As its name suggests, The Encyclopedia of Trading Strategies contains descriptions of many trading strategies. But, for an encyclopedia, it is structured quite unconventionally and also, its purpose is different from that of a normal encyclopedia.
The book is divided into three big parts — introduction, entries, and exits. The book starts off with rather extensive but outdated information on testing data, testing simulators, optimization software, and statistics used in trading strategies' analysis.
The second part is the biggest one and consists of several chapters, which group together several trading strategies that share some common idea, like seasonality or breakouts. Each chapter presents to a reader a broad description of the trading methods, the source code of the C++ program that was used to test the methods, and the backtesting results (both
The third part is a study of exits, which is very similar to the part on entries, except that much fewer strategies are tested.
The purpose of the book is not to give a reader a selection of trading strategies where they would pick the best one and then would trade it for huge profits. No, the authors do not even mention such a strategy in the book. The purpose is to show the following:
Together, Jeffrey Owen Katz and Donna McCormick authored many articles on trading strategies and their tests since early 90s. You might know them if you read Technical Analysis of Stocks and Commodities or Virtual Trading magazines back then. Basically, this book is a more
In addition to being a financial trader, Jeffrey Katz and Donna McCormick are also avid astronomers. This might explain some of the nontraditional trading ideas tested in The Encyclopedia of Trading Strategies.
Despite the disadvantages of this book that are evident from its age (published in 2000) and abundant online reviews, one could point out the following advantages that outweigh all the bad about The Encyclopedia of Trading Strategies:
Perhaps, you have your own expectations from this book, but we would like to present the following list of the things you won't find in the book, to not let it disappoint you:
It would be great to find a similar book but with a more recent test data and with a focus on Forex. The transaction costs and slippage used in The Encyclopedia of Trading Strategies have little to do with the actual situation in currencies. Until then, the work by Katz and McCormick can be recommended to both new and experienced FX traders.
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