savor each bit of information.

A Trully Great Book!
This is one of the few books that I have read over and over again. You find a lot of valuable resources and it is a very entertaining read. I always find something new. Being a succesfull trader, I recomend this book to anybody that is interested in this bussines.

An important book
There are 1000's of trading books available. They can be divided into four categories: books about trading written by non traders (most are in this category; don't waste your time or money on them), books about traders written by non traders (most are worthless), books about trading written by traders, and books about traders written by traders. This book is the best book available in the latter category. If you need a book about technical indicators, this isn't it. If you need a book to get a glimpse at the thought processes of successful traders, this is it. Jack has the remarkable ability to ask relevant and productive questions of some of the most successful traders of out time. ... Read more

Book Description

Measure market sentiment and predict market trends.

Contrary opinion is the opposite opinion of the sentiment held by the majority. If eighty percent of traders are bearish then a bullish view would be a contrary opinion. As developer of the Bullish Consensus, R. Earl Hadady has fine-tuned sentiment, measuring the opinion of a specific majority, to a calculable figure. Traders can now develop a winning trading plan around the Bullish Consensus and buy or sell as warranted by its numbers.

Examines in-depth the workings of the futures markets and how market sentiment affects those markets.
* Demonstrates that the trend of the market is actually a reflection of the trend of market sentiment

Earl Hadady (Glendora, CA) is the author of the first edition of Contrary Opinion: How to Use it for Profit in Trading Commodity Futures. Mr. Hadady is a renowned expert in contrary opinion. ... Read more

Reviews (3)

Excellent book, simple and provocative
What you will come to know in several years can be assimilated in little time with this book written by the master. Because most people are going towards electronic trading, they are devoid of the emotions that people have witnessed in the trading pits. Often times, things that are percieved in a convoluted way are at the human level pychologically simple, and that is what this book is taking you towards. Everything good and nothing bad.

The best elaboration on Contrarian Theory I ever read
Ironically the low sales of the book (I inferred from the Amazon sales rank) tells the high value of it, if ones believes the contrary opinion theory, that conventional wisdom, usually the popular one, always put the majority/public to the wrong side.

The author had honestly and successfully delivered what one could grasp from the title: profiting by contrarion opinion (to be precise, bullish/bearish consensus) in futures markets. He explained why the futures market is a money game, why the minority always win, why conventional market wisdom (yeah, your analysts included) always fail...He did that so well. That's all I wanna say.

...

not a bad book
this book starts out giving the basics of the futures markets. the meat of the book is about bullish consensus which i found very interesting. the author states this isn't a trading system but a supplement to trading systems.i would reccomend this book. ... Read more

Book Description

Praise for The Option Trader Handbook

"Jabbour and Budwick’s unique approach to strategies and trading moves options analysis out of the laboratory and onto the painter’s canvas. Understanding this refreshingly new viewpoint is essential for any options trader looking to expand both his horizons and his wallet."
–William E. Seale, PhD
Principal and Chief Investment Officer, ProFund Advisors LLC

"The Option Trader Handbook is the best text available for those who desire detailed advice about how to manage positions with standard and advanced options strategies. The book is well worth reading due to its step-by-step focus on practical strategies and trade adjustments. Given the breadth and depth of the options positions covered, it will certainly serve as an important reference text in any trader’s library."
–Stephen D. Young
Vice President, Wachovia Capital Markets, LLC ... Read more

Reviews (2)

Not groundbreaking, but very good nonetheless...
The Option Trader's handbook is a bit more in-depth than most basic option trading texts in that it explains what to do to after you have entered a position. Unlike trading a stock or future, with options, there are many possibilities. Other books too often neglect the adjustment part of a trade.

Most option books describe various spreading strategies, but I know many novice traders complain about picking a directional spread (bull call or bear put), getting the direction correct, only to lose money because the spread still hasn't reached its maximal potential because of time value still remaining. This book tells you what to do in order to keep much of the profits without increasing risk.

Many of the tactics and adjustments described were alluded to in McMillian's _Options as a Strategic Investment._ But that thick tome occasionally left out a few points complete novices might not pick up. So if you trade stock, long options, or spreads, and want to figure out what to do to limit risk, this will explain things clear and simple language.

The author clearly demonstrates the beauty of trading options in addition to the underlying security. There are so many ways to repair a losing position, minimize, or eliminate the risk of loss, I am amazed that options have the risky reputation they do.

The one danger with all of these adjustments, however, is that you spend too much time on a trade trying to come out with a small profit, or break even. From a psychological POV, this knowledge could be dangerous in that you fail to admit a trade hasn't worked. Rather than take the loss, you make adjustments, and focus your energy on breaking even, rather than looking for a trade to make you whole, and then some.

One of the negatives--I was hoping the authors would go into more detail on various delta neutral trade adjustments. There was much discussion on adjusting long or short positions, but not much at all on diagonal spreads, or various types of ratio spreads.

Another issue--there is some advice that strikes me as mistaken.
The author advises selling an in-the-money call option on a stock you own to hedge against a decline while avoiding short term capital gains (p. 89). My understanding is that the IRS considers this a "constructive sale" and either you are taxed (if you get assigned) or your holding period starts over.

But aside from this, the book deserves a place on the shelf of every trader.

Solid book
You should probably have a bit of experience before reading this book. It is not an absolute beginner's book. However the concepts are presented clearly and there are enough of them so it is likely there will be something interesting for most everyone.

You will need a level of mathematical sophistication necessary to multiply by two or three as well as addition and subtraction. This book contains no mathematical concepts beyond that level.

If you are looking for theory, keep looking as you won't find much of that here. Practicality is the hallmark of the book.

