Ralph Vince "Mathematics of Capital Management". Ralph Vince and his books - Mathematics of capital management and a new approach to capital management

It will be about one trick that Ralph Vince describes in his book "Mathematics of Capital Management"

Suppose you want to invest part of the money, say 100,000 rubles and the question arises how to do it in an optimal way. There are two options. Option One - buy stock for all the money, which is called here and now, at the price offered by the market. The second option is to divide all the money into several equal parts and buy parts for some time. For example, divided 100,000 to 10 parts and buy every month in the amount of 10,000. It is assumed that you have no information about a short-term trend in the market, the market can equally concern both up and down. Question: Which option to choose as the most profitable? Does one of the options have an advantage on average?

Ralph Vince's answer can be found in the "Mathematics Management Mathematics" in the section "Averaging Prices for the purchase and sale of shares." The answer of Ralph Vince is unequivocal in favor of the second option (options for the purchase of parts) and ... incorrect!

Those who wish to figure out, strongly recommend it to read this small in 2 pages of the master from start to the end and trace the entire chain of speculation, which leads to an erroneous conclusion. All the luxury is that Ralph Vince offers us technique from the category how to make money in the game in Orlyanku. In the Orlyhanka, because he justifies his method on the absolutely random market, where, in his own words: "There is no dependence in monthly price changes." It is concluded that on average (applotically) for such a market, the purchase option of parts will be advantage. So, gentlemen, this is the greatest delusion! No need to be an expert on probability theory and statistics to understand this. It is understood that in principle there is no such strategy, the method, technicians who would have an advantage, shifting the mat. Waiting for winning a positive side when playing an eye or random money wandering. Once again we will emphasize that here we are talking about the market for which you do not have any information about price change, i.e. 50% by 50% price will go up or down - that's all you know. Suppose you are not a trader, do not possess technical analysis, do not read news, but you want to invest in an optimal way. So Ralph Vince is just for you and offers averaging technique, and I say that it will not work. That is, the exhaust of this technique will be exactly the same as any other technique: whether it is to buy all the stocks at a day, when you decide to invest, or on the day that an astrological forecast indicated, or whether to invest parts for any conceivable function or algorithm from the calendar day ...

The meaning of the two-dimensional model of the investment portfolio is a harmonious risk ratio to which the merchant goes, and the profits he can receive. It is this model that is actively used since the middle of the twentieth century. According to this model, the investor determines which risk will be acceptable for it, and thus gets the necessary income. However, the methods that the risk was assessed were rather dubious. After all, it is no secret that sometimes quite large companies suffered collapse, even if the shocks were not so big and large.

The book "A new approach to capital management" describes a method for managing investment positions, which, according to the author, is much more effective. Thanks to this method, it is possible to replace the risk, and instead, pay more attention to the development of scenarios, for which the cost of the portfolio can change. Thus, the investor will not be discouraged, whatever the situation is in the market. He will be able to eliminate changes in the value of assets that are sufficiently dangerous at the right time. In addition, this system will ensure the distribution of profits that best contributes to the achievement of the purpose of each particular investor. That is, it will make it possible not to act on the principle of normal distribution of profits.

The Wine Ralph system is quite flexible, and therefore its application will make it possible to obtain results, much higher than those that give the usual ways of capital management. And this is despite the fact that the remaining conditions remain equal. The book "The new approach to capital management" will be useful to read professionals in the field of investment, representatives of banking structures and risk managers. The theory of Ralph Wine for private investors, who have the right to choose the degree of risk and income independently.

Imagine the case that today you got huge losses, as a result your account is empty, the broker asks what you will do with this big debit on your account. You are caught by surprise, as they did not expect it to happen today. Try to imagine yourself in such a situation. What would you do? Take the paper leaf and write down in detail the sequence of your actions. It is better to do it now, so that later, when this happens, you did not have to return to it. Try to think if there are any questions that you could solve now in order to continue to protect yourself from large losses. Do not read the book "Mathematics of Capital Management", close it and think about these questions for some time. After all, the task is not to make you fatalists. In order to earn in the Forex market, there is a lot of optimism, which will help pass through all the inevitable expressive periods of damages. The purpose of the book is to make you think about the scenario of the worst case and think about the action plan in advance if such a scenario occurs. After all, nothing will help you if you independently create a foundation that will rely on.

Contents of the Book of Ralph Wince "Mathematics Capital Management"

• 1. Introduction
• 2. Empirical methods
• 3. Characteristics of trade in fixed fractions and useful methods
• 4. Parametric optimal F during normal distribution
• 5. Parametric methods for other distributions
• 6. Introduction to Capital Management Methods using a parametric approach while simultaneous trade in several positions
• 7. Correlations and Effective Border
• 8. Portfolio geometry
• 9. Risk Management
• 10. Conclusion

The readers adopted this book exceeded the most bold expectations of the author. It was written in the sake of popularizing the concept of optimal f and in order to explain to its reader interrelation of it with a portfolio theory. This book is written about the mechanisms. The author, together with the reader, takes special tools and builds more powerful and improved tools - mechanisms. In them, the amount of parts is less than one. At the same time, the author with the reader will try to understand how such mechanisms are arranged, which before that time was an unknown value.

At the same time, in the book "Mathematics of Capital Management" the author tries to resist the detailed consideration of all the mechanisms, because it would make this work simply impossible. For example, arguing how you can build a jet engine, you can discuss all the details in the most detail, and it will not be necessary to teach chemistry to find out how reactive fuel works. Approximately the same can be said about this book. After all, it is completely in many areas, including statistics, affecting the computational methods.

Statistics and Mathematics Capital Management

In his work, Vince suggests that it is not trying to teach the reader to mathematics. Of course, if it does not have a direct need for the text to be understood correctly. However, this material is written in such a way that if statistics and computing methods are already available, this work will be fully understood. If the discipline data is not available to you, then the loss was washed away if it would generally be very insignificant. At the same time, each reader can not just understand, but also to use for the most part of the material disclosed in the book.

As in his book, Ralph Vince Mathematics of capital management, in statistics, certain mathematical functions are periodically used in statistics. They are very often referred to as the functions of mathematical physics. Such functions are beyond the limits of the material, which is currently being considered. Remove them to the very depths can be outside the framework of this book. And this is possible far from the direction of this work. This book, first of all, not mathematical physics, but management of traders.

Successful trader Ralph Vince "Mathematics of Capital Management"

Ralph tried to respond to deeper themes affected in this book in their other works. All the fullness of information, he outlined in them with the fact that his readers would know all the functions of mathematical physics and computational methods. At the same time, it is necessary to be good money managers or trader. Moreover, he sets out his opinion that there is no direct dependence between the extraction of income on the market and the mind. This Vince wanted to say that the mind does not always define a good trader. But what makes the trader successful, this is a tough discipline and mental strength that outweigh the mind is much.

Each successful trader, believes in his book Ralph Vince Mathematics of capital management, which the author met ever had the experience of a large loss at least once. A good trader is distinguished by one common characteristic, one denominator. This distinguishes it from all others and is a characteristic feature. After all, it is a good trader, in whatever gloomy state there is no situation, will take a telephone tube and place a warrant. Such an act is possible when a person has much greater qualities than a simple knowledge of statistics and computational methods.