Not another one! My fifth book...

Well yes, I am pleased to announce that as of this week I completed final proof reading of my new book "The Art And Science of Trading"(AAST). It joins the list of my existing books with their  own acronyms: Systematic Trading (ST), Smart Portfolios (SP), Leveraged Trading (LT) and Advanced Futures Trading Strategies (AFTS).

Due to the inherent delays involved in global dead tree supply chains the book won't actually be officially published until 1st December, although if you pre-order now you will probably get your copy a little earlier. 

I also approved the cover art, which looks like this:

Briefly, what is this book about?

This is effectively four books at once (I know, cool trick right?!). Firstly, it effectively forms a counterpart to my third book Leveraged Trading (LT). LT is an 'introductory' book to trading properly with leveraged instruments; things like futures or spreadbets. Essentially, AAST is the delta-one counterpart to LT. It's an introductory level to trading properly without leverage - so where you can't take on bigger positions than your account value, nor can you go short. It covers the classic delta one instruments used by retail traders: shares, ETFs and ..... crypto (I'll address that particular block chain sized elephant in a moment).

Note: Yes I did cover shares and ETFs in 'Smart Portfolios' (book#2) but from an investment rather than a trading perspective.

Secondly, it's the most introductory book I've ever written, and aimed at more of a mass market (is that because I'm trying to educate as many people as possible, or is it because I want to sell a gazillion copies rather than modest five figures.... well a little of both). So there is a lot more hand holding than there is even in Leveraged Trading; plus more careful explanations of why you can't trust 'gurus', and I've  also stripped back my usual introductory trend trading strategy to the simplest possible rule set it can be without being dangerous (essentially using Occams razor to the point where you are about to cut yourself with it, but not quite). For example, the trend rule - which you can have for free as loyal readers of this blog - is 'has the price gone up or down'?

Thirdly, and this is in the title, I think there is a bunch of 'science' that all traders need to know about, even retail traders - nay, especially retail traders. And actually I go into far more detail about explaining this intuitively than I have in any of my previous books. Familiar concepts like proper robust backtesting, judging outcomes by distributional uncertainty, and of course my old mate the Kelly criteria are all in here. These are all explained in an accessible way from first principles.

Finally, and this is also in the title, it's about the art and science of trading. I came up with the idea of semi-automatic trading in my 1st book, and I used it again in my 3rd. So if you are one of those gifted people who can intuitively predict price direction better than a systematic method, that's lovely, but you should still do that within a systematic framework for position sizing and risk management. Essentially by putting a set of science based guard rails around your trading methods, you will make the most of a good method, and protect yourself from the worst excesses of a bad one. This also means someone using a crap 'systematic' method like <insert obscure japanese sounding charting method name here> won't lose too much money, and if they're lucky enough might even make some.

The relationship between my 5 books is explained quite well on this web page https://www.systematicmoney.org/which-book-should-i-buy where you can find this neat diagram:

A brief aside: Crypto. Rob-seriously?

Let me quote from page 25 of AAST:

I should state my own prejudices up front: I am not a fan of cryptocurrencies, which are used primarily for gambling and criminal activities such as money laundering, and which consume a great deal of electrical power, with obvious implications for the climate crisis. In an ideal world I would ignore them completely. Although I am retained as a research advisor for a crypto hedge fund, and I trade Bitcoin and Ethereum futures, I do not hold any crypto in my personal portfolio.

But the point of this book is to guide traders into using certain scientific rules to reduce their chances of losing money, and nobody needs those rules more than those trading crypto. The message of this book as it pertains to crypto can be summarised as ‘I would not do this stupid thing if I were you, but if you insist, this is the least stupid way to do it.’

(is this because I'm trying to educate as many crypto people as possible, or is it because putting crypto on the cover will increase the sales by a factor of a gazillion.... well a little of both)

Do I need to buy it?

If you're reading this blog, there's a good chance you tick all of these boxes:

• I consider myself something of a financial expert, actually
• I only trade leveraged instruments, like futures
• I'm a fully systematic trader, not interested in this 'intuitive trading' sounds like woke nonsense to me.
• I've already read your other books and I have a firm grasp on the concepts, thanks very much

So if you tick all of these boxes then you probably don't need to buy this book. Of course you may still want to, because:

• You have already derived $x000's or even $x,000,000's of benefit from my existing books and blog at minimal cost, and chucking me another $x0 seems only fair
• My writing style is so awesome that people will happily read my books for fun
• It's probably worth being reminded of certain basic concepts and ideas
• You never know, there could even be some deep insight within the book that even you haven't thought of before. As one reviewer said "Despite being an experienced market practitioner, this book really gave me new ideas when it comes to trading". Thanks Saeed, the next burger is on me!
• You have a friend or relative who doesn't tick all these boxes, but has an interest in trading. And... Christmas is coming!

However if you are someone who ticks one or more of these boxes:

• Is a relative beginner at this trading nonsense;
• Is unfamiliar with, or struggled to understand, books like Leveraged Trading, Systematic Trading and Advanced Futures Trading Strategies;
• Trades non leveraged instruments like ETFs, stocks or crypto;
• Trades in a non systematic way

... then I'd suggest that you should seriously consider a purchase of AAST. The worst outcome would be that you'd read it, decided trading isn't as easy as you thought, and then decide not to trade. You'd be out the price of a book rather than losing hundreds or thousands of <insert local currency unit here>. 

