Price Action Lab Blog

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  • Fooled by Random Backtesting May 20, 2013

    Backtesting trading systems on historical data is again becoming popular almost 30 years after it started being used by individual traders due to recent advances in web technology and server speed that allows its online implementation.

  • The Golden Cross Trading System Lacks Intelligence May 3, 2013

    Many have claimed success trend-following the markets. But a fair assessment of the situation requires to also count those who got ruined by it and this is not easy.

  • The Main Cause of Failure of Some Popular Technical Trading Methods December 21, 2012

    Trend-following based on indicators and classical chart patterns are two trading methods that were developed in mid 20th century using data from the equity markets mainly. These methods worked well for an extended period of time in those markets due ...

  • A Common Mistake in Calculating Correlations December 11, 2012

      No information is reliable until it is checked thoroughly. 

  • Are the Returns of Your Fund Manager Platykurtic or Leptokurtic? November 20, 2012

    If you do not know the answer or, even worse, if the manager does not know the answer, then you may be up for surprises in the future, pleasant or unpleasant. Most fund managers focus on return and risk as measured by volatility and ...

  • Risk of Ruin For Dummies November 2, 2012

    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 ...

  • Same Investments But Divergent Fortunes October 8, 2012

    Both read the same newsletter. Both followed the exact same advice and purchased shares of BubbleNet, Inc. Yet, John lost a small fortune while Bob made a small fortune. How did this happen?

  • What is so Special About the 200-Day Moving Average? The GLD Case December 23, 2011

    The importance of the 200-day simple moving average as a trend indicator is well-known and indisputable. Even those who do not use technical analysis pay attention to this average.

  • The Many Faces of Trading Expectation [Premium Articles] November 25, 2011

    Expectation has many faces that often they make more sense than a fancy mathematical definition.

  • Curve-fitting and Optimization [Premium Articles] September 7, 2011

    Trading strategy development usually involves optimization and curve-fitting of some sort.

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