There have been thousands of books written on investments and options over the years. It would be quite hard to come up with much that is truly original. Instead the better books come at things from a different perspective. This book is certainly better than most on the subject. Here are some of the things that make this book different than most.

There is no super secret no risk sure fire rags to riches in 30 days plan presented. Instead there is an emphasis on trading should be looked at for what it is; a business. A healthy respect for risk is shown throughout the pages. The first chapter of the book is worth almost anyone's time as most people do not seem to realize they are in business when they call their broker or click on their order page.

Many options books present large numbers of P/L graphs on the various possible positions. This book is no exception, however they approach things from a slightly different perspective. Here much of the emphasis is on how to move from one position to another. They extensively cover many different changes you would want to consider making as the market or your perception of it changes.

Knowing the relationships between different postions is important for several reasons. First you can react quickly by having a good idea as to what to do in a rapidly changing enviroment where a few seconds delay can cost a lot of money. An even better use for this information is in forming your trading plan before you ever place an order. A third use is to avoid situations where there are no good adjustments if things do not go as planned.

The first negative that I found had to do with the length. In general having any 2 of the three building blocks (puts, calls, underlying) you can synthetically construct the other piece (indeed a large part of the book is devoted to this concept). The authors built a little more repetition into the book than I personally found necessary by doing the same analysis on mirror image postions. This is not a major downside as some will appreciate the review and others will simply skip a few pages here and there.

The second issue concerns the use of the terms free trade or risk free trade. The reality is the trade was not free and there is a price. The price may have been actual money, foregone opportunities, or increased risk. Sometimes the authors mention the cost, other times they do not.

An example of a not so free "free trade" would be to buy a call have the stock rise, sell a higher priced call for what you paid for the original. You now have a bull spread. This is free in the sense you now have a spread position at no cost. However it could end up costing you if the stock drops because the spread could become worthless and you could have sold your long call outright. The concept is good but I find the wording to be troublesome.

Overall I believe the money spent on this book was a pittance compared to the money made or saved by reading this book and I am very glad to have bought it. ... Read more

Book Description

For commodity traders and portfolio managers—a practical, hands-on guide to profiting in today’s growing international cross rate markets. Cross rates trading is growing increasingly popular, fueled in no small part by banks and multinationals seeking creative strategies for hedging currency risk and speculators seeking profits from interest rate plays and exchange rate moves. Trading Currency Cross Rates is the passkey to this vastly profitable financial sector. Written for the experienced trader moving into the currency futures and foreign exchange cash markets, as well as for the corporate portfolio manager seeking to limit company exposure, this professional guide covers the fundamentals of today’s cross rates markets and delivers the step-by-step techniques needed to trade cross rates successfully. Packed with charts and tables that apply over a broad range of international markets and currencies, the guide:

• Explains what cross rates are and profiles the different types that currently are traded
• Shows whether to trade on an agency or principal basis, and how to avoid counterparty failure
• Covers the building blocks of currency valuation and the best methods for forecasting moves in currency cross rates
• Reveals how to profitably trade exotic cross rates among currencies from the Pacific Rim and Middle East
• Explains how to cross over to the growing interbank currency market, and which fundamental and technical analysis techniques specifically apply to it
• Discusses how to easily adapt any current trading system and its input to the profitable cash markets

Book Description

The Complete Arbitrage Deskbook explains every aspect of the types, instruments, trading practices, and opportunities of modern equity arbitrage. It travels beyond U.S. borders to examine the worldwide opportunities inherent in arbitrage activities and demonstrates how to understand and practice equity arbitrage in the global professional environment. Written specifically for traders, risk managers, brokers, regulators, and anyone looking for a comprehensive overview of the field of equity arbitrage, this groundbreaking reference provides:  Details of the financial instruments used in equity arbitrage—stocks, futures, money markets, and indices  Explanations of financial valuation and risk analysis, tailored to the characteristics of the underlying position and market environment  Examples of actual arbitrage situations—presenting a real-life snapshot of equity arbitrage in actionThe Complete Arbitrage Deskbook is the only book to combine operational details with practical analysis of modern equity arbitrage. Concise in explanation yet comprehensive in scope, it provides an integrated overview of both the practices and the possibilities of the modern equity arbitrage marketplace. ... Read more

Reviews (9)

definitely not technical !
I bought this book in order to improve my knowledge on arbitrage. I was expecting to find some practical applications on the market like on (equity) pairs trading, yield curve arbitrage. The book provides a very broad and general overview on the concept of arbitrage and it is a very good book for someone who wants to understand the meaning of arbitrage and how and where he can do it. If you already know what arbitrage is, you dont need to read it.

good introduction, but lack of depth...
This is a broad introduction into equity arbitrage world, but not much depth is provided. There is a better book on risk arb by Moore. I am still looking for a "real" book on statistical arb.

Very comprehensive, but may not suit all time frames
Reverre has written a very comprehensive book, covering all instruments. Quite importantly, he has gone beyond conventional merger arbitrage for the equity markets, and details both fundamentally based equity arbitrage techniques and statistical arbitrage, based on return correlations. The optimal audience is probably financial institutions with a speculative timeframe of a few days and upwards. The outlined methodologies do not include intraday arbitrage; however, the astute trader could probably modify the interday strategies to the intraday trading horizon, by constantly monitoring evolving bid and ask spread differentials at the microscopic level, rather than monitoring conventional interday spreads (without placing too much, if any, emphasis on bid-ask differentials).

For the private trader, the book does provide some food for thought; however, unless a private trader has access to cutting edge technology and the appropriate price feeds, he will not be able to effectively execute too many of the posited strategies.

GREAT BOOK
Got my brother ERNITO this book and he's been arbitragging all over the place!! Great!