Of course if you do decide to trade, then owning a copy of AAST will seriously improve your chances of successful trading. Naturally, actually reading and doing what it suggests will help even more.

Has anyone read this nonsense, and liked it?

Four people! And only three of them are mates of mine! Here are some nice things they wrote without me having to give them money (or got AI to write, I didn't ask):

Saeed Amen, Author of Trading Thalesians; Co founder Turnleaf Analytics (ex Lehmans FX, ex Thalesians)

I’ve always enjoyed Rob’s trading books, because they’re always very practical. This new book is useful both for novice and experienced traders. I like the way he creates a framework in the book for managing risk that is applicable to both discretionary and systematic traders. Crucially he takes you through the whole lifecycle of a trade, from position sizing to execution and the broader question of how to manage different assets in a portfolio. Despite being an experienced market practitioner, the book really gave me new ideas when it comes to trading.

Andreas F. Clenow, Chief Investment Officer and author of multiple financial bestsellers (his words!)

Rob Carver is an outlier among financial authors. He has managed billions at tier one institutions and he is a world class quant professional. Seeing his name on the cover of a book should be enough to buy it. I have all his previous books in my office and reference them often in my own work. This time, Rob brings his institutional perspective to tackle equities, ETFs, and crypto in the same structured and well-researched manner as his previous work. In particular, I enjoyed his ruthless analysis of crypto returns, day trading, and the separation of internet hype from the brutal reality of real-world, professional trading. I am clearing space on my office shelf for another book which I will read and reference many times, and so should you.

Alex Spiroglou, CFTe, Dip(TA) ATAA Semi-systematic macro trader

A highly insightful and practical read for anyone looking to improve their trading. Rob Carver cuts through the noise and shares a thoughtful approach grounded in experience, discipline and real-world market understanding. The book offers plenty to reflect on, whatever your trading style or experience level.

Tony Guida, Head of Quant Research AtonRa Partners

In a few words: I really liked it. It reads well and fast, and you got the ordering right. In my world almost all the effort goes into the opening signal and almost all the P&L comes from what surrounds it. Very few authors are willing to say that out loud, because "here is how to size a position" sells fewer books than "here is how to pick winners". The costs chapter and the trade management rules are what I would hand to a junior on day one. A few other things I liked. Chapter 12, on adjusting positions and stops when risk changes, is the chapter almost nobody writes and everybody needs. The forecast-based stop losses in 13 are the right way round: the stop follows the conviction rather than a round number on a chart. And I appreciated that the diversification section treat it as an operational problem, instrument substitution, and portfolio construction, not as a slogan about not putting eggs in one basket.

I should declare my bias. I would have happily read another two hundred page of formulas and python. But I am clearly not the main target here, and that is the point. Putting it in spreadsheets is what makes the rules usable by the people who need them, and the rules do not get worse for being written in Excel.

My humble endorsement: “A discretionary trader and a systematic PM can read this book and end up agreeing with each other, which almost never happens unless the building is on fire or bonuses are at stake. Carver's argument is that you can keep your intuition for choosing what to trade, provided everything about how you trade it follows rules. Thirty years of experience compressed into procedures that fit in a spreadsheet, with no equations and no black boxes. He has written something a beginner can act on and a professional cannot argue with.”

Seems appropriate to say thank you

Yes, I do have a list of thank yous:

• The panel of Elite Traders who helped me pierce my Anglocentric bubble and get a better understanding of the international landscape for retail traders: Alexey Chursanov, ‘Elder’, ‘Kernfusion’, Matthijs Vákár, Professor Paul Calluzzo, Goran Peretin, Dr Sebastian Schmidt, and Vikram Mundkur.
• A couple of key crypto people from Twitter/X: Crunchster and Scott Phillips. They didn't know they were contributing to a book but their posts were very helpful in my research process.
• My sister Vicki and my 'sister' Debbie who forced me to write their names into the book despite me insisting it wasn't a novel. This isn't really a thank you, it's documentary evidence I will need for the police report.
• The expert reading panel: Burak Yenigun (of Stylus Digital) and Riccardo Ronco (of recently retired). This is an unpaid position requiring many hours of reading the first draft of my prose. Which is awful. I can barely read it myself. And the only reward is a signed copy and passive aggressive responses from me ignoring nearly all their comments. Why do they do it? To get this brief mention in a blog post only 50 people will read? I guess.
• Various random people from my publisher Harriman house: Myles, Victoria, both Charlottes, Sally, Lucy and Suzanne
• Editors: Comissioning - Craig Pearce, Copy - Dominic Fenn, Proof - Amy Webber (who also as assistant editor has assidously guided this book on it's journey from concept to physical copies). This is a paid position requiring many hours of reading the 2nd, 3rd, 4th..... 89th drafts of my prose. And you can't get AI to do it. Because AI would be like "This is great! Just needs more em-dashes and it would be perfect".
• The people who live in my house with me (some or all of the time) and put up with all my nonsense.

Is that it then? No more books? <slightly pleading voice>

Ha! If only. No, I'm currently in the early stages of thinking about book#6 which will provisionally be  a relatively advanced book about backtesting. And I'll probably stick AI on the cover to get some more sales.

Note: for those that don't understand the 'not another one' it's a UK political reference to 'Brenda from Bristol' 

https://www.reuters.com/article/world/us/not-another-one-brenda-from-bristol-speaks-for-britons-sick-of-elections-idUSKBN17L1FX/

To see Brenda live, watch the first 5 seconds of this video: