Category Archives: Risk Management

Investors May Be Preparing For A Stock Market Rally

Although it appears that the market has started to correct, there is some evidence that investors may be selling overbought low volatility and high yield stocks to raise cash before a market rally.

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Data-Mining Bias Still Drives Wall Street Decisions

This latest article in Yahoo! Finance is an example of how data-mining bias still drives Wall Street decisions.

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Is The Stock Market Irrational? Short Answer: No

Two weeks ago stocks were under pressure and the financial media was predicting chaos from the Brexit vote. The S&P 500 dropped 5.6% in two days. But the market ignored all negative news and rallied 6.5% near all-time highs in the … Continue reading

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Money For Nothin’ And Backtests For Free

Backtests are good for systematic trading and under certain conditions. It makes no sense to use backtests in an effort to analyze current market conditions. Yet, this is done all the time and regrettably by educated people who call themselves … Continue reading

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A Black Box May Be A Good Choice

Some investors and traders will never be satisfied with the type of strategy they use. If they use a strategy from the public domain, then they complain it does not work. If they use a black box, then they complain … Continue reading

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Two Golden Rules Of Savvy Traders For Times Of Uncertainty

There are two golden rules savvy traders follow during times of uncertainty. Adhering to these two rules minimizes the risk of large losses due to adverse moves or lack of participation when a favorable move starts.

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Short-Term Rate Increase Neutralized

On December 16, 2015, when the Fed raised short-term rates, the 10-Year Note yield was at 2.29%. After about a month, the market has neutralized the Fed action and the 10-Year Note yield has fallen by about 25 basis points.

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Traders Should Diversify During Rough Times

Even if only one trade out of several bad trades shows a small gain, large losses can be reduced substantially. Here is an example from last week.

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