Great inside to quantitative financial realm
Great book that I read with smile! The author takes the reader step by step and teach in numerous example of real life, how to calculate the risks, the odds and of couse, find some arbitrage opportunities. The examples are pretty amazing and obviously tolerate for symbolize or numeric brains, as well all varieties of investors. I will consider the book as a must for very serious financial students. Surprisingly, even the last two chapters that dealt with risk arbitrage and pair trading are quite applicable to all invetors even the small ones. The book is great, did I say? ... Read more

Book Description

Every trader will appreciate this reliable, realistic, and systematic approach to trading financial and commodity markets. In a step-by-step manner, the author applies a rigorous mathematical discipline to finanical speculation and explain how to analyze markets, forecast price movements, develop trading strategies, and manage trading capital. Kase also unveils several highly sophisticated indicators that are far more precise than conventional technical indicators. Unlike most books on trading, Trading with the Odds contains complete coverage of money management, including the author's own ``Kase Dev-Stop,'' a highly calibrated money management tool. Trading with the Odds also includes: Uses and abuses of conventional technical analysis; New technical indicators for analyzing markets and entering trades. ... Read more

Reviews (15)

A Serious Professional - Excellent Work!
For any trader looking for real concrete answers and positive direction in technical analysis, this is the book to read! Ms. Kase is able to break down the main elements of the markets into easy to understand terms and logically explains how and why her approach and methods work.

Her impressive successful background and experience cannot be disputed; this shows in her work. There are many weak "black box" systems for sale out there - this is not one of them. The Kase indicators and methods to trading in the markets are not limited to specific periods in time, nor are they limited to specific markets; this is the fundamental basis for their solidity and amazing accuracy.

Her "Dev-Stop" and "PeakOscillator" are excellent tools! I highly recommend this book and the fine work of Ms. Kase to any trader serious about trading using technical indicators.

Statistics approach to the markets - Excellent
I ordered this book and then devoured it twice. I disagree with other inputs that the book does not provide details for the indicators. Ms. Kase is extremely open in disclosing the math and logic behind her technical indicators and her overall approach to the markets via statistics. With little study, one can easily derive her mathematical approach. The chapter explaining standard deviations was worth the price of the book alone. Having taken a post-graduate level statistics class, I found her explanation of standard deviations and statistics to be the best I've ever read to explain the math. You do not need to be a math whiz to understand her approach because of the easy-to-understand explanations. If you trade using standard deviations, this is a "must-read" book.

Good ideas, average book
I like this book because it uses some similar methods that I already incorporate into my trade. Using Elliot Wave to form a possible pattern in the near future and create a bias , and then using an indicator as a filter for an allowance of trade ("permission"). Kase develops a number of oscillators, stop variation and so forth that are custom to her and requires you to buy it from her webpage . That part is a bit annoying, especially when I doubt the indicators are any less useless than all the others out there. Nevertheless, this is a decent effort by a profitable trader and that alone is reason to take a look at it.

Deception Abounds!!
Kase is a very smart woman, unfortunately she has hooked into the hype and "guru" mentality that is the financial community for futures. ...it is a mere proxy for getting you to buy her software. Save your money!!

I agree, listing systems in the back portion of the book showing spectacular profits that are based on trading unrealistic quantities(250) is purely eye candy. I wonder if she pulled some of this some stuff in her "distinguished education" classes.

I was deceived. It's just an advertising folder.
This book by Cynthia Kase is intended to provide you with "the power of statistics to profit in the futures market". To acomplish this, she proposes the "kase permission stochastic" in chapter 4, the "kase peakoscillator", "peakout line" and "kaseCD" in chapter 5, and the "dev-stops" in chapter 6. But the unbelievable is that she hides all the mathematics required to calculate those indicators. Very disappointing. I was deceived. ... Read more

Book Description

The leverage and profit potential associated with options makes them very attractive. But you must be prepared to take the financial risks associated with options in order to reap the rewards.

The Option Traders Guide to Probability, Volatility, and Timing will introduce you to the most important concepts in options trading and provide you with a working knowledge of various options strategies that are appropriate for any given situation. Whether youre a new trader or "returnee" to the options market, this book will not just teach you about options, it will teach you how to successfully trade them.

This comprehensive trading guide includes:

• An overview of the most valuable uses for options
• An introduction to basic option terminology
• An explanation of the most useful trading strategies available, including risk curves, and the conditions to look for when determining which strategies to employ
• Guidelines for exiting a trade at a loss and exiting a trade at a profit
• And much more

In clear, easy-to-follow terms, The Option Traders Guide to Probability, Volatility, and Timing arms you with the facts you need to understand options as well as choose and use profitable options trading strategies. From time decay, market timing, and volatility to naked options, covered calls, and butterfly spreads, this comprehensive guide will help you trade options intelligently and confidently. ... Read more

Book Description

Must reading for anyone thinking about taking the plunge into online day trading

If you’re looking for an honest and authoritative assessment of different trading strategies, risk control techniques, and trading technology, you’ve come to the right place.

"Etzkorn has assembled a cutting-edge blueprint for those looking to move into online trading. Covering everything from trading basics like Level II screens to more advanced technical analysis, What Works in Online Trading provides all the tools to excel."—Henry O. (Hank) Pruden, Ph.D. Professor and Exec. Director, Institute for Technical Market Analysis at Golden Gate University, San Francisco, California

"With a career spanning nearly 15 years in the markets, both as a trader and writer, Mark Etzkorn, now Editor in Chief of Active Trader magazine, has gained the experience and the contacts to provide you with a well-balanced education on trading. Take advantage of the insight presented in this book."—Thom Hartle Editor, eCharts.com (www.echarts.com), and Vice President, Wizard on Wallstreet, Inc. (www.thewow.com) ... Read more

Reviews (4)

Decent book
This is not your ordinary trading book, but one that teaches some real "usable" techniques. The book is broken up into chapters written by different people, so the tone of voice will change frequently. The prize of this book is the Seleznov breakout method, which anyone can use to trade profitably for life. That alone is worth thousands of times the price of this book. I'd recommend this for any serious amateur/semi-pro level short term trader who may be lacking a consistent trading system.

