The Trading Game: Playing by the Numbers to Make Millions
Clear, concise, and practical, The Trading Game shows you how to harness the power of money management for any trading method “The goal of most futures traders is to make a million dollars as fast and as painlessly as possible. Unfortunately, few traders achieve this goal. In The Trading Game, Ryan Jones demonstrates how the proper application of his new money management strategy, Fixed Ratio Trading, can enable an average trading system to earn spectacular profits. My advice? Don’t trade until you’ve spent as much time and effort on money management as you’ve spent on developing your entry and exit rules.” —Tom Bierovic, Manager System Trading & Development Education, Omega Research, Inc. “Ryan Jones is on the cutting edge of the most important element in the art of speculation—be it stocks or commodities—money management.” —Larry Williams, trader and author Long-Term Secrets to Shot-Term Trading “Money management is the most overlooked part of trading but is the key to building enormous wealth. Ryan Jones first overviews classical methods and then discusses a new paradigm which, combined with a reliable trading method, can lead to financial security.” —Murray Ruggiero, President Ruggiero & Associates; contributing editor, Futures magazine “At last—a money management book that is not intimidating or boring. Ryan Jones has made a complex subject easier to understand and follow. I am especially excited for all independent traders.” —Glen Ring, President, Glen Ring Enterprises editor of the widely respected View on Futures newsletter “Ryan Jones has always been one of the most innovative traders and creative minds in the industry. With the writing of The Trading Game: Playing by the Numbers to Make Millions, he has taken the science of money management and risk control to another level. I wholeheartedly endorse his efforts and recommend this new work required reading to anyone either just entering the trading arena, or already participating in it.” —Ted Tesser, CPA and author, The Trader’s Tax Survival Guide
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(out of 31 reviews)
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Review by for The Trading Game: Playing by the Numbers to Make Millions
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Unfortunately Ryan did a poor job with this one. This is not necessarily the easiest subject to explain, but it is the most important one for trading. There are several instances in his spreadsheets and examples where he isn’t clear, and makes some incorrect comparisons. Mostly where he compares trading one contract vs. fixed ratio and fractional ratio – in relation to the drawdowns in each example. Run the numbers in a sim. There are a couple other areas that I take serious issue with as well. One is porfolio weighting. Again he compares apples and oranges with his example of trading 1 S&P and 1 Corn vs. 1 S&P and 3 Corn. He states there is no reason to equalize positions and goes to great lengths to prove his point. He doesn’t take into account the portfolio size and the unequal affect on gains and losses that come from not equalizing the positions, the point of which is supposed to be to reduce drawdowns and risk while increasing profits. Of course in hindsight having a heavier weighting in the S&P improved profits, (which he tries to use as an example to prove his point) but you don’t know that ahead of time. Equalizing the positions equalizes the diversification and smoothes the equity curve. It is fine to overweight a certain market if you are doing it for a reason, like you expect it to outperform, but don’t claim that it doesn’t matter and there’s no reason to do it. Another thing he says is that Risk of Ruin isn’t important “it just is.” I can’t even comment on that one. This same type of thing, faulty reasoning, happens in several areas. If you are already familiar with money management and are sharp enough to catch these you might learn something. As for the people complaining about his system, he includes a basic trend following system, it’s a very good one. This is obvious to anyone that has done any mechanical system testing/trading. And his money management techniques are good too. No complaints there.Larry Williams has a couple recent stock and futures books out. Both books have the same chapter on money management where he briefly explains “optimal F” (fixed fraction) and Jones’ “fixed ratio”. Then adds his own preference. One of those might be a better read. And Dr.Tharps “Trade Your Way To Financial Freedom” does a good job with position sizing. I’d read these first. And if you do get this one, make sure you run your own spread sheets.
