Book Review: Volatility Trading
I started reading Volatility Trading by Euan Sinclair with a clear goal: learn about the practical aspects of volatility trading. It turned out more advanced than I expected, so I learned more about volatility from Natenberg first. But this book became something even better - an amazing resource about trading in general.
I love Sinclair's mindset of pragmatism - it resonates with me so much and has helped me organize my own trading within this framework:
Pragmatism must always be our guiding philosophy.
This cuts through so much academic nonsense. Trading isn't about elegant theories - it's about what works in practice, under pressure, with real money on the line.
Surprisingly, this felt more like a general trading book than an options-specific guide. The four chapters I absolutely loved aren't even specific to options:
- Money Management - Trade sizing can't turn a losing strategy into a winning one, but it dramatically impacts profitability, variance, and drawdowns. The in-depth discussion of the Kelly criterion is relevant for all forms of trading, not just volatility.
- Trade Evaluation - You can't improve if you don't track and review your performance. This chapter emphasizes taking full ownership of both successes and failures - no excuses, no external blame.
- Psychology - A refreshingly down-to-earth acknowledgment of behavioral finance without the usual exaggeration. Sinclair argues that psychological problems are often symptoms of poor trading systems, not the root cause.
- Life Cycle of a Trade - A detailed examination of a single trade from start to finish. I haven't seen this level of insight anywhere else outside of learning in a professional trading environment.
What ties everything together is the relentless focus on process over outcomes. Sinclair emphasizes that good trading comes from consistent, pragmatic processes - not from being right about market direction or having perfect timing.
This book is highly recommended as a general trading resource, not just for options traders. The volatility-specific content is solid, but the real value lies in the trading philosophy and systematic approach.
I definitely plan to return to this book, especially those four favorite chapters. Sometimes the best trading books teach you how to think, not just what to think about.