Introduction Algorithmic Trading (also called automated trading, black-box trading, or algo-trading) uses a computer program that follows a defined set of instructions (an algorithm) to place a trade. The trade, in theory, can generate profits at a speed and frequency that is impossible for a human trader. The defined sets of instructions are based on timing, price, quantity, or any mathematical model. Apart from profit opportunities for the trader, algo-trading renders markets more liquid and trading more systematic by ruling out the impact of human emotions on trading activities.
Top 12 Essential Beginner Books for Algorithmic Trading
1. LIAR’S POKER by MICHAEL LEWIS Liar's Poker is a non-fiction, semi-autobiographical book by Michael Lewis describing the author's experiences as a bond salesman on Wall Street during the late 1980s.
FLASH BOYS by MICHAEL LEWIS This book tells about high-frequency trading in a simple and understandable language. The author talks about such trifles as sigma and its role in trading, a hilarious story about how banks paid big money to have their “black boxes” closer to the server than from competitors and they would get the advantage in centisecond.
ALGORITHMIC TRADING AND DMA by BARRY JOHNSON The most right book about algorithmic trading in its strictest sense is algorithmic execution of orders. It has a standing offer on the table for reading to anyone who is engaged in the development of algorithmic engines in brokerage offices, investment banks, or under the investor’s wing.
HIGH-FREQUENCY TRADING by IRENE ALDRIDGE There are general characteristics of the markets, the basics of the microstructure of the market, the classification of high-frequency algorithms, risk management, backtesting, and analysis of the programs.Everything is on a technical level, to understand what is useful; you have to wade through a bunch of generalized information.
QUANTITATIVE TRADING by ERNIE CHAN This book deals with automated trading in general, without focusing on high-frequency strategies.However, the separation of algorithms is carried out â€“ pulsed-type (momentum) and bidirectional (mean reverting), which is essential for HFT.
BUYING AND SELLING VOLATILITY by KEVIN B. CONNOLLY Those who want to build automatic algorithms using options are going to need a good understanding of the strategy of trading volatility.In the book, you will find all the theoretical foundations of this type of trading, and there is enough information in it to build HFT algorithms.
ART OF WAR by SUN TZU The book is the perfect guide to beat the opponents in various conflict situations. The main idea of the book is that only methods of warfare change, the nature of man and the laws of war remain unchanged. According to the author, the art of war is based on the two most important instruments of warfare, which are tactics and strategies, applying which you will win before the “boiling point” of the conflict.
WAY OF TURTLE by CURTIS FAITH Richard Dennis was the initiator of the experiment. Two traders in the 1980s argued with each other for $ 1, which can be taken from the street person (“turtle”) and teach him to trade.There was a contest of 1200 people. Of these, 24 people were selected. They were showed one model. For two years, these people earned 200 million dollars, in 1986, not having a computer, not having almost nothing. All transactions are carried out by voice only.The model involved a trade in which it was possible to be wrong 11 months a year, 10% of positive inputs, and they earned them.
TRAINING WITH DR. EDLER It is just a bible for traders.The book consists of three sections describing various aspects of trading. The primary focus of the book is money management and the psychology of trading.You will also learn how to control your risks in the market.You can find detailed answers to popular questions of newbies in trading.
10. THE PETER LYNCH APPROACH by PETER LYNCH The book was published in 1989, which is why some ideas described in it have become rather old. However, it is an excellent resource of information, especially for those who invest in cryptocurrency playing a long game. The book will teach how to recognize the future market winners. Peter Lynch preferred the humanities before heading the Fidelity Magellan Fund, one of the most successful investment funds in the history of financial markets.Experience in the study of the humanities allowed Lynch to try himself in several directions, developing the ability to multidisciplinary thinking. He was the first to find stocks with the potential for future long-term growth.Of course, much has changed since then, and Lynch himself admits that he is a technophobe and hates computers, without which it is impossible to imagine modern trading.
11. TECHNICAL ANALYSIS AND STOCK MARKET by RICHARD
SCHABACKER Another book that was released long before cryptocurrency. It is worth noting that this is the only technical analysis book recommended by Peter Brandt, a legendary trader with 40 yearsâ€™ experience.Although Brandt himself has strained relations with some representatives of the crypto-community, who consider him a deceiver, because he called the crypt market a bubble, Brandt correctly predicted the growth of Bitcoin when his course was only around $ 800.He managed to sell his cryptocurrency at the rate of $ 18,000 for Bitcoin, proving the power of classic charting.
12. INSIDER BUY SUPERSTOCKS by JESSIE STINE Stine was able to make a fortune in a regular market, which is rarely found outside of modern forex and crypto banking. In this book, the author describes in detail the psychology of traders during the first ups and downs and examines the problems of emotional volatility associated with huge risks. Stine also provides examples of graphs in which he considers the work of both fundamental and technical analysis in practice. In conclusion, the author also tells how to sell assets, which are not so much devoted to financial publications.
CONCLUSION All this books contains best material over the study of subject. One can learn a lot from this books, and need to practice it to be perfect in achieving results. This way you can have the knowledge and use the studies in practical life situations. TECHMOON
BEST BOOKS ON ALGORITHMIC TRADING, AND LEARNING AND GAINING PRACTICAL KNOWLEDGE