
Ask HN:  Good resources for learning+getting into Finance / Trading? - jasonlbaptiste
I'm starting to be intrigued by Finance/Trading/Stock Market, but sadly know nothing about it from a professional perspective.  I don't even know what to ask for, the same way a complete luddite wouldn't know how to ask for more than "What are some good resources to learn to start building computer programs?"  So with that said, where would one start?
======
tptacek
For the love of all that is holy go to Amazon _right now_ and buy a copy of
_Trading and Exchanges: Market Microstructure for Practioners_ by Larry
Harris.

I'm not a trader, or an exchange, but I've been forced to get _very, very_
intimate with the technological plumbing of both, and I've interviewed many of
their developers, and you'll find the architects of match engines, order
routing systems, and clearing backends recommending this book just as much as
I do.

It is _exceedingly_ well written, too.

Investing strategy? Stick with Malkiel, like everyone here is (and is going
to) recommend.

Another suggestion: you can download the recordings of Schiller's Yale
Financial Markets class from iTunes (and from Yale); I listened to it on the
way to/from a client in the suburbs for a couple weeks and enjoyed it,
particularly the guest speakers.

~~~
vecter
My roommate and I are both algorithmic traders. He LOVES that book with deep
sophisticated passion. I haven't read it yet, but he described it to me as a
high level discussion of why and how people trade. It's not necessarily going
to help you be an awesome trader, but it will help you interpret the markets
in a way you've never imagined before.

------
davidw
For some reason, this stuff seems to interest a lot of people here. Me too,
I'll admit. But when I think about it, I come away with a deep suspicion that
"the only way to win is not to play the game". How are you, as an individual,
supposed to come out ahead playing in the same field as people with more
knowledge and skills than you? The only way I can see is to have a 'sure
thing' of some kind. Some sort of knowledge that is not widespread, perhaps to
the point of insider knowledge, which is actually illegal. Perhaps you can
gain that knowledge through lots of research, but even there... how much time
is that going to take and how can you be sure you'll get there faster than
bigger, well connected people and companies? For instance, any sort of
quantifiable data is going to be picked through by someone with a bigger,
faster, more extensive set of algorithms than you can dream up on your own.

Edit: one more thing: with a startup, the opportunity cost is likely your
biggest expense. With trading, you risk losing the money you put in, which,
combined with the time, could really amount to something.

I guess the question is: where is the parallel to startups, where a small
group _can_ do well? Also: is it possible to do well without basically making
a job out of it? Otherwise, perhaps it's best to avoid the whole thing: a few
ETF's and forget about them, and concentrate on doing something you have an
edge at.

~~~
olalonde
I think that many HNers could have an edge in the tech sector. Most of us
could probably not beat the Wall Street guys with analytical trading or
whatever it's called (analyzing charts or detecting some patterns), but we
could certainly predict which tech companies are likely to succeed in the
foreseeable future and which are likely to fail. Does it make sense? I am
totally ignorant about finance/trading, perhaps someone can correct me if I'm
wrong.

~~~
olalonde
It would be much more helpful to tell me why I'm wrong instead of down voting
me...

------
HSO
If you were allowed only the proverbial one book on the island, I'd recommend
Kuznetsov's "The Complete Guide to Capital Markets for Quantitative
Professionals".

It is one of the rare books where the marketing blurb is actually a valid
description: "...a comprehensive resource for readers with a background in
science and technology who want to transfer their skills to the financial
industry."

Instead of further praising it myself, I'll copy a reader review from amazon
that describes how I feel about it: "Rarely a book with a title as ambitious
as "Complete Guide" fulfills its promise. This book does. Big time. It is
written for quantitative professionals (current and prospective) and gives a
bird-view account of all types of activities available to them in a typical
Wall Street firm. The author cleverly avoids pitfalls of the books of this
genre. The book is general enough to cover various settings, but not too
general to become useless. It is detailed enough to provide relevant
information, but not too detailed to become a software manual or a textbook.
The text educates without being annoying and entertains without being
lightweight. Hopefully, readers will appreciate consistency and
appropriateness of the book's style. The author avoids over-fragmentation and
"bulletization": the book consists of 20 chapters without any further
subdivisions. It makes for much smoother reading undistracted by unnecessary
subheadings. After finishing the book one can only marvel at the author's
efficiency, wondering how he could cram so much useful and interesting
information in just 600 pages. "

Kuznetsov also includes a great commented bibliography for further reading. I
know many of the books therein, as well as their competitors, and I can say
his are good recommendations (at least, I would have picked the same in most
cases and found a lot of good reads there too).

------
SkyMarshal
The Hacker News + Slashdot of finance/trading is <http://wilmott.com/>. Check
out the articles, peruse the forums. <http://tickerforum.org> is also superb,
no-bs.

I'd also recommend reading Nassim Taleb's books _Fooled By Randomness_ and
_The Black Swan_ (info at his website <http://fooledbyrandomness.com/>) along
with one he recommends:

 _What I Learned Losing a Million Dollars_

<http://infraredpress.com/>

Those will all teach you what _not_ to do, which is just as, if not more
important in investing and trading than what to do.

