Book Image

Algorithmic Short Selling with Python

By : Laurent Bernut
Book Image

Algorithmic Short Selling with Python

By: Laurent Bernut

Overview of this book

If you are in the long/short business, learning how to sell short is not a choice. Short selling is the key to raising assets under management. This book will help you demystify and hone the short selling craft, providing Python source code to construct a robust long/short portfolio. It discusses fundamental and advanced trading concepts from the perspective of a veteran short seller. This book will take you on a journey from an idea (“buy bullish stocks, sell bearish ones”) to becoming part of the elite club of long/short hedge fund algorithmic traders. You’ll explore key concepts such as trading psychology, trading edge, regime definition, signal processing, position sizing, risk management, and asset allocation, one obstacle at a time. Along the way, you’ll will discover simple methods to consistently generate investment ideas, and consider variables that impact returns, volatility, and overall attractiveness of returns. By the end of this book, you’ll not only become familiar with some of the most sophisticated concepts in capital markets, but also have Python source code to construct a long/short product that investors are bound to find attractive.
Table of Contents (17 chapters)
14
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15
Index

Is the stock market art or science?

"When bankers get together for dinner, they discuss art. When artists get together for dinner, they discuss money."

– Oscar Wilde

Once upon a time, Lorenzo de Medici praised Michelangelo for the quality of his craftsmanship. Il Divino replied to il Magnifico, "it appears as art only to those who have not worked hard enough to see the craft."

Every market participant has wondered whether the stock market was more of an art than science. The assumption behind art is the notion of innate talent. Some naturals are born gifted. Some aren't, and I am one of those. If talent is innate, then we mere mortals have to resign ourselves that we simply do not have it. However, talent is often an excuse for laziness. Michael Jordan was not a natural. He was thrown out of his basketball team, so he trained and would not go home until he landed 100 free throws. Landed 98? Oops. Do it again. This way, skills...