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

Overcoming learned helplessness

"Remember no man is really defeated unless he is discouraged."

– Bruce Lee, Chinese American philosopher

After a few unsuccessful attempts at ball trapping shooting stars and chewing dry bones, market participants find themselves at a loss, financially and emotionally. No battle plan, however well drafted, ever survived its first encounter with the enemy. The short side turns into an endless source of frustration, its logic defying logic.

Dogs are a man's best friend and unfortunately one of his favorite lab test subjects too. In a famous experiment, Martin Seligman, pioneer of the positive psychology movement, deprived dogs of the chance of reward. Randomness in the attribution of reward further deprived test dogs of hope. They gradually became apathetic. They stopped trying even when they had a clear chance of success. They just passed up "free-money" trades. Those dogs had learned helplessness...