Ask HN: Good resources for learning+getting into Finance / Trading? • Hacker News Board

Re: Ask HN: Good resources for learning+getting into Finance / Trading?

#51

Post by pw » Tue, Jun 22, 2010, 7:42 AM UTC

groksalot wrote: post #35

It seems to be implied, but I'm not taking anything for granted so my suggestion is thus: Maths. What do you know about math? Start there. You will be quickly asea if you are innumerate. Don't even think about reading any of the suggested literature (some very good suggestions, too...) without a good grounding in mathematics all the way through the Calculus. Don't make the mistake of thinking that the maths that may…

This is true once you get into the mechanics of algorithmic trading, but maths aren't needed to understand the basics of how markets and trading function. In fact, one recommendation of Trading and Exchanges starts "Although this book doesn't contain a single equation...".

Re: Ask HN: Good resources for learning+getting into Finance / Trading?

#52

Post by dedward » Mon, Jun 28, 2010, 11:54 PM UTC

SkyMarshal wrote: post #47

j5eb6ach wrote: post #43

Earlier quoted context omitted.

SkyMarshall said Those will all teach you what not to do, which is just as, if not more important in investing and trading than what to do. Anyone can notice the successful investment decisions after the fact: buying Apple Inc on March 6, 2009 at $83.50 or selling BP on January 19, 2010 at $62.30. No stock or mutual fund can beat the market, each year, over twenty years. Neither can you. What you can do is not beat y…

Yup. And one more consideration to add to that, the math of losing money is brutal. For example, say you start trading with $100, have a bad day and take a 50% loss, and are down to $50. What % gain do you need to get back $100? Not 50%, as many new investors answer without thinking. To get from $50 back to $100 requires a 100% gain. If you only a 25% loss down to $75, you need a 33% gain to get from $75 back to $100…

That highlights a fundamental error many people make - you can't average percentages. A graph of an index fund on a percentage basis for the last 20 years tells you nothing useful (at least not directly).

Re: Ask HN: Good resources for learning+getting into Finance / Trading?

#53

Post by dedward » Mon, Jun 28, 2010, 11:57 PM UTC

I'm late to the thread - but along with all the good advice here, my advice would be "don't actually trade any REAL money for the next 5 or 6 years, just sock your cash away in safe banks and currencies". Practice, study, try out your algorithms and systems, and watch what unfolds for the next half decade before you start trying to game the market - because it's very possible that those with liquidity a few years from now will be the ones in the best position to reap huge rewards.