The importance of risk management can not be overstated. But, what parameters aid the trader in his evaluation of his risk on each trade or as a portfolio? All trades should have a predetermined exit point at initiation. Rules governing the entry and exit will help alleviate the pressure of emotion and standardize trading results. […]

How can volatility expansion help the daytrader?
It sounds like a simple concept. I have a little homework for you. Click on this Amazon link . It is a book by Toby Crabel. I’m sure that you have never heard of him. But he is a legend in the managed futures industry and manages 5 Billion […]

After designing a breakout strategy, it’s time to improve the results. There are many methods but I will describe my two favorites. Filtering before the trade is one technique and recognizing a trend day is another method.
Filtering the days
Look for trends in the daily pl of your trading. Identifying a trend in pl that […]

The close can be an important point to evaluate the market’s direction. But, the open is the most important number to watch all day. It has several important factors.
It shows the early morning strength or weakness
It is where the trading day begins and is the first barometer of market sentiment. A gap up shows strength […]

Great poker players calculate the odds before every move. They determine the expected value based on their cards and their estimates of their opponents cards. If the number shows a positive expected value to call or raise then they follow the numbers. Great traders follow the same philosophy.
Expected Value Calculation
The essential calculation is the expected […]

It is very important to keep statistics for every trade that you execute. If you are a daytrader then record the bar data from your trade entry until your eventual exit. Start an excel database with all the stats. One of the key statistics is the Maximum Adverse Excursion(MAE) . Maximum Adverse Excursion is the […]

Market prices seem to move randomly. One parameter that does have some predictive power is volatility. A good measure of volatility is implied volatility. Implied volatility can be a good parameter of the assessment of risk in the marketplace. The problem is that volatility tends to reflect an interpretation of past movement and less of […]