Review by CD for The Trading Game: Playing by the Numbers to Make Millions
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If I had to recommend one book to read on trading, this would have to be it. While it does not cover every aspect of trading, it is the only book I have read that can actually deliver what the title implies. The author discusses all of the popular methods of money management in use by private and professional traders alike. There are times when the detailed and exhaustive examples can make the most enthusiastic reader bleary eyed. However, this is done for the benefit of the reader. The author is convinced that his method of money management is superior to traditional methods and takes pains to prove this with a comprehensive and step by step analysis of each. Additionally, he describes and gives the rules to a simple trading system that actually works better than most of the high-priced systems for sales in popular trading magazines. I have personnally back tested the system oulined in the book using his “Fixed Ratio” money management approach using TradeStation 2000i. I optimized the system parameters to a small degree to reflect them as a function of the respective markets in which it was being tested but still attempting to avoid curve-fitted results (i.e. the moving-average parameters in the SF may have been 24 and 5 days as opposed to them being 21 and 3 days in bond futures). I used this method with a stop-loss (also being a function of the market) in the following markets: TQ, SF, ED, ES and DX. I chose these markets for their relatively low margin requirements. Tested over the past four years yielded approximately $1,400,000. The author claims that if one has a system that generates at least $20,000 per year, that that amount can be parlayed into $1,000,000 in five years. Judging from the results from my own tests, this book delivers that and then some. What is interesting about Fixed Ratio money management is that it is independent of the system being used. You can add any number of systems and any number of markets and as long as the systems all generate a profit, the results just keep getting better and better. This is the result of allowing your equity to grow geometrically, with only a modest increase in your risk. You actually stand to increase your return by several hundred percent while you increase your risk by a few meager percentage points. If you are prepared psychologically to trade futures, equities or options then I urge you to purchase this book. Otherwise, get yourself mentally ready to trade by reading “The Disciplined Trader,” by Mark Douglas (books by Ari Kiev and Van K. Tharp are also good) then return to this book/subject. It is revolutionary.
Review by Charles T. Dowis for The Trading Game: Playing by the Numbers to Make Millions
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I read this book with mixed feelings. First, after looking at some of the reviews, I wondered if we were reading the same book. Now I know why — the writing is terrible. Some sections I had to read 3 or 4 times before I even began to understood what he was talking abou. It does not surprise me that several reviewers obviously were clueless on what he was talking about. This book desperately needs a re-work. My second reaction was “Finally a system for the small accounts”. Most of the money systems I’ve seen are designed for major accounts (e.g. “don’t risk more than 2% on a trade” — yeah, right!) The trader with $10,000 or less should find a very workable system to manage his account. His system handles important issues of how to build equity on the way up, and another section on handling downturns, including streaks. He gives a good discussion on other money management techniques as well.Wow!It will take several…. several readings for it to make sense, but, believe me, it is well worth the effort. Hopefully we can look forward to a second edition that makes sense.
Review by CD for The Trading Game: Playing by the Numbers to Make Millions
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While the book quite exhaustively covers every popular method of money management, it’s main focus is on the “Fixed Ratio” method. Since the author of the book is the creator of this method, his material is the only reliable source from which it can be learned. Proper money management will make you a millionaire much faster than any one system will – and that is what this book teaches. The balance between the ability to grow your money geometrically and maintain a comfortable risk level is what makes Fixed Ratio so superior to methods lile fixed fractional and Optimal f. For the price of the book, more valuable information cannot be had. (and you get a pretty robust system to boot!)
Review by for The Trading Game: Playing by the Numbers to Make Millions
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Requiring the same amount of per contract profit to move from trading 25 contracts to 26 as it takes to move from trading 1 contract to 2, is ridiculous. The percentage change in position sizes when adding 1 more contract to X number that you already have is not the same as doubling your position size from 1 contract to 2! And it should not require the same amount of per-contract profit.Jones uses some “smoke and mirrors” to make his approach look much better than it is. He starts by using enormous leverage when his example account is small, then scales back the leverage as the account grows. He waits until he has scaled back the leverage to show what happens to the account when it encounters some losing trades. He doesn’t show that, had these losses occurred when the account was smaller, they’d have wiped out the account due to the high leverage employed with the small account!There are a bunch of logical and mathematical errors in this book. All in all, it is a joke. I’m surprised and disappointed that it ever made it to publication…