Algorithmic Trading and DMA: An Introduction to Direct Access Trading Strategies

Algorithmic Trading and DMA

Algorithmic Trading and DMA: An Introduction to Direct Access Trading Strategies
By Barry Johnson

Readers of Barry Johnson’s Algorithmic Trading and DMA have raved about this book, lavishing it with mostly five-star reviews so we were eager to get our hands on a copy and share our verdict.

Divided into fifteen sections, Johnson provides a comprehensive ‘introduction’ which includes;

  • Overview
  • Market Microstructure
  • World Markets
  • Orders
  • Algorithm Overview
  • Transaction Costs
  • Optimal Trading Strategies
  • Order Placement
  • Execution Tactics
  • Enhancing Trading Strategies
  • Infrastructure Requirements
  • Advanced Trading Strategies
  • Multi-Asset Trading
  • News
  • Data-Mining and Artificial Intelligence.

For those who are new to the subject or this type of trading, Johnson starts from scratch with explanations of Direct Market Access (DMA) and all other information covered, paying equal attention to both buyers and sellers and sowing seeds of reassurance with theoretical, almost academic examples. Drawn examples and graphs are included to support the reader as they absorb the simplified yet thorough information. Johnson doesn’t keep all of the glory as mathematical knowledge fountain for himself either, providing plenty of links for further exploration throughout the book. The Appendices provided are great accompanying tools for digging deeper also.

A resounding comment and one that I’ve found to be true also, is that Algorithmic Trading and DMA is so enjoyable to read that it is “like a novel” as one reader puts it. Readability, entertainment and the enjoyment-factor  is not something necessarily associated with books of our beloved genre so we understand if you have looks of scepticism right now! We were suspicious too, then we found ourselves getting through the book much quicker than expected – feel free to try the first few chapters and report back!

Johnson seems to have included everything that may be deemed useful, including the human element required to succeed in trading – the instinct if you like. Even though the book is largely about giving people the tools they need to build their own systems and predict/automate the feasibility of trades, the communication is clear and presented in a way that helps us to easily imagine how to implement the information with the largely instinctive methods many trades from other sub-fields habitually rely on.

Johnson’s background is more related to the technology required to build a profitable system rather than how to work it so the knowledge he shares is especially interesting and most likely explains the heavy use of theoretical examples and lots of data; however overall beginners and intermediates wouldn’t lack for much at all when relying on Algorithmic Trading and DMA to accelerate their understanding.

Then book stays topical and current, not just with a nod to the industry and its myriad changes and developments but also adds to the conversation around user-driven methods, whereby traders are increasingly springing up from non-financial backgrounds and attempting a home-based outfit. It seems a challenging task to cater for this brand of readers as well as those who are more seasoned and hope to pick up something new, however Johnson tackles the issues across the board with aplomb.

Review by Andrea Photiou

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