How To Enter And Exit Positions At The Close
One of the most important aspects of trading is the buy and exit prices. How do you enter and exit a trade? We all know commissions can eat into the
Continue readingSurvivorship Bias In Backtesting, Trading And Investing (Examples)
Almost all traders ignore survivorship bias, either on purpose or lack of knowledge. Why is it important to understand survivorship bias? It’s important because it overstates backtested results and leads
Continue readingWhat Is The VIX And How Does It Work? (Is It Profitable?)
“In the short run, the market is a voting machine but in the long run, it is a weighing machine.” In the short-term, fear and greed is a major driver
Continue readingHow Does Pairs Trading Work? Is It Profitable?
Pairs trading involves market-neutral strategies that aim for profits in any type of market, be it sideways, down, or up. Jim Simons’ The Man Who Solved The Market describes the
Continue readingCan You Become A Quantified Trader? A Personality Test
Brett Steenbarger is a famous trading psychologist who has written the bestseller The Psychology Of Trading. In the book, Steenbarger referred to personality traits that tend to distinguish good from
Continue readingEd Seykota – Wisdom And Quotes
Anyone reasonably interested in trading and speculating has probably heard about Ed Seykota. He was first featured in Jack Schwager’s Market Wizards. It’s the most memorable interview in the whole
Continue readingProprietary Trading – Pros And Cons (A Personal Experience)
Proprietary trading might not be so different than retail trading. I was a proprietary trader from 2001 until 2018 in three different companies. How was it, and how does it
Continue readingThe Stochastic Indicator – Does It Work? (How To Use It)
The stochastic indicator is a standard indicator in any trading platform, but we rarely see it published in any trading strategies. Compared to the RSI, stochastics seems much less popular.
Continue readingIs Interactive Brokers Safe? Brexit Mess
I have been a customer at Interactive Brokers for the last 11 years, and on and off many years prior to that. Not only have I been a profitable customer
Continue readingHow To Overcome Trading Biases
Mankind has come a long way in problem solving and technical advancements, but most of us still suck when it comes to financial planning and managing our investments. We have
Continue readingHow To Succeed In Day Trading
How can you become a profitable day trader? How can you make money day trading? We were pure day traders (profitable) in stocks and indices from 2001 until 2018. In
Continue readingWilliams %R Explained – Does It Work? (Better than the RSI)
The famous trader and tax rebellion Larry Williams has given names to several technical indicators. Last week we wrote about WilliamsVixFix: WilliamsVixFix explained – does it work? This article explains
Continue readingEdward Thorp: Beating The Odds – The First Quant
Edward Thorp is by many regarded as “the first quant”, at least one of the first who successfully used quantitative models for risk-taking. He became famous when he wrote the
Continue readingWilliamsVixFix Explained – Does It Work?
Back in 2007, the well-known trader and “indicator innovator” Larry Williams wrote an article in Active Trader about VIX and how you can create your synthetic VIX for any security
Continue readingWhy Strategies Don’t Work In Live Trading
If you have spent considerable time developing a strategy, it’s frustrating if it performs poorly in live trading. What is happening? Why does it perform so poorly when it worked
Continue readingIs This The Holy Grail Of Trading?
Something that a person or a particular group of people want very much to have or achieve. Cambridge Dictionary defines the Holy Grail Many traders are looking for the Holy
Continue readingThe Most Common Trading Biases (How To Deal With Them)
The first principle is that you must not fool yourself and you are the easiest person to fool. – Richard Feynman When your money is at risk, you easily get
Continue readingWhy Day Traders Fail (Avoid The Pitfalls)
Day trading certainly holds promises of a fast-paced working environment with high returns. Its allure proves practically irresistible to many new traders. It is also a common belief that most
Continue readingTrading Strategies And Correlations
Correlation, which measures the relationship between two datasets, is an essential variable for a trader. How your positions move in relation to other positions is crucial to understand and manage
Continue readingHow Can A Beginner Start Trading?
Are you looking to start trading but are unsure what steps need to be taken? Or have you dipped your toes in the water but are struggling to find the
Continue readingRetail Seasonalities
Are there any seasonalities in retail stocks? Some years ago, Jay Kaeppel published an article about retail seasonalities. Put short, the best month for retailers are November, March, and February
Continue readingHow To Deal With Drawdowns
If you can’t stomach 50% declines in your investment, you will get the mediocre returns you deserve. Charlie Munger The share price of Berkshire Hathaway has declined more than 50%
Continue reading8 Pros And Cons Of Quantitative Trading
Quant trading, an abbreviation for quantitative/quantified trading, is growing in popularity because of the possibility of having the computer do all the work and reduce emotions and behavioral mistakes. This
Continue readingTrading Or Investing – What Is Best?
Trading and investing are entirely different ballgames. Both have the same aims, to grow your wealth, but they have various time commitments, risk profiles, and outcomes. Trading has been around
Continue readingHeikin Ashi Explained (How To Use It)
A reader recently asked if we use Heikin Ashi in our trading. We don’t. Neither of us has ever heard of Heikin Ashi! So what exactly is Heikin Ashi? In
Continue readingCan You Get Rich By Automated Trading?
There are many reasons why someone might like to become an automated trader. Freedom, independence, wealth, and scalability are a few reasons why someone starts trading, but we suspect the
Continue readingThe Sharpe Ratio Explained (With Examples)
The Sharpe Ratio is a popular and widely used parameter for comparing the return and its risk. The name is given from its inventor, William Sharpe, who developed the ratio
Continue readingThe Profit Factor Explained (With Examples)
How do you evaluate a trading strategy? In hindsight, it’s easy to judge a strategy by the result – the CAGR or the annual return. However, this is what Annie
Continue readingDo Candlesticks Work? A Quantitative Test Of 23 Candlestick Formations
This article explains candlesticks and why we like to use candlesticks when displaying charts. Moreover, we test quantitatively 23 different candlestick formations. Perhaps surprisingly, some of the formations work pretty
Continue readingHow Jim Simons Made 66% A Year By Using Quant Strategies (The Medallion Fund)
Jim Simons recently stepped back as the chairman of Rennaissance Technologies, the asset management group that manages the most profitable fund ever: The Medallion Fund. Simons is the founder, biggest
Continue readingDoes The MACD Indicator Work? (Including Strategies)
This article looks at the MACD-indicator, what it is, and how you can use it. Does it work? In which markets does it work best? Which timeframe is best? These
Continue readingLarry Connors’ Multiple Days Up And Multiple Days Down Strategy
Chapter 6 of Larry Connors’ High Probability Trading contains a strategy called Multiple Days Up (MDU) And Multiple Days Down (MDD). The book was published in 2009, the trading tests
Continue readingHow To Become A Successful Quant Trader
There are many approaches on how to make money in the markets. Some use fundamental factors, others use technical analysis, while others might crunch numbers to get an edge. The
Continue readingWhat Happens After A Sell-Off On The First Day Of The Month?
The first trading day of 2021 started with a “mini-crash”. The S&P 500 fell 1.36% and the Nasdaq fell 1.41%. We have previously established the end of the month effect:
Continue readingLarry Connors’ %b Strategy (Bollinger Band)
In chapter 5 of Larry Connors’ book High Probability Trading, published in 2009, there is a strategy called %b strategy. The book contains many strategies which we test in chronological
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