When Has an Investment Gone Too High to Buy? Is it Priced High or is the Price Reasonable? Financial Bubbles. If you do enough financial market reading sooner or later you will run across references to “Extraordinary Popular Delusions and the Madness of The Crowds” written by Charles Mackay in 1841. The primary sections of [...]
How many types of trading systems are there? Google this question and you will get several answers. Amazingly – there is no agreement on this question. It appears the answer, as in beauty, is in the eye of the beholder. This is because different authors put different trading systems into different size buckets. One author [...]
The Description Of A Trading Setup The description of a trading setup can be as simple as “When a stock hits a new 52 Wk high, then…” – Or – As complex as one that requires four or more conditions to occur. A Trading Setup is a description of ALL conditions necessary for an Entry Signal [...]
Six Basic Elements of a Trading System To answer this question – let start with what the basic elements of a trading system are: The Financial Market it’s designed for the market volatility, financial instruments (equities, commodities, forex) Time Frame for trading system day, short-term, intermediate-term, long-term Entry Signal complete description of the entry signal and [...]
WHY DO I EMPHASIZE LOSSES IN A ROW AND NOT WINS? You will notice throughout this website I talk about losing streaks much more than winning streaks – but they both occur – so why emphasize the losing streaks? Well the common sense answer is that a string of losses can destroy your trading capital [...]
Position Sizing – The Perfect Name For Limiting Risk Position Sizing is THE MOST IMPORTANT ELEMENT IN SUCCESSFUL TRADING. Without it, you will blow up your trading account – guaranteed. You can be using a system with an 85% probability of success and without proper position sizing you can lose a major portion of your [...]
How Many Losing Trades Can I Get in a Row? First, the principle is the same, whether it’s a winning streak or a losing streak. Second, the answer is not what you think. I’m telling you right now – “This Is Really Important!”. This is a really important concept for you to understand before you [...]