Many traders choose to stop trading once a dollar based profit goal is reached. It is a safe guard against oneself from over trading. It also helps a trader from getting to aggressive due to emotional high triggered by reaching the profit goal too quickly. So is it a good idea to do this? I […]
An interesting talk based on the book “The Success Equation: Untangling Skill and Luck” by Michael Mauboussin. Mr. Mauboussin is managing director and head of Global Financial Strategies at Credit Suisse. It is a long talk for about an hour. You can get the book from Amazon.
Ms. Smeets’ great presentation of scientists and media mistakes of mixing up correlation with causality. It is what I warned traders and quants to-be all the time – if you do not know what causes the correlations, expect the statistical biases may disappear fasting than you think.
Real life experiment with people on rational decision making. Our human nature plays a big part in our lives on the decisions we make. Traders are especially haunted by our bias towards risk aversion as losses of any kind is almost automatically translated into a form of pain or threat. Being able to overcome that […]
The importance of understanding probabilistic thinking in both our