Tag Archives: risk of ruin

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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The Most Important Performance Measure of Trading Strategies

Shortly after my post on Kelly maximization I received a number of emails from traders who are developing systems but are, understandably so in my opinion, a bit confused about which performance criterion or criteria to use when evaluating them. I understand why those … Continue reading

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Price Action Trading

Price action trading is a trading methodology that, as the name implies, is based on price action. Not surprisingly, as it is the case with many other things, this terminology has been abused and misused by many. Of course, this is a … Continue reading

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