A Man for All Markets (Edward O. Thorp)

Trader's Library #3 · Speculation classics and biographies. The mathematician who beat the casino and the market explains what a real edge is.

Author: Edward O. Thorp · Original: A Man for All Markets · Year: 2017 · Usefulness for traders: ★★★★★

What it's about

The autobiography of the mathematician who first beat the casinos by counting cards at blackjack and then founded one of the first quantitative funds. Thorp also describes how he spotted Madoff's Ponzi scheme long before it collapsed.

What it gives a trader

The best book on what an edge really is: a small, measurable imbalance in the odds that you have to exploit thousands of times, with sensible bet sizes, to survive the bad streaks. Thorp shows the link between gambling and the market directly: in both, the one who calculates wins, not the one who guesses.

Lessons for traders

• an edge is a statistical advantage, not certainty on a single bet
• bet size determines survival as much as accuracy does
• if a result looks too good, check where it comes from (Madoff)
• judging by outcomes kills a good process (outcome bias, Atlas of biases #28)

What to watch out for

The mathematical passages are lightly presented but need attention. Part of the book is childhood memories.

Discussion

The discussion takes place in Hetman Capital Club (in Polish). Join the discussion in the Club →

Navigation

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Educational content, not investment advice. The book description is my own summary and assessment, not quotations. Edition details were checked in catalogues and bookshops, and where there was doubt I said so plainly.