The Laws Of Trading

Why Trading? Why Laws?

Trading is the act of buying and selling. Whenever you buy groceries, you are trading. Purchasing a car, ordering dinner, selling an item on eBay—all trades. And the difference between good traders and bad traders is the quality of their decision-making.

Financial markets are the most competitive arena on earth. To trade successfully, you need a deep understanding of the underlying principles. You need to know the universal Laws Of Trading.

Armed with these laws, you will become a formidable decision-maker. React in real-time with the appropriate decision. Leverage your unique skills and knowledge. Make profitable trades in your personal, professional, and financial life. Think like a trader.


 

The Laws

1. Know why you’re doing the trade before you trade.

Motivation

2. You’re never happy with the amount you traded.

Adverse Selection

3. Take only the risks you’re paid to take. Hedge the others.

Risk

4. Put on a risk using the most liquid instrument for that risk.

Liquidity

5. If you can't explain your edge in five minutes, you don't have a very good one.

Edge

6. The model expresses the edge.

Models

7. If your costs seem negligible relative to your edge, you're wrong about at least one of them.

Costs

8. Just because something has never happened doesn't mean it can't.

Possibility

9. Working to align everyone’s interests is time well-spent.

Alignment

10. If you don’t master technology and data, you're losing to someone who does.

Technology

11. If you're not getting better, you're getting worse.

Adaptation

Media

"A fun and fascinating guide to the world of trading, ranging effortlessly from the fine details to the broad lessons we can all learn when we think like a trader."

Tim Harford, author of The Undercover Economist and Fifty Things That Made The Modern Economy

"Do we need another book about how to beat the stock market written by an arrogant trader? I sure don't. But, hey, wait, it turns out this is not about beating the market. Mr Lebron is applying his experiences to actual real life, helping you with insights into how you can balance risk and reward, how to get to know yourself and your motivations. Entertainingly written as well as insightful."

Dr. Paul Wilmott, creator of wilmott.com and the Certificate in Quantitative Finance

“I predict this book will quickly become a minor classic.”

Aaron Brown, author of The Poker Face of Wall Street
and former head of risk at AQR


 

Upcoming Events

  • University of Waterloo, mid-June
  • Qualcomm, July 17 2019

 


 

About the Author

AGUSTIN LEBRON began his career as a trader and researcher at Jane Street Capital, one of the largest market-making firms in the world. Over the years he traded many kinds of securities: equities, futures, commodities, options, and an assortment of other derivatives, and has created, developed and implemented several successful trading strategies.

He currently runs the consulting firm Essilen Research, where he is dedicated to helping clients integrate modern decision-making approaches in their business.

Agustin Lebron