Tag Archives: risk of ruin

Chartists and Trend-followers Need to Trade More Frequently Than Most Quants

Besides the fact that chart patterns are mostly random formations (see head and shoulders, double bottoms, triangles, flags, etc.), chartists also face some practical problems having to do with position size.  Trend-followers also have similar problems. This is because position … Continue reading

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Practical Position Sizing Based on the Risk Ratio

In the blogosphere and elsewhere one can find many articles about optimal position sizing and on maximizing equity growth via the use of fancy math, like for example the Kelly ratio. Traders and investors should ignore such supposedly optimal methods of sizing … Continue reading

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Risk of Ruin For Dummies

A good percentage of  traders and investors get ruined because they are deceived into believing that they can be profitable in the longer term even if they are wrong more often than they are right provided they win multiples of what they lose, on … Continue reading

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Confidence Is The Sure Way to Ruin

If you are confident about your market analysis then this is the sure way to ruin. Unlike other disciplines that demand confidence due to the existence of concrete rules and procedures, trading and investing are on the opposite side. Nothing … Continue reading

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SPY Pattern Indicates High Probability for a Continuation of the Rally

As the title indicates, in this blog we are dealing with probabilities and not with any indubitable rules.  In the markets, there are no such rules, at least not any that I know of, and only those who can properly calculate probabilities within … Continue reading

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Price Action Lab Alerts for Friday, May 18, 2012

This alert is about a signal in SPY for entry at today’s open and exit at the close and also about short signals in a Dow 30 stock. Share

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