Strategies you can use
I have read many "trading" books, and find this one a pleasant suprise. Section Two includes a good source of trading strategies that work, each one written by people who actually trade. Strategies covered include 1) pure price action by Gary Smith, 2) breakouts by Mark Seleznov, 3) seasonals by Steve Moore, et.al., 4) patterns by Mark Etzkorn, 4) springs and upthrusts by Hank Pruden, 5) Bow Tie patterns by Dave Landry, and a few others.

The strategies include a good summary of setups, entries, stops, and exits. These summaries are general enought that you can program them in most any backtest software you use, not just Tradestation or C++. I use them to backtest with TC2000 and TC Companion.

The book also has very good information on risk mangement, the mechanics of trading and the mindset of different trading styles.

The great thing about this book, is that it is a well integrated compilation of tools and techniques from a variety of well known and/or highly successful traders. The editor did a wonderful job of taking this diverse group and integrating the book into a very logical and usable flow.

While it may be too much for the pure beginner, this book will be most appreciated by the intermediate to advanced trader.

Eclectic, but useful
This is an eclectic book. It doesn't focus on a major theme and is a collection of different people's views plus the author's.

I would not recommend this book for beginners who want to learn the basics because I don't feel the foundation is thorough.

It is a good book for those who want to see how others trade, their diverse techniques, and their opinions on trading. Also of value are the risk management techniques.

A more appropriate title would be: Different techniques by various traders and other trading tips.

Good Book - Like it
This is a good book that tells it like it is. It made me stop and think before I risked my money in the stock market. It was written by a group of writers who seem to know their stuff. It talks about a subject which many day trading books do not! It is risk mgmt. If you wanted to learn about NASDAQ, this is a good book. If you wanted to learn about the NYSE, I would read another one. The thing though is the diveresity in topics covered in this book. I do recommend it to begginers and intermediate traders. Beware that after reading this book, you may end up postponing your plans to trade in a rush. ... Read more

Reviews (40)

Flawed, but superb nonetheless
A very good introduction to derivatives (and even some general finance for novices) and one of the better looks at how degenerate Wall Street culture can be. Though comparisons are frequently made to Liar's Poker, I found FIASCO to be a more useful read, even though it's not quite as funny as Liar's Poker was at its best. The usual tales of arrested development among Wall Street's community are here, but there's a much more gripping and sobering tale of how rapacious greed knows no bounds, and how a large number of actors, including large multinationals and even governments, ultimately pay the price.

Partnoy doesn't tell his story as smoothly as he could, and his narrative sometimes feels larded with anecdotes that don't add much color or relief. He also struggles at times to weigh his role in the big picture. Overall though, he describes his experiences and general Wall Street culture with enough insight that you can feel his disgust, and applaud when he eventually steps away from it all.

A great business book, flaws and all, and a perfect antidote to all the puffery surrounding coverage of financial markets and Wall Street these days. Now when will we see a book of investment banker/derivatives trader jokes, to add to all the great lawyer joke books?

Good, entertaining reading about derivatives
Now that there is a proven market for recent financial history/humor books, after the stunning success of Liars Poker, Predator's Ball and Den of Theives, this book FIASCO is another one of these books that tries to emulate the financial stories from the 1980's.

To my knowledge it is the first book to take on the derivatves trading industry, which is extremely volatile and can be the most risky sector of the financial markets, if you choose to speculate in it. More importantly, there will eventually be a derivatives disaster outside of the Long-term Capital one that occurred a couple of years ago.

This book, as I read it, is highly sensationalist. I have worked in the financial service industry with institutions and chose to leave the industry about a year ago. Here are my thoughts on this book as it relates to the derivatives markets.

1.Mr. Partnoy gives a high level description of some of the transactions that he was involved in

2.He seems to be indicting the market in derivatives, which I disagree on since he is dealing with institutions, which already should have a fiduciary responsibility to their clients. If they are dumb and allow an investment bank to "rips their face off" as Partnoy claims then they shouldn't be 1) in those financial products or (2) doing business with them. It is their choice!

3.From the reading it seemed as though Partnoy doesn't understand his role in the machine known as Wall Street. He is a salesmen, pure and simple. He gets paid to ring the register, nothing more. Other people construct the deals and he is the marketer to clients. If he makes clients money they should come back more and more. Often times, there are MANY other factors that cause business to vary from firm to firm. LOTS of different agendas/goals in mind.

4.Some of his anecdotes, particularly those in which he discusses the atmosphere in an investment bank around bonus time (pg.40 - 42, 202 - 205), are pretty amusing and dead on accurate.

5.The author's descriptions of some of his deals are clearly told from a junior banker's perspective, but they do a good job of putting forth what was being done, how it was being done, what everyone's perceived incentives for the transaction were, the work required to get the deal done, what kind of money, and importantly what kind of fees were involved.

In conclusion, like all books written by former investment bankers the book contains liberally sprinkled anecdotes regarding job interviews from hell, the ridiculous daily escapades that can occur on a trading floor, strip clubs, the lack of personal lives, gambling trips and other stories which could easily have been pulled from the pages of Mr. Lewis's book or "Monkey Business" by Rolfe and Troob. Folks, not all folks on Wall Street are like that but a HUGE percentage are. Nothing wrong with that lifestyle but it is a choice everyone is free to make. Hope this helps everyone.

