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My last book giveaway was Tim Sykes book “An American Hedge Fund” so with this new book it seems we are continuing a “hedge fund” theme …
“Hedge Fund Trading Secrets Revealed” by Robert ‘the Hawk’ Dorfman.
Dorfman runs the SilverHawk Fund out of Costa Rica and before that used to work for Jim Mellancamp of Genie One Capital Management. I couldn’t find much on Mellancamp or Genie One but I suppose most hedge funds are fairly secretive.
The first few chapters of the book tell the story of how Dorfman came from humble roots in Cranston, Rhode Island, thanks to a fight in a restaurant was able to attend Brown University and from there, discovered Wall Street.
If you are new to trading or investing, the book contains a lot of basic to intermediate information that you’ll find useful. I don’t think there are many “secrets” revealed about hedge funds, other than they know more and have more resources than the average retail trader.
Still even someone who is experienced and relatively knowledgeable will be able to pick up a few things here and there. For example, Dorfman talks about Thompson Financial’s AutEx, an institutional liquidity pool I wasn’t familiar with.
As well, he outlines his basic strategy:
“…we enter trades based on these institutional trading firms’ actions as reported by Thomson Financial’s incredible global, pre-trade execution and communications network called AutEx, which provides us with an in-depth view of the moves being made by over 800 institutional traders…”
His basic thesis is that “the price simply will not make a sustained move without the power of institutional buying or selling”. Which is hard to argue with. He describes in some detail how a hypthetical order from an institutional trader will be pounced on by others and result in the price being pushed against the order.
Unfortunately, there is a chapter devoted to the “Universal Law of Attraction“. I’m more than skeptical about this New Age phenomena. I don’t think it has any validity but the good news is that in this book it is only a small part and can be easily ignored.
Most importantly, there is significant portions of the book devoted to capital allocation and risk management. He talks about maximum position allocation (MPA) and describes how to calculate it. As well he discusses scaled entry for an order (that is increasing size as the trade goes your way). On the whole, while important, it is fairly basic stuff. If you are curious about similar topics of risk management and capital allocation, check out the “Way of the Turtle” by Curtis Faith.
Dorfman’s book will be a disappointment if you naively believe its title. But if you dedicated to learning more about trading and especially about how large institutional traders operate, you’ll pick up some good information.
If you would like the chance to receive a copy of Robert Dorfman’s book for free, drop me a comment below. Make sure you write your email correctly (so I can contact you in case you win the random draw!).
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