Tag Archives: risk of ruin

What You Want From The Market Vs. What It Can Give You

Although there are many rules about trading, I can offer only one in this article because after nearly 25 years in the markets, I have seen many popular rules violated one after the other. My rule is: try to get … Continue reading

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Market Timers And Gambling

Arguments in favor of market timing usually rest on the existence of the momentum premium anomaly and empirical analysis that shows it can be captured with relatively simple strategies, such as moving averages and price rate of change. However, these … Continue reading

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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, for example the Kelly ratio. Traders and investors should ignore such supposedly optimal methods of sizing positions … 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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