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- 2006-8-22
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To the administrator
Please do not delete - relevant to this forum only!
To the administrator. The following comments are specifically for the zero risk trading strategy book, not for the Random Walk Down Wall Street.
I apologize for not being able to type in Chinese. I got a copy of this book through mail order and read through it. I am working in the financial services section in Toronto Canada. I can see the value of the author's preposition. His trading strategy is certainly intriguing and has practical application. His trading strategy is based on the random walk theory, which was made popular by Burton Malkiel in his landmark book, ""A Random Walk Down Wall Street". In summary, random walk says that stocks take a random and unpredictable path. The chance of a stock's future price going up is the same as it going down. A follower of random walk believes it is impossible to outperform the market without assuming additional risk. In his book, Malkiel preaches that both technical analysis and fundamental analysis are largely a waste of time and are still unproven in outperforming the markets. Malkiel's theory has somewhat been proved to be right as most active fund managers actually underperform the market. This explains why the index funds have become so popular in recent years.
Without the benefits of actually applying the trading strategy proposed by the author in his book, I felt that this trading strategy could work with the aid of good data and analytical tool. Trading on probability (similar to the author's zero risk trading method) is a proved and tried strategy commonly used in the western financial market. The rationale of this strategy is similar to the author's rationale in his book. As far as I know, a number of funds have their own proprietary trading platforms using statistics. Although I did not know the details, one thing in common in these platforms is that they are making money based on probability.
Of course, a probability trading platform is not bullet proof as catastrophic events tend to distort the historical probability pattern. For example, Russian's default of its debt obligations in 1997 triggered the collapse of the then famous hedge fund Long Term Capital, which was earning stellar returns prior to this event using its proprietary trading platform.
The key to the author's trading theory is identifying the stocks moving at the right path (i.e., the stocks in the B path in the author's book). I think this would increase the probability of making money significantly. I disagree with some of the comments on this board regarding the absolute probability (i.e., the chance of red and black showing up is 50%/50% in any given throw of dice). The reason is simple: the real life events are not as randomly distributed as throwing a dice as the real life events have fat tails in a normal distribution model, which means that positive movements at time n tend to reinforce and crease the same movement at time n+1. In other words, if a stock travels in the B path, the probability of going up is higher than the probability of going down.
Overall, I felt that this is a good book of a general nature. I am looking forward to reading the author's other books in the series with more in-depth analysis and practical trading methods. |
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楼主
发表于 2006-8-22 17:35