Price: $49.95
User Reviews about Trading Systems Explained: How to Build Reliable Technical Systems
Martin Pring is a prolific technical analyst and is considered a pioneer by many in technical analysis. It was with this in mind that I read a copy of his Trading Systems Explained: How to Build Reliable Technical Systems. A little bit of background about me: I am not a mechanical trader and have never developed a mechanical trading system for my own use, although I do have an interest and basic knowledge of technical analysis which was helpful in understanding the book.
Overall, this book serves as a great starting point for anyone interested in developing a mechanical trading system. What I enjoyed most about the book was that Pring was not afraid to use very specific examples of trading systems. He shows specific uses of moving averages and oscillators and shares his optimized results. The systems he uses are simple and easy to chart, which is encouraging to anyone new to trading. In addition, he gives four specific trading systems based on intermarket relationships. They are systems based on a) Equities versus short term interest rates, b) The CRB versus Gold, c) Bonds versus commodities, and d) Systems using relative strength. Again, in each example he shares his results for each trading system. Pring also uses the beginning of the book to cover the basics that every trader should be familiar with before risking his or her own capital. Mainly, the tools for risk management including stop losses and and the importance of testing systems prior to implementing them.
The primary drawbacks of the book would be that the results are 7-8 years old. It would be nice to see the out of sample returns on the systems Pring uses in the book. In addition, and this is not necessarily a drawback of the book itself, every trader is going to need a robust software platform to test potential systems and should not expect to rely on one book to provide the "holy grail". The book's emphasis in on longer term systems, which I find to be a benefit. However, short term traders should probably look elsewhere. Finally, the book's title states its limitations: the book explains reliable technical trading systems. A beginning trader should seek out other books that have more details on money management (especially as it relates to trade sizes) and the psychology of trading before implementing these systems.
In conclusion, I think Pring's book could serve as a core book for anyone interested in mechanical trading. The book is specific, helping the reader get inside the head of a master technician and to understand the work involved in testing and optimizing trading systems. As with any book, don't rely on it as the "holy grail", but use it to help build your own master trading plan. -- Good Starting Point for Developing a Trading System
"Trading Systems Explained" outlines how to build technical trading systems just as the title suggests. You will need sophisticated software to do this. Some online brokerages provide high level charting but several offer simpler products that aren't as complex. I would imagine, however, most people buy the book to learn about specific trading systems/techniques that are recommended by Mr. Pring - that's why I purchased it. For those looking for stock trading systems, I found three within the course of the 221 pages that were of value.
1. Buying into the S&P and other equity indices when they go above the 10 month moving average and selling when they go below the 10MA provided consistent profits over the long term (tested for 98 year period). Ch. 12
2. Using a 10 day MA and an oscillator made up of the ratio of the present day's close divided by the 10 day MA allows you to take partial profits at earlier points with half of your investment while letting the other half continue for a longer time frame. This is to limit losses more than create additional profits. This produced great success on the NASDAQ and Russell 2000. Ch 14.
3. Comparing the S&P composite to the 3 month commercial paper yield (inverted) and using the 12 month MA for each offers nice results. He was able to improve this system but it created greater volatility and didn't sound like a good choice to make for most people.
There was significant discussion about many other entities such as gold, the pound, T notes, etc. in addition to explanations about the many parameters used in his analyses. Not a bad book but it's limited if you're looking for specific ways to trade equities.
One big positive is the CD-ROM. It covers the entire book and is the easy way to digest it. After watching the PowerPoint like presentation with Mr. Pring's narration, you can go back to the book to review areas that might not be perfectly clear. I really, really like this feature. The book is technical and a valuable source for those learning about mechanical trading methods. -- Valuable info on mechanical trading methods but limited in usable examples
What can you say about Martin Pring? Obviously he is a scrappy, salty-dog of a proessional trader...You will get much real world insight here...And if I can "pay" someone the price of a book to do all that back-testing - I am all for it....Some caveats:
1) He is not the best writer - and some of the charts don't match his verbiage (~10% of time).
2) You should have a good understaning of TA before reading this - so not recommended for beginers.
3) Short-Term traders beware - not much for you to sink your chops into here.
But for a long-term TRADER - this is a ggod read...Many LT systems discussed with excellent results..I plan to look at them further and most likely begin trading a few...Nice thing - these do not require a full-time effort!
Further, he has a nice section on Intermarket systems...You may want to read Murphy's "Intermarket Analysis" first (an awsome read)...Some of Pring's systems bring Murphy's work "to life"
Good luck in your trading!
-Joe
Well I am updating this review on 2/22 because I was not able to verify his back-testing results...Now warented, I can be doing something wrong - but his book looses some points because of the uncertainty in some of his test parameters...Martin - if you are out there you can post to the contrary - I am willing to learn....
So, i found the Gold/CRB system to be awsome...The one I could not verify was the Russle 2000 10 DMA/Oscilator system...I actually got awful results because i believe it traded too much. Again, If I am wrong - happy to hear from Martin.
Still like the book - but it could be much better with more carefull instructions, specifics and editing. -- Mr Scrappy
This book serves well for the absolute beginner. No indicators more complex than MA,CMO, and RSI are used. The books by Pardo and Kaufmann are better options for the ones more serious about trading systems. Also, Quantitative Tradings Systems by Howard Bandy is way better and is priced the same. -- ok book, but very basic
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