Introduction to Algo Trading
by Kevin J. Davey
22 min 25 sec
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Book Summary
Kevin J. Davey's Introduction to Algo Trading guides retail traders into systematic trading. It covers mindset shifts, strategy building, platform selection, and testing; showing how rules beat emotion in markets. Davey draws from his futures trading wins to teach building robust systems that compete with pros.
Key Concepts:
Davey contrasts discretionary, algorithmic, and hybrid trading, pushing for rule-based approaches to remove emotion. He details basics like entry/exit rules, position sizing, and back testing. Challenges include overfitting and constant tweaks; solutions involve out-of-sample tests and walk-forward analysis. Platforms like TradeStation get reviewed for charting, automation, and community support. Build simple breakouts, factor in slippage, and manage expectations for long-term edges.
Why It’s a Must-Read:
Traders get actionable steps to systematize trades, test ideas historically, automate execution, diversify strategies. Real-world: Apply to stocks by running multiple systems across tickers, cutting risk in volatile sessions. Key takeaway: Discipline wins; start small, test rigorously, adapt without over-optimizing.
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