~~~
j5eb6ach
SkyMarshall said _Those will all teach you what not to do, which is just as,
if not more important in investing and trading than what to do._

Anyone can notice the successful investment decisions after the fact: buying
Apple Inc on March 6, 2009 at $83.50 or selling BP on January 19, 2010 at
$62.30. No stock or mutual fund can beat the market, each year, over twenty
years. Neither can you.

What you can do is not beat yourself. Within the nuts and bolts of a
portfolio, some trades may cost you dearly in terms of capital gains tax.
Lopsided distribution of your investments in too few asset classes will also
wreck havoc. Avoid these mistakes and you can greatly improve your rate of
return.

<another_shameless_plug> I run the investment website <http://blog.realized-
app.com> and companion web app for getting these decisions right.
</another_shameless_plug>

~~~
SkyMarshal
Yup. And one more consideration to add to that, the math of losing money is
brutal.

For example, say you start trading with $100, have a bad day and take a 50%
loss, and are down to $50. What % gain do you need to get back $100?

Not 50%, as many new investors answer without thinking. To get from $50 back
to $100 requires a 100% gain.

If you only a 25% loss down to $75, you need a 33% gain to get from $75 back
to $100.

If you took a 75% loss to $25, you need a 300% gain to get back to $100.

Given the loss, the odds of getting the gains required to break even are not
good.

Avoiding losses is a huge part of making money trading, which is why I
particularly like both _What I Learned_ and Taleb's stuff.

~~~
dedward
That highlights a fundamental error many people make - you can't average
percentages. A graph of an index fund on a percentage basis for the last 20
years tells you nothing useful (at least not directly).

------
sfalbo
Another good book I've read recently is Liar's Poker by Michael Lewis. I
thought it was a good look into Wall Street and it's culture and how 'the
system' is still susceptible to human judgment and misjudgment.

[http://www.amazon.com/Liars-Poker-Rising-Through-
Wreckage/dp...](http://www.amazon.com/Liars-Poker-Rising-Through-
Wreckage/dp/0140143459)

------
groksalot
It seems to be implied, but I'm not taking anything for granted so my
suggestion is thus: Maths. What do you know about math? Start there. You will
be quickly asea if you are innumerate. Don't even think about reading any of
the suggested literature (some very good suggestions, too...) without a good
grounding in mathematics all the way through the Calculus. Don't make the
mistake of thinking that the maths that may have helped inform any knowledge
of computers and/or computation, will translate cleanly. Understand the maths
first. You will then be able to understand where the authors, such as Michael
Lewis and others, gloss over the mathematics to make the story more palatable
to the 'average reader'. It's not that they do this deliberately, as much as
their editors force them to do so. (Possibly apocryphal story: when Stephen
Hawking submitted a first draft of "A Brief History of Time" it was rejected
on the theory that each equation included in the manuscript would halve the
sales... and he had so many equations that, it was quipped, "people would need
to be paid to read it..." )

