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

Money "is" made between events that "should" happen

"Most decisions should probably be made with somewhere around 70% of the information you wish you had."

– Jeff Bezos

The reality of short selling is that money is made in the time between events that "should" happen. Let me explain what I mean. When stocks reach unsustainable levels, they "should" go down. When companies are in complete disarray, they "should" go under. Between the fatal moment of implosion in orbit like an old satellite and the languishing purgatory of zombie stocks, they were not magically beamed down by some market Scottie. Between the time when they "should" go down and the time when they "should" go bust, the reality is that they actually "did" come down a long way, over a long time, unnoticed, unappreciated, but still in a very profitable way to a few savvy short sellers.

They faded from...