Here's why derivatives become more and more complex
The book has the merit of going through the most complex derivatives and structured products explaining to a fair extent business motivations behind the deal, an information that is not only confidential, but that constitutes the bread and butter of investment banks.

I loved the book until I got to the last chapter. I would have rated this book ... if it wasn't for this last chapter that the author has added in more recent editions.

I would like to make two comments:
The book tends to explain the concept of present value in simple words, but still wants to go through the most complex derivatives. As a result, certain parts are boring to someone without the financial background, but I would doubt that anyone without the financial background would make it to the second chapter or even be attracted to the book.
My second criticism is regarding the last chapter, "Epilogue". This chapter ruins the book. The author develops an anti-derivatives theory that turns to be amusing. As everyone knows, a tool is neither good nor bad by itself. It is what one achieves with the tool that is good or bad. This principle is also valid for derivatives. It is useless, not to say irritating to go through a list of lawsuits and settlements. This is not proving any further that derivatives are bad or that investment banks are evil.

A lesson in 'let the buyer beware'
Partnoy takes the reader through many real-life examples of how greedy, ignorant people can be taken by clever salesmen. He demonstrates the stupid bravado of clients who, for fear of looking unsophisticated, continue to buy what they do not understand. Incredibly, these people are apparently in charge of many other people's fortunes, retirement incomes and lives and they generally behave as gamblers in a Las Vegas casino.

Buy Liar's Poker instead
Ok let me get this straight. Here is a guy that believes in the efficient market theory but was a salesman/trader. There are tons of conflicts in the book. Partnoy is obviously a professor now. He is practically begging for more regulation in investment banking and feels that financial reporters and professors are not only smarter but deserve more money compared to the investment bankers. He starts out at First Boston and is doing well financially. Then moves to Morgan Stanley and does complicated derivative deals and makes a ton of money. Now a professor and investment banking is pure evil (now that he made a ton of money). Another conflict is Partnoy said he quit Morgan Stanley but on page 277 he writes "...I am not referring what Morgan Stanley did to me." This is where he is talking about another Morgan Stanley employee being fired. I rate this book 2 stars because it was somewhat entertaining but think about this before you buy it. Do you really want to read a book by an author who believes in the efficient market theory but also worked as a salesman/trader? I only bought this book for $3.29 used on amazon.com. I definitely wouldn't recommend paying full price for it. ... Read more

Book Description

"This book will let you see the little-known but effective trading tactics and methods of today's top market makers."--Technical Analysis of Stocks and Commodities

Active traders must get inside the head of the all-important market maker--"The Ax"--before they can begin to truly compete.

The Market Maker's Edge, written by longtime ax Josh Lukeman, is the first inside look at how axes think, what they look for, and, most important, how they can be beat.

Reviews (39)

Informative book
I thought this was an excellent read to for someone like myself who admittedly is just getting started in daytrading. It covers a lot of ground and educated me to among other things, Japanese candlestick charts, how market makers work a big institutional order, how to use oscillators against a price chart, scaled entry and exit techniques. It also continually harps on the need to listen and follow the market rather than try to outguess it. Perhaps to battle hardened trading veterans this is old news, but for someone in my shoes you can learn a lot from this book. I also like his "keep it simple" attitude and the idea the best traders don't get lost in all the data overload, they just execute well on some fairly simple basics. The book is actually not so much about market makers as it is on developing the skills & knowledge base needed to be a sucessful daytrader, so I would have to say it is somewhat mistitled.

Misleading title, lacking actual mechanics of MM trading
Although this book contains useful techniques to increase the novice trader's knowledge about trading, no market maker techniques and strategies are actually even mentioned in the book. In markets such as the NYSE, AMEX, etc. specialists (market makers) are privileged with the knowledge of every single order that comes across for the securities that they are trading. These specialists are then able to use this "information" to trade profitably. A recent WSJ article (March 2001) reports that specialists on the floor of the NYSE are making more money than EVER. On the NASDAQ, market makers use Level II and Level III "information" to make profitable trades. It is widely believed that 95% of market makers NEVER lose money and that 95% of individual investors (wannabe traders) ALWAYS lose money. So what does that mean? Trading is a zero sum game, somebody has to lose (YOU), and somebody has to win (MMs). This book should have talked more about how to trade (and win!) like a market maker, and not about old moving averages, macd, and what nonsense that individual investors (wannabe traders) use to lose money day in and day out. Market makers actually use ma's macd's and other technical signals to find out what the ignorant public is likely to do and use that information to trap and make money off of them. They know where the public puts stop orders, so they'll find an opportunity to dump/short stock, temporarily triggering sell pressure, then accumulate shares as the price drops to cover their shorts. Of course MMs use many other strategies to make money (that I don't know of), but this is an example of the mechanics of trading as an MM and this is their "edge". As none of this crucial information is even mentioned in the book, I feel three stars is actually quite generous.

A Bad Investment
I was hoping to get the inside scoop on how the robber barons, I mean market makers, colluded in nefarious activities to rip off the public. I expected chapters on payment for order flow, trading ahead of large customer orders, surreptitious ECN 100 share orders that refill to infinity, price fixing, holding market orders for 30 minutes then turning the stock price the other way (this actually happened to me once), etc. What I got was a primer for people who don't know what a dead cat bounce or double top is but, nevertheless, think they are smarter than the consensus and want to throw their money at the market.

The section devoted to psychology was excellent. The rest I could have done without. I wonder how market makers can make money nowadays with the spread basically nonexistent in most stocks and the NASD more vigilent on enforcement. Maybe in his next book we will find out.