As for "what questions to ask for", start with the clear and explicit: "who's
expecting to make money...? And how do they expect to make it?" This will lead
you to interest rates and bond coupons, dividends, etc... But make certain you
understand the math.

~~~
pw
This is true once you get into the mechanics of algorithmic trading, but maths
aren't needed to understand the basics of how markets and trading function. In
fact, one recommendation of _Trading and Exchanges_ starts "Although this book
doesn't contain a single equation...".

------
tmsh
If you know programming, the thing probably is to get intrigued about the
various different areas.

    
    
      The Predictors (Thomas Bass)
      Market Wizards (there's a series)
      When Genius Failed
      Pit Bull (Marty Schwartz)
      Rigged (Mezrich)
      Liar's Poker
      Reminiscences of a Stock Operator
    

These are all basically novels. All basically dated, misguided and incorrect.
But then slowly you might learn to ask the questions that will interest you.

In terms of learning finance or trading, you have to learn that thing in a
spiral (like with programming). Unless you're superhuman. In which case, by
all means, pick up: Fabozzi for bonds, Ross for equities (Corporate Finance is
the name of his book, but he's known for inventing APT, a key model in equity
portfolios -- so unlike a lot of people, he does have a pretty clear sense of
authority) and Hull for options/derivatives, etc.

But remember -- that one thing that is very much alive in the markets is the
invisible hand and specialization. There are even fewer generalists than there
are among professional programmers, etc. Most highly successful people can
summarize their trade by highlighting 1/2 of a sentence in some textbook. (If
they have experience, they might also be able to tell you how 40% in that
textbook relates to or is in some ways similar to that 1/2 of a sentence.)

So it's kinda like that, imho. Good luck. And as I think you mention in one of
your recent posts about being a millionaire, leverage your strengths, etc. If
it becomes a very large interest, probably the most efficient thing is to go
to a prop shop or a large firm and learn from the source.

~~~
tmsh
Also, curiously enough tonight I just learned about reddit's growing way of
organizing free books online. E.g., for econ (some finance):

<http://www.reddit.com/r/econbooks>

------
iamelgringo
<shameless plug> I run <http://Newsley.com>. We're pivoting away from social
news we're rebuilding the back end to turn it into a real time search engine
for financial and economic news. The front page is populated with financial
news and macro economic articles of interest </shameless plug>

~~~
aohtsab
uh oh. Also, you have DEBUG = TRUE in your Django settings.

~~~
iamelgringo
That's awkward.

I made some changes late last night, and messed up when I pushed them to the
server.

It's fixed.

------
nunb
Check out this video:

[http://python.mirocommunity.org/video/1531/pycon-2010-python...](http://python.mirocommunity.org/video/1531/pycon-2010-python-
in-quantitat)

Doing a search for "Panel data" yields some interesting courses.

MIT's OCW and Apple U should also have lots of material.

As far as books go, I've been recommended "Lords of Finance" "Too Big to Fail"
and "My Life as a Quant".

------
jeromec
1\. Caveat: the market can teach _expensive_ unforgiving lessons. After you've
read, learned and developed your own theories/strategies _test_ them with
practice and see if you're any good - consistently. Use a free service like
vse.marketwatch.com or wallstreetsurvivor.com, or just pen and pad for several
weeks/months before actually trading. This becomes more important depending on
your level of aggression/risk.

2\. Always define how much you're comfortable losing _before_ trading. (time
frames for entering/exiting trades helps too) The more you adhere to this the
better you can control emotion-based trade decisions, and that equals money in
this game.

------
theoreticalee
for technical analysis: 1)World famous Dan Zanger (turned ~30k into 42 million
in 2 years) <http://chartpattern.com/>

for options 1) cboe.com has the best online education around (free too)..
including video cast and other media

2) option training: dan sheridan: <http://www.sheridanmentoring.com/> , mark:
<http://www.option911.com/> both Dan and mark used to work w/ the najarien
brother's in their huge market making firm on the CBOE.. both know their stuff
backwords and forwards

~~~
diziet
Wait, did you seriously recommend technical analysis?

~~~
theoreticalee
Yup, all my hedge fund friends that actually make money use it :p

~~~
_delirium
Isn't technical analysis basically a kind of stripped-down version of
quantitative analysis focusing on relatively easy to compute and/or eyeball
trend statistics?

~~~
SkyMarshal
It's more like using statistical regression methods and Microsoft Paint to
find patterns in tea leaves, but as long as you use disciplined money
management and avoid major losses you can still make money at it.

The only thing I know about Dan Zanger was when he was featured in one of the
trading magazines many years ago, in an article discussing his feat. He
accomplished it during the 90s tech boom, when you couldn't lose money even if
you tried. No idea what he did after that.

