Add training workflow, datasets, and runbook
This commit is contained in:
@@ -0,0 +1,47 @@
|
||||
271Chapter seventeen: A summary an d concluding comments
|
||||
3. Enable processing of a hitherto unimaginable degree. An unlimited number of stocks
|
||||
may be analyzed. Choosing those to trade with a computer will be dealt with in
|
||||
Chapter 21, Selection of Stocks to Chart.
|
||||
4. Allow the investor to trade on ECNs or in electronic marketplaces where there are no
|
||||
pit traders or locals to fiddle with prices.
|
||||
Advancements in investment technology, part 1:
|
||||
developments in finance theory and practice
|
||||
Numerous pernicious and useless inventions, services, and products litter the internet
|
||||
and the financial industry marketplace; but modern finance theory and technology are
|
||||
important and must be taken into consideration by the general investor. This chapter will
|
||||
explore the minimum the moderately advanced investor needs to know about advances
|
||||
in theory and practice. And it will point the reader to further resources if he desires to
|
||||
continue more advanced study.
|
||||
Instruments of limited (or non) availability during the time of Edwards and Magee
|
||||
included exchange traded options on stocks, futures on averages and indexes, options
|
||||
on futures and indexes, and securitized indexes and averages, as a partial list of only the
|
||||
most important instruments. Undoubtedly, one of the most important developments of
|
||||
the modern era is the creation of trading instruments that allow the investor to trade and
|
||||
hedge the major indexes. Of these, the instruments created by the Chicago Board of Trade
|
||||
(CBOT
|
||||
®) are of singular importance. These are the CBOT® DJIASM Futures and the CBOT®
|
||||
DJIASM Futures Options, which are discussed in greater detail at the end of this chapter.
|
||||
(EN9: Not so singular, perhaps. Probably of greater importance to readers of this book are the AMEX
|
||||
iShares, particularly DIA, SPY, and QQQ, which are instruments (ETFs) that offer the investor
|
||||
direct participation in the major indexes as though they were stocks.)
|
||||
General developments of great importance in finance theory and practice are found in
|
||||
the following sections.
|
||||
Options
|
||||
From the pivotal moment in 1973 when Fischer Black (friend and college classmate) and his
|
||||
partner, Myron Scholes, published their—excuse the usage—paradigm-setting Model, the
|
||||
options and derivatives markets have grown from negligible to trillions of dollars a year.
|
||||
The investor who is not informed about options is playing with half a deck. The subject,
|
||||
however, is beyond the scope of this book, which hopes only to offer some perspective on
|
||||
the subject and guides to the further study necessary for most traders and many investors.
|
||||
Something in the neighborhood of 30% or more of options expire worthless. This is
|
||||
probably the most important fact to know about options. (There is a rule of thumb about
|
||||
options called the 60–30–10 rule: 60% are closed out before expiration, 30% are “long at
|
||||
expiration,” meaning they are worthless, and 10% are exercised.) Another fact to know
|
||||
about options occurred in the Reagan Crash of 1987; the money puts bought at $0.625 on
|
||||
October 16 were worth hundreds of dollars on October 19—if you could get the broker to
|
||||
pick up the telephone and trade them. (The editor had a client at Options Research, Inc.
|
||||
during that time who lost $57 million in three days and almost brought down a major
|
||||
Chicago bank; he had sold too many naked puts.)
|
||||
The most sophisticated and skilled traders in the world make their livings (quite
|
||||
sumptuous livings, thank you) trading options. Educated estimates have been made that
|
||||
as many as 90% of retail options traders lose money. That combined with the fact that by far
|
||||
Reference in New Issue
Block a user