The title is a quote I heard from Tom Basso, a semi-retired trader featured in “The New Market Wizards” book that was published in 1992. According to his idea, risk is something you can’t get away from if you want to earn excess returns. No matter how much you try to optimize the entry / […]
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Comparison makes market participants unhappy
Happy New Year! Absolute performance measures the annual returns of a portfolio, while relative performance compares it to a benchmark or some index. Part of our human nature is to compare what we have or achieve to someone else be it a friend, neighbor, co-worker etc. We may be satisfied with our new car until […]
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Timing the Nasdaq 100 index (QQQ)
Earlier this year I posted a simple strategy on how to beat the S&P 500 index with market timing. I had done the backtest on 21 years of data in AmiBroker. I am now publishing the results of a backtest using the same strategy on the Nasdaq 100 index. The backtest was done in TradeStation on […]
Simply put, compounding means money makes money that makes money that makes money. So, instead of thinking about returns in a linear fashion, compounding actually illustrates the exponential growth of assets over time, which is as important for a trader as it is for an investor. Let go of the short-term mindset Beginning traders and […]
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No pain, no gain
People often look for easy money in the markets. They are in for the reward without wanting to tolerate the pain. When I think systematically in quite efficient markets, the more gain you want the more pain you need to put up. Strategies with excessive returns need something that people are less willing to do. […]