Not too bad..
Positive aspects of this book:

- provides great common sense / simple ideas regarding some market basics (don't get me wrong, common sense / simplicity is probably one of the keys to becoming a top trader);
- quite well written / organised; and
- covers basically all the key areas a trader would need to know

Problems:

- charts are really badly referenced.. eg some are on other pages, some are incorrectly dated in the text, some are just plain ambiguous when referred to; and
- as an experienced trader, i didn't really learn much especially the commentary from the market maker's point of view, since it is usually quite obvious and common sense based.

Gotta say though, this is a good value book and would be OK to read as one of the beginner texts..

Learn the mind of a market maker
I really liked this book, but I had to ignore significant portions of it to do so. If you parse the new age inspired psychological section and the tepid discussion of technical indicators that are anecdotal in nature and unsupported by research (I have been spoiled by "trading classic chart patterns" and "practical speculation"), then you might like it too. While it may be unfair to compare this book to the others since this book predates them, I will be forever testing what I read by those standards.

I really value his anecdotal explanation of what he did as a market maker and how he traded. I think there is real value to know the mind of the market makers that have to make a living in the market everyday by accepting risk. If you can rework your trading to trade WITH the order flow that market makers have on their desk, it will be a much easier ride. Obviously, there is no way for a third party to exactly know what is on a market makers desk, it may be interpolated from their actions. This book provides a perspective that I have not found in other trading books. ... Read more

Book Description

In recent years, interest-rate modeling has developed rapidly in terms of both practice and theory. The academic and practitioners' communities, however, have not always communicated as productively as would have been desirable. As a result, their research programs have often developed with little constructive interference. In this book, Riccardo Rebonato draws on his academic and professional experience, straddling both sides of the divide to bring together and build on what theory and trading have to offer.

Rebonato begins by presenting the conceptual foundations for the application of the LIBOR market model to the pricing of interest-rate derivatives. Next he treats in great detail the calibration of this model to market prices, asking how possible and advisable it is to enforce a simultaneous fitting to several market observables. He does so with an eye not only to mathematical feasibility but also to financial justification, while devoting special scrutiny to the implications of market incompleteness.

Much of the book concerns an original extension of the LIBOR market model, devised to account for implied volatility smiles. This is done by introducing a stochastic-volatility, displaced-diffusion version of the model. The emphasis again is on the financial justification and on the computational feasibility of the proposed solution to the smile problem. This book is must reading for quantitative researchers in financial houses, sophisticated practitioners in the derivatives area, and students of finance.

... Read more

Reviews (5)

Excellent Treatment of Interest Rate Derivatives
I'm an interest rate professional with more than 10 years of successful pricing and trading experience, and I enjoyed and appreciated Riccardo Rebonato's clear presentation of the pricing of these derivatives. I keep this on my desk as one of my key references.

Another great read is "Credit Derivatives" (2nd Edition) by Tavakoli. The products and their uses are clearly explained, and ties in relative value to the interest rate market. I concede that the models for this product may be trickier because of documentation risk and data issues, but Tavakoli brings clarity to this topic so any interest rate professional can grasp the products and why investors - even hedge funds - are so keen to use them.

why bother
It's hard to believe a reviewer with such a myopic view of Derivatives pricing could go through the whole book, understood it and found time to rate it. Mindblowing waste of time !
Few hundreds years ago, he would have recommended burning the Madmen claiming the earth was round.

Anyway, while Derivatives Pricing achieves little for the welfare of mankind, the recent need for assets based on ever complex market scenarios calls for a more refined pricing methodology. There no supply and demand here, only customers who want hedge/trade/tradge assets /liabilities and traders who need to make sure their firms don't go burst when market move.

The author answers that demand by formatting and publishing his papers.

rebonato does it again
My avid reading kept jostling out superb hot ideas from this book. Rebonato carries out a comprehensive survey of the LIBOR market model. He tackles historical background, calibration, and effective implementation. The later chapters also cover extensions to the LIBOR market model to take account of smile and skew. In particular, there is extensive discussion of the cutting-edge Joshi-Rebonato stochastic-vol, displaced-diffusion LIBOR market model.

If you are working on the pricing of exotic interest rate derivatives, this book is a must buy.

Such pearls of wisdom
I am not qualified to write a review of this book, but neither is the above author as his "review" is nothing more than an uninformed assault on modern finance.

In fact, I submit, that said reviewer knows nothing of finance whatsoever.

(Since this book happens to be well regarded, I'll give it a five)

A theoretical substitute for supply and demand
A complicated body of mathematical theory, developed over a period of about 30 years, addresses the question: how should derivative X be valued if we know certain parameters, especially the volatility of the price of its underlying asset?

But why exactly does the question need answering? After all, the price of X, like that of its underlying, is determined by the point at which the demand for X is equal to the supply of X. One doesn't need a computer for that, one just needs a liquid marketplace. I can look up the price of a share of Microsoft's equity in my daily newspaper. I'm not tempted to develop a body of theory to figure it out, when I can flip through a few pages and find it.

Nowadays, I can also look up the price of a standardized option to buy Microsoft in the newspaper. In 1973, when people like Fischer Black began developing this body of theory, that was not yet the case.

This brings us to the point of my little sermon. The purpose of this body of theory is to produce a price figure in cases where there is not a liquid market for X. The theories answer the question a portfolio manager must often ask himself: if I were able to find a buyer for X, how much could I charge for it?

This book has its moments, but in general I believe this body of theory accomplishes less than its adepts believe. The imagery of a God-like Newton on the dust jacket indicates, I submit, some of the pretentiousness that gets into their ivory towers. ... Read more

Book Description

MARTIN PRING ON TECHNICAL ANALYSIS

McGraw-Hill's Martin Pring on Technical Analysis series introduced individual investors to the value and legitimacy of technical analysis­­helped by the worldrenowned Martin Pring brand. Each book focuses on explaining and demonstrating one of the key tools of technical analysis, while the interactive CD-ROM/workbook format helps traders develop their technical analysis skills.

