The Prop Trader's Chronicles: Short-Term Proprietary Trading Strategies for Both Bull and Bear Markets

Overview

"Little did I know that not a single educational product available at the time had prepared me for the world I was about to enter."
—Francis James Chan from The Prop Trader's Chronicles

Today's technology allows traders to make faster, more price-sensitive trades and to better read the flow of market information and transactions—opening the way to a wider variety of short-term trading strategies. Unfortunately, other than actual on-the-job ...

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Overview

"Little did I know that not a single educational product available at the time had prepared me for the world I was about to enter."
—Francis James Chan from The Prop Trader's Chronicles

Today's technology allows traders to make faster, more price-sensitive trades and to better read the flow of market information and transactions—opening the way to a wider variety of short-term trading strategies. Unfortunately, other than actual on-the-job training at a prop trading house, or, for the most intrepid independents, years of costly trial-and-error, there is no reliable source of practical, real-world information on how to capitalize on the rich veins of opportunity opened up by the latest direct access and trading technologies.

. . . Until now, that is.

Both a compelling memoir and a highly instructive how-to, The Prop Trader's Chronicles takes you inside a typical proprietary trading house to paint a vivid picture of the white-knuckle, day-to-day of the prop trader's world. At the same time, it reveals the strategies and techniques used at the most successful firms while showing you how to adapt them to your trading style and long- and short-term goals.

In an engaging narrative featuring a colorful cast of characters, Francis James Chan recounts his evolution from a naive, young retail investor, schooled in the ways of value investing and Modern Portfolio Theory, to a highly respected prop day trader and the innovator behind several trading systems now used at some of the world's top proprietary trading firms. Interweaving memorable scenes from his career, beginning in 2006, at Toronto-based Swift Securities Trading, with plain-English explanations of key terms, concepts and trading strategies, he describes how the most successful traders use direct access technologies, Level II quotes, time & sales feeds, and electronic communication networks (ECNs) to reap massive profits—one penny (or fraction of a penny) at a time.

Offering priceless strategic insights, accessible explanations and a rare glimpse inside the world of proprietary trading, The Prop Trader's Chronicles is must-reading, whether you're an independent trader or investor who'd like to learn more about today's electronic trading systems or an aspiring professional trader looking to acquire a firm foundation in the basics of modern prop trading.

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Product Details

  • ISBN-13: 9781118241080
  • Publisher: Wiley
  • Publication date: 10/30/2012
  • Series: Wiley Trading Series, #545
  • Edition number: 1
  • Pages: 155
  • Product dimensions: 6.36 (w) x 8.98 (h) x 0.71 (d)

Meet the Author

Francis James Chan is a Canadian-born proprietary trader who specializes in U.S. equity markets with experience in index futures, foreign exchange (currencies), and options spreads. His career began at Swift Trade Securities in 2006 where he learned the craft of modern tape reading, double auction market theory in practice, and destination selection techniques. Having lived and worked in both Toronto and New York, the major financial centers of Canada and the United States, he has customized and implemented semi-automated trading systems for branches of notable proprietary trading firms including World Trade Securities, Hold Brothers, and Title Trading. Mr. Chan currently lives in Hong Kong where he trades U.S. stocks for Delta Capital Group and serves as managing director of Atrium Asset Management.

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Table of Contents

Preface ix

CHAPTER 1 Eat a Percentage of What You Kill 1

CHAPTER 2 A Swift Reality Check 9

CHAPTER 3 The Basics of Double Auction Markets in the Real World 21

CHAPTER 4 Introduction to the ECN Platforms and Order Routing 29

CHAPTER 5 Dark Pool Liquidity and Alternative Trading Systems 41

CHAPTER 6 Combining Level 2 and Time & Sales: Reading the Consolidated Tape 47

CHAPTER 7 Week One on Live Trading 55

CHAPTER 8 Losing $30,000 in Under a Minute 71

CHAPTER 9 Trading with a Real Edge 79

CHAPTER 10 The Psychology of Profitable Trading 91

CHAPTER 11 Choosing a Proprietary Trading Firm 107

CHAPTER 12 Strategy Diversification 117

CHAPTER 13 Volatility and the Crash of 2008 127

CHAPTER 14 Building Blocks of Trading Strategies 133

Glossary 141

About the Author 149

Index 151

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