This week’s journal posting is a response to a comment by ‘fastbucks’ last week when the following question was posed: “Another related rule is the 6% rule, i.e. you cannot have a total risk in your positions at any one time greater than 6%. I don’t suppose you have any comments on that?” The 6%…

The art of trading is not about winning as much as it is about not losing. Like a business needs to control its costs, a trader needs to be able to minimise and withstand losses so that they are ready and able to take advantage of profitable opportunities. This comes down to managing risk at…

One of our long standing customers forwarded this article to me last year. It touches on a number of important topics that I believe are strongly related to active investing and are well worth being aware of to help put your trading endeavours into perspective. http://www.smh.com.au/executive-style/culture/luck-of-the-draw-20120829-250hc.html I’m sure that as you read this article all…

The following Open Letter was sent to me by Mike Cullen as a comment to last week’s blog. It contains an interesting way of viewing trading, which I obviously agree with. I felt it deserved it’s own limelight as a posting all on its own. The context is Mike visiting a friend, Bill, who has been…

So what is a researched EDGE and why is it important to have one when trading and investing? An edge is a researched set of entry and exit criteria that deliver profit trades that are sufficiently large enough to cover costs and loss trades over a large number of trading events. The biggest strength of…

An often overlooked technique by many traders, investors, and unfortunately even some investment professionals is that of charting the equity changes that occurs in a portfolio. Most tend to review the net changes that occur in a list but few go to the trouble of reviewing a mark to market equity curve of the portfolios…

This week we take a light hearted yet serious look at what it means to have an ‘edge’. In the natural world animals develop skills and characteristics that allow them to prosper and survive often under strange and adverse conditions. This process of evolution gives those that develop these skills a survival advantage over those…

For those building a system I can only commend you for taking on such a challenging and potentially rewarding task. It must be said that it is not for everyone as the skills and focus required for developing an edge are somewhat specialised and niche. The 4000 plus hours I invested into SPA3 has taught…

A trading edge is a set of entry and exit criteria that, when executed, will deliver profit trades that are sufficiently large enough to cover your trading costs and loss trades, and deliver you a positive return on your capital and time. The biggest strength of deploying an edge in the market is not the…

Traders employing a discretionary or subjective bias to their decision making can suffer enormous swings in their emotions – from euphoria when they get a winning trade, to dread and horror when they lose. Anyone hoping to achieve longevity and long term success in the markets can not trade in this way. It is simply…