The Martin Pring on Technical Analysis series is a compelling new chapter in supplying accurate, timely information to technical traders everywhere while, at the same time, introducing traders to the foundations and proven methods of technical analysis.

Today's volatile markets are tailor-made for day and swing traders, who are realizing that the disciplines and precision of technical analysis are the ideal fit for this high-pressure, analytically rigorous form of trading. Technician's Guide to Day and Swing Trading is a complete handbook for day and swing traders looking to improve their understanding of market dynamics, uncover securities with the highest probability of substantial, near-term price movement, and then select profitable entry and exit points with greater precision than that afforded by fundamental analysis alone.

Reviews (2)

Combination Book & Video Presentation
The "Technician's Guide To Day & Swing Trading" by Martin J. Pring has a great CD presentation. The CD presentation covers the same information in the book chapter by chapter. I found the CD presentation much easier to understand than reading the book.

The book combines technical indicators with tips for day and swing trading under different market conditions. Overall, I would highly recommend this combination book and CD to anyone that wants to make money in the stock market. From my own experience, the material sets reasonable expectations and does not make false claims on making easy money in the stock market over a sustained period of time.

Excellent introductory book
Whatever one thinks of technical analysis, even a died-in-the-wool fundamental and value investor trembles at the thought of going against the famous "head-and-shoulders" pattern. This book will give you an excellent background in the basics without overwhelming you with a lot of technical detail. The book discusses everything from moving averages and Bollinger Bands to oscillators such as relative strength, MACD (moving average convergence-divergence), ROC (rate of change), the parabolic indicator, and Pring's own proprietary KST indicator, and so on. Also, the included CD contains a four-hour video presentation on the most important topics. Pring says in the introduction that, in contrast to most CDs in books, which are throw-aways, the CD is actually the most important thing and the book is the "throw-away." In any case, there is a lot of value and information here between the book and the CD and overall this is a fine book to get you to the next level in terms of your trading expertise. ... Read more

Book Description

With the low cost of modern computer hardware and software combined with the communication of price data via satellite, a new and rapidly expanding market of traders using computers has developed. This essential book bridges the gap between the basic instruction that comes with software programs and what a trader actually needs to know to develop and text profitable futures trading system. With specific information on how to set up and use computer-generated technical studies of the most popular indicators, the book includes: How to build a trading system tailored to the reader's specific need; Practical instruction on how to display and analyze technical information; Advice for developing well disciplined money management and risk control strategies; techniques for monitoring a trading system to detect if something has gone wrong before major losses occur. ... Read more

Reviews (6)

Excellent Book
This book gets a 4 stars rating because of its expensive price (the book is only 220 pages and full of empty spaces). But, price is always subjective. You may treat it as the cost of your education.

Anyway, what makes this book so very valuable is the fact that it is easy to read, clear, definitive, and yes it has so many valuable information on what parameters to use for each indicator. How many of you left confused on what parameters should be used? This book will definitely clear away the clouds in your mind.

LeBeau has done extensive research on indicators such as ADX and his insights on other popular indicators are extremely valuable.

The title may be slightly misleading because bulk of the contents is explaining each technical indicator (120 pages), while only 45 pages on explaining how to build a trading system. Yet, it is clear and concise.

The final Chapter is also valuable. It deals with 12 Day Trading systems that the author has selectively chosen out of all day trading ideas he has or has received from other great traders.

ok
If you like this sort of thing sure go for it. I don't but well written

Many concrete tips
I only discoverd this pretty old book recently. I am suprised to find there are quite a lot of trading tips. What make this book stands out of the crowd is the tips were very concrete and practical. The discussions about exit and stop loss are parcticular good. Many other books just said cut the loses quick. How quick? When? This book gives you some hints. The authors also give some tricks in using indicators which I hope I could know earlier.

You should buy this.
I know Charles Lebeau. He does occasional system seminars with my father Dr. Van K. Tharp one of the "Market Wizards" and author of Trade Your Way to Financial Freedom. Charles Lebeau is a great trader. When anyone ask me about a technical indicators book this is the one. Charles is very through. He noticed the best traders in the industry are usually right 30% to 40% of the time. They just cut their losses short and have these huge winners. Charles tested most of the major indicators against random entry i.e. (Flipping a coin) most of them don't do any better. Your exits, psychology, and money management determine if you are making money or not. Don't pay too much attention to your entry. This book explains his results and how to use each indicator. Almost any indicator will work with proper money management. I done well even with flipping a coin and the right stop. The indicator best for you is one you feel comfortable with and will stick with. BUY THIS BOOK and hopefully what I wrote may make some sence to you.

Decent Info on TA
This book is nothing special. I really disagree with the author's interpretation of the ADX indicator. Absolute level is far more important than slope. The day trading systems shown will lead you to the poor house in no time. Presents some novel ideas though. ... Read more

Book Description

An indispensable resource for experienced and novice options traders and hedgers alike Dynamic Option Selection System "Howard Simons offers an in-depth look at options and risk management for the serious market participant. He uses his extensive experience as a trader and trading systems designer to provide ten basic principles that are at the foundation of every successful trading methodology." -Leo Melamed, Chairman Emeritus and Senior Policy Advisor, Chicago Mercantile Exchange; Chairman and CEO, Sakura Dellsher, Inc. "Howard Simons's engaging, colloquial manner makes The Dynamic Option Selection System: Analyzing Markets and Managing Risk an enjoyable read for even the most accomplished professional hedger. His ample use of real-life stories, like parables, illustrate the nuances of trading and the complex and opposing interests of buyers and sellers in the marketplace." -Jack Wing, Executive Director and Professor, Center for Law and Financial Markets, Illinois Institute of Technology "It is the risk of potential reward that motivates many traders in today's markets. Employing Howard's ten simple principles allows us to 'put ourselves in the position where the accidents will work in our favor' so that we can remain 'In the Game'." -Bennett J. Corn, President and CEO, Winnipeg Commodity Exchange; Former President, Coffee, Sugar & Cocoa Exchange, Inc. ... Read more

Reviews (3)

Outstanding Book
Howard Simons' book is a tremendous resource for beginners and market professionals alike.I don't know who this jerk is who panned the book, but he obviously has no idea what he is talking about and ,furthermore, iscompletely incorrect in his criticisms.All of the equations in this bookare correct.

