Uncorrelated Assets And Strategies – Benefits And Advantages (Examples Evidence, Rules, Backtest)

Uncorrelated or non-correlated assets and strategies are a traders’ goldmine. Why? Because it reduces risk and (might) increase returns. However, constructing a basket of stocks, assets, or strategies that are uncorrelated or non-correlated is probably the most difficult task in…

ATR Trailing Stop (Trading Strategy): Technical Indicator & Volatility Stop-loss Levels

This article will delve into the intricacies of ATR trailing stop a technical indicator to help traders set stop-loss levels based on price volatility. We will look at calculation, application in trading strategies, significance, risks, and considerations.  Traders and investors…

Profit Target Explained: Should You Use It In Your Trading Strategy?

Should you use profit target in your trading strategy? Many traders use various forms of stops in their trading. One of them is the profit target. A profit target is exactly what the name says: a pre-set price where the…

Negatively Skewed Distribution in Trading Strategies – Definition, Example, Histogram (Fat Tail Analysis)

What is negatively skewed distribution in trading strategies? Negatively skewed trading strategies are “accidents waiting to happen”: You have many small winners and rare big losers. Unfortunately, the big losers can put you out of business. This is what a…

What Is The Correct Benchmark In Trading?( Essential Considerations)

Unlike investing, which focuses on long-term appreciation and wealth accumulation, trading is centered around capitalizing on short-term market fluctuations or exploiting price differentials and inefficiencies. To assess the effectiveness and performance of trading strategies, traders often rely on benchmarks that…

Arithmetic and Geometric Averages in Trading and Investing: Position Sizing and the Kelly Criterion

The arithmetic vs geometric averages can be difficult to grasp. Albert Einstein is famous for saying that compounding is the eighth wonder. But what if he is wrong? Perhaps multiplicative compounding is the most destructive force in the universe? The…

How To Build A Diversified Portfolio Of Trading Strategies (Why You Need It As A Trader) – [Two Examples]

It would be best if you built a portfolio of trading strategies that differ in markets, time frames, and types. Why? Because you want to have a portfolio of trading strategies that both complement each other and make the portfolio…