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Predatory Trading and Crowded Exits

New thinking on market volatility

By James Clunie

Paperback £34.99 / $57.00
eBook £30.99 / $36.99
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Predatory Trading and Crowded Exits

New thinking on market volatility

By James Clunie

Jacket text

In this book, James Clunie looks at a series of market phenomena that involve security prices moving temporarily away from their ‘fair value’, creating opportunities for traders to profit (and the risk of losses for the unaware).

These phenomena have only recently begun to be well understood and key among them are those known as ‘predatory trading’ and ‘crowded exits’. The author examines these on three levels. Firstly, he describes the basic principles and theory behind each phenomenon, to build a solid framework for the way a trader should think about these situations. Secondly, he examines the accumulated empirical evidence of these situations. This gives an idea of what generally happens in these situations, and what the profit opportunity and the risks might be like. Finally, the author considers a number of individual cases to illustrate what can happen to traders in practice. Often, these will be special situations or extreme events from history, but always cases from which the trader can learn.

By understanding these phenomena thoroughly in this way, a trader can gain an edge over others in the market. In the first instance by avoiding becoming the victim of the phenomena and secondly by using detailed knowledge of these situations to (legally and ethically) profit from the events.

This book is for traders looking to gain an edge through a superior understanding of how markets work, both in theory and in practice. It will also be of interest to longer-horizon investors who are seeking to avoid timing errors, and to risk managers wanting to understand better the subtleties of risk beyond traditional risk statistics.

About the author

James Clunie is Head of Strategy, Absolute Return at Jupiter Asset Management and manages the Jupiter Absolute Return Fund (Unit Trust) as well as the Jupiter Global Absolute Return fund (SICAV). Before joining Jupiter, James worked at Scottish Widows Investment Partnership as an Investment Director of equities, and managed a long/short equity fund and UK long-only funds. James was a senior lecturer in nance at the University of Edinburgh between 2003 and 2007, prior to which he worked as Head of Global Equities at Aberdeen Asset Management and Director and Head of Asset Allocation at Murray Johnstone International.

Media coverage

From Your Trading Edge Magazine:

In ‘Predatory Trading and Crowded Exits’ Clunie tries to explain some of the reasons trades don’t always perform as you expect or as computer or analytical models suggest they should. As someone who trades long-short fund for a large institution, Clunie understands that the reality of the markets is very different from the theory. In… Read more »

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From Traders Magazine:

Predatory Trading and Crowded Exits New Thinking on Market Volatility James Clunie Every trader should have a thorough understanding of phenomena such as predatory trading and manipulation, and of liquidity problems that can arise when traders position themselves in a similar fashion to one another. These problems are often understood intuitively, but there is a… Read more »

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“An interesting book that I suggest retail traders need to read.”- Your Trading Edge Magazine6th July 2010

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From Media Review:

“An exceptionally lucid and practical guide.”- Traders Magazine1st April 2010

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About the Author

1. The Ecology of Markets
2. Predatory Trading
3. Crowded Exits
4. Stop Losses
5. Manipulation
6. Final Thoughts

Appendix 1. The Market Model
Appendix 2. Abnormal Returns


Published: 12/04/2010
Edition: 1st
Pages: 220
Formats: paperback - ISBN 9781906659059
ebook - ISBN 9780857191519
Media enquiries

If you’d like to get in touch with the author for interview or comment, or you’d like a review copy of this book, please contact us at or call +44 (0)1730 233870.


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