Almost useless and certainly confusing!
I was hoping for better when I obtained the book. I can't believe this guy (the author) went to U.C. Some of the ideas that he presents are interesting and worthwhile to pursue, but he does a poor job of presentingthem. The author took bits from each class that he attended at U.C. andforced them into an incoherent story. Many of the equations that heintroduces are plain wrong, e.g., (2.7), (2.8), etc. Those that are correct(2.11) are presented in a most obtuse way so that one is left wondering:"what is Simons' talking about". For those who are nottechnically inclined this is a travesty. How are they supposed todifferentiate the baloney from the fact. I understand that this is a"traders' book", but there are many better ones out there! Comeon Howard, come on Wiley, you can do better than this.

Excellent.Lots of great insight
Simons book goes beyond the obvious "how do" on options -- which is exactly where more writers leave off.He is able to take very obtuse institutional topics like behavioral analysis and apply them to intermarketanalysis.This is an excellent book for the more sophisticated trader whowants to learn more about options trading in all markets, includingfutures.Great read and well worth the price. ... Read more

Book Description

Praise for Cybernetic Analysis for Stocks and Futures

"If John Ehlers writes it, I read it. He’s that brilliant."
––Larry Williams
trader and author of Commodity Timing

"Cybernetic Analysis is a treasure of new and innovative ideas. John Ehlers has put aside the traditional mathematics of cycles and written a totally readable, thought-provoking, and user-friendly book on new indicators and trading methods. I particularly liked his work on the Fisher Transform, probability distributions, and true lag, which are a great contribution. This is a must for all analysts."
––Perry Kaufman
author of Trading Systems and Methods and A Short Course in Technical Trading

"John Ehlers ranks with Art Merrill as the best quantitative technical analyst of the twentieth and, probably, the twenty-first century. The success of his insight–employing digital signal analysis–is fully demonstrated in this volume, a worthy addition to his earlier, Rocket Science for Traders. For substantive, fully disclosed techniques you can use every day, this material is the best there is."
––John Sweeney
former editor of Technical Analysis of Stocks & Commodities magazine

Breakthrough Trading Tools–and Updated Applications–for Dramatically Increased Forecasting Accuracy in Every Market

Over the past two decades, John Ehlers has built a worldwide following with his unprecedented ability to combine the scientific knowledge of an engineer with the instincts of a top trader. In Cybernetic Analysis for Stocks and Futures, Ehlers–author of the groundbreaking Rocket Science for Traders–introduces serious traders to all-new methods for applying digital signal processing techniques to market forecasting.

Let Ehlers’s latest book show you how to:

• Obtain accurate cycle measurement within five samples
• Make indicators adaptive to market conditions using the measured cycle period
• Sharpen market turning points by manipulating the Probability Distribution Function using the Fisher Transform
• Discern the onset of trend modes and cycle modes
• Generate dependable buy and sell signals in any market

Cybernetic Analysis for Stocks and Futures combines all-new indicators with innovative uses of proven indicators to give you that rare edge that makes trading more pleasurable and profitable, in virtually every market and environment. ... Read more

Reviews (1)

An Outstanding Book On The Market!!
John Ehlers has again written a book that I believe is detined to become an "investment classic".

I have three things I look for in investment books and newsletters:
1) Original Research
2) Explained Methodology
3) Actionable Strategy

Many books deemed "classics" fail to meet one or more of these criteria. Very few meet all three. John Ehlers is rare in achieving all three with his works.

1) Original Research - Original research is key to being successful in the market. A technique that everyone knows is unlikely to work very well for trading or investing. Ehlers is a pioneer in applying advanced cycle measurement theory (MESA - Maximum Entropy Spectral Theory) to the stock market. In Cybernetics he extends and builds on his cycle work by also applying very advanced and sophisticated Digital Signal Processing (DSP) techniques to trading the market. More information on Ehlers MESA work can be found at www.mesasoftware.com. To my knowledge there is no one else using and reporting on the application of DSP to the market.

2) Explained Methodology - In my opinion this is where Ehlers really shines. While these DSP techniques are extremely sophisticated and mathematically intense, Ehlers cuts to the chase in a very concise fashion, explaining the core principles, presenting the math, but leaving the derivations and complication to the textbooks and the engineers. Ehlers makes the techniques acceessible to the trader/investor without trying to turn the reader into an Electrical Engineer.

3) Actionable Strategy - all the tools presented in the book are fully disclosed and accompanied by complete TradeStation Easy Language Code and eSignal Formula Script (EFS). In addition the code can be purchased from www.mesasoftware.com for a modest cost, to save yourself the typing and debugging time (your time is worth something). I use TradeStation. With the fully disclosed code, all of the indicators can be displayed, modified (if desired), combined with one another or other indicators, and your own systems created. Those systems can then be back-tested in TradeStation to see how they performed. They can also be optimized and otherwise worked with to create systems