Alpha measures excess return. Anything with alpha over 1.0 is considered favorable. Beta measures volatility and market risk. Anything with beta below 1.0 is considered favorable. These cannot be the only metrics you make your trades or investments on, but they are extremely helpful when comparing funds or stocks. Chasing high alpha will usually result in...
As folk who follow my posts know, I don't keep any secrets. I explain some of my methodology in this chart. It is bespoke. To be 100% clear, this will not work 'for you'. No methodology works 'for you'. You work the methodology through experience to create your advantages. I'm not saying that people should change to this way. I do not interfere at all with...
Cheat Sheet for Risk Management. Practicing Disciplined Risk Management is what sets a amateur trader apart from a professional trader. Define your risk prior to the trade. The risk, combined with distance to stop loss is what determines your position size.
Risk management in forex, or any other trading, shouldn't be complex, rather it should be simple enough even for a kid to follow. Our Risk Management approach comes down to 3 basic points, 1. Structured position sizing ( manage your exposure! ) 2. A definite exit area ( always have a stop loss! ) 3. Follow point 1 & 2 like a religion! Hope this helps and good luck!
A friend of mine send me a question yesterday, "hey, curious question. how much was the a great day / swing/ scalp trader looking to make per day prior to Bitcoin?" This was my answer yesterday: That's an invalid question to ask a real trader. A trader takes what the market gives them. One may go days, weeks, perhaps a month without a signal that fits...
As you grow, so does your risk.
Let’s also talk about another so very important, and often undervalued part of risk management. Risk management really does help me to stay emotionally stable during trading. Just think about it: If I place a trade with a 30% risk and I lose it, it will hurt so much, and it will allow my negative sides, my revenge nature to come out and start dominating. I will be...
Between 1990 and June 2000 the median hedge fund (there are not that many that started in 1990) had an annual return of 16.3% and max drawdown of 28.5% according to MORGAN STANLEY. Keep in mind the 2/20 destroys profits. (16.3%*1.25)+2% = 22.4%, and 28.5-2 = 26.5%. So what the median fund actually did I I did not mess it up was get 22.4% return a year and a max...
3. If you flip an account, like you want, how long would it take to blow it again? Let’s imagine you have a small account like $2000-$3000. What do you want from it? Most likely, you would like to live from it, so depending of a country you live in you’ll need somewhat between $600 to $2000 a month for a decent living, right? In this scenario, you’ll need to...
Introduction We all hear from everywhere about risk management. They all say the same: “It’s important, it will help you to protect your capital, etc., etc.” But today I wanted to talk to myself about risk management in more detail. And I’m sure I will have a much better understanding of practical risk management in forex after this - I will talk through its...
It's not that you don't know how to profit. You simply don't know how to lose.
I've seen lots of people getting liquidated on there longs on this BTC dump. This is why I think people never take into consideration risk management or don't know how it actually works. Maybe this can help a lot of people and help them clarify things. YES, the getting rich quick by leveraging is a probability, but if you ask me, I would consider it luck in the...
After years of searching for the holy grail, the trader found himself.
The answer is often within you. Are you still looking outside?
I like anywhere from 3-4 anxiety units, what do you like?
This illustration explains the functionality of TradingView's Long/Short Position Tool and is intended to help new people looking for more information on this tool in a "novice friendly" format. TradingView’s position tool will aid you in pre-planning and pre-evaluating trades and as such should be an essential part of every trader's toolkit . Note: At its...
Here we look at 3 traders, all claiming to have a winning trade with 100 pips - however, with very different % gains on their accounts. The main part of trading is profitability, you can not pay your bills with pips. This explains what you need to focus on and be aware of! Hope it helps, Regards Darren