We had an interesting question the other day: What would be a reasonable range for total number of trades per instrument for an active intraday trader? And is there a different range for something like a stock-in-play vs. SPY or EUR/USD? I’m working on discretionary trading along with algorithmic strategies and I just want to gauge your opinion on when … Read More

## How To Lose All Your Money

We have one more major thing to look at as we build out our casino—volatility.  We know the house edge for every game, but we also need to know some basic statistics before we open the doors of our casino.  Let’s just focus on standard deviations for this discussion and how they affect our returns, and the bettor’s returns. Game … Read More

## A Few Spins Of The Wheel Redux

rick.martin1 Comment

We made a fundamental error in calculating the returns in our last article, and many thanks to one of our readers who was on his toes and caught it.  Some of our calculations were based on dollars per trade and others on dollars per share—clearly a case of pineapples and pomegranates, along with doing the calculations much too late at … Read More

## A Few Spins Of The Wheel

Last week we talked about the casino’s edge which in the trading world is called expectancy, but all that expectancy tells us is whether or not our trading strategy is likely to be profitable or not—but not how much money we might make.  How profitable depends on how often we have a chance to trade our system—will it be a … Read More

## Great Expectations

The next step in building our casino so that we have the house odds in our favor is to look at the edge, or in system trading terms, expectancy. Let’s take a look at the house edge in a few casino games: Game House Edge Baccarat 1.2% Blackjack 0.8% Craps 1.6% Roulette 5.3% So exactly what does this mean?  Let’s … Read More

## Less Is More–Usually

Less is more—most of the time.  In my early days, I started out with almost twenty different indicators in a single system—and why not; the computer was going to do all the work.  I figured that if I combined enough techniques, I could find the perfect entry signals—I hadn’t even thought about the importance of exits back then.   Well, needless … Read More

## There Is No Holy Grail In Trading

rick.martin1 Comment

I wanted to respond to a couple of observations from our readers: The first: “If you’re talking a pure technical (trend-following or countertrend based on indicators) system on highly liquid vehicles like QQQ, “getting a real world system to work” is insanely difficult….I’m looking forward to this series, skeptical though I am.” And the second: “It’s simple enough to create … Read More