------
rajesht
I really liked following two books on the subject of investing 1\. A Random
walk across wall street 2\. Intelligent Investor

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elecengin
Since "Finance/Trading/Stock Market" is a bit of a wide net to cast, I will
offer my opinion on a small chunk. To understanding modern automated US equity
trading, it pays off to understand the basic mechanics underpinning the
market, and get a feel for the opportunities this structure presents.

I would suggest reading up on the national market structure, and reading
"Inside the Black Box" by Narang for a good overview of how automated trading
is structured.

------
steveplace
You're going to have to figure out what style of trading fits your
personality. Value, growth, income; long term, swing, daytrading; futures,
stock, options, forex; quant or discretionary; and so on. There are some
quintessential resources for each "bucket" which are fairly well known--
Graham, Livermore, O'Neil-- I'd start with the classics and go deeper into
what your interested.

I do this for a living, if you want to talk more just google my name

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haliax
I'd advise you to read Fortune's Formula, by William Poundstone first. It's
entertaining, an easy read, and you'll pick up loads of information that will
be useful going forward.

After that:

If you want to invest on fundamentals go for both of Graham&Dodd (aka the
bible) and Seth Klarman's margin of safety
(<http://www.my10000dollars.com/MS.pdf>).

For technical/quant trading both Trading+Exchanges and Volatility Trading are
good books to read. Then look up some of the articles on wilmott.com and
papers about things like Universal Portfolios or Neural Networks for trading
on places like CiteSeer. Poking around Interactive Brokers' documentation
isn't a bad idea either.

Hope this helps!

------
notaddicted
Collapsed investment bank Bear Stearns' required reading list for interns:
[http://paul.kedrosky.com/archives/2007/09/09/bears_stearns_r...](http://paul.kedrosky.com/archives/2007/09/09/bears_stearns_r.html)

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mikebmassey
I'd start even simpler than a lot of these other comments. I've worked in the
investment space for years and there are many, many great books to read. In
fact, there are just too many of them.

Start of with a book by Peter Lynch - Probably "One up Wall Street". He's a
legendary investor. After that, go a bit more broad - "A Random Walk Down Wall
Street". After you're done with that, try learning about fundamental and
technical analysis. They are 2 very different things, but are the basis for
valuation/pricing.

When you're done with that, you'll know more than most.

------
dustydean
Simple yet effective:

Turn on CNBC while you're working at your computer. Make note of any
unfamiliar words or phrases and Google them throughout the day.

Do this for several months and you'll be surprised at what you're learning.

~~~
SkyMarshal
Replace CNBC with Bloomberg and I'd agree. I was forced to work in a small
trading floor with CNBC on all day every for almost a year, and those people
are absolute morons, spin doctors, and cheerleaders.

Basically they take John Madden/Dick Vitale announcing style (but not the
substance) and apply it to market news. You might learn a few terms from them,
but I'm convinced CNBC exists for no other reason than to lure the next marks
and suckers into the market, intentionally misinform them, hype them up, and
then get kickbacks from the sharks and traders who take their money.

Bloomberg is much higher quality.

~~~
dustydean
Thanks for the tip! I'll check out Bloomberg this week.

------
dedward
I'm late to the thread - but along with all the good advice here, my advice
would be "don't actually trade any REAL money for the next 5 or 6 years, just
sock your cash away in safe banks and currencies". Practice, study, try out
your algorithms and systems, and watch what unfolds for the next half decade
before you start trying to game the market - because it's very possible that
those with liquidity a few years from now will be the ones in the best
position to reap huge rewards.

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icodemyownshit
There is no one like the fly <http://ibankcoin.com/flyblog/>

------
aohtsab
I am also getting into trading, and I've been frequenting fool.com — they have
great beginner/novice resources.

------
dirtae
Check out the comments on this thread:

<http://news.ycombinator.com/item?id=1241165>

I would start by reading The Intelligent Investor by Ben Graham. If you like
it, then move on to Margin of Safety by Seth Klarman. (I have a value
investing bias.)

------
dkasper
Check out <http://www.investimonials.com> It's like Yelp for finance related
stuff. It's a great place to find reviews of brokers, books, newsletters,
blogs, etc.

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iterationx
Arbitrage Theory in Continuous Time (Oxford Finance Series)
<http://www.amazon.com/gp/product/0199271267/ref=oss_product>

------
thornad
<http://video.google.com/videoplay?docid=5352106773770802849>

