Establishing a Trading Methodology Part IV
On Establishing a Trading methodology part IV, we will discuss MAE and MFE and their value on the optimisation of a trading system or strategy. MAE and MFE John Sweeney on his book Campaign Trading (Wiley & Sons, 1996), and then in Maximum Adverse Execution, established the base for a statistical way to deal…
Establishing a Trading methodology Part III
On Establishing a Trading methodology Part III we will explain why we need to keep a record of the performance of our strategy or system. Deciding that a Trading System has an edge, isn’t a matter of evaluating the last five or ten trades. Even, evaluating the previous 30 trades is not conclusive at all;…
Establishing a Good Trading methodology Part II
Diversification The first step in establishing a good trading methodology Part II starts with optimising risk exposure using: A portfolio between 4-10 of uncorrelated and risk-adjusted assets; or A portfolio of 3 to 5 uncorrelated trading systems; or Both 1 and 2 working together. The advantage of a diversified portfolio The benefit of having a diversified…
Establishing a Trading methodology Part 1
This is part 1 of a 4 part article which focuses on a traders ability to establish a trading methodology; please enjoy: The desire to win Traders desire to win. Nothing else matters to them. They believe the most crucial question is timing the entry. Exits don’t matter at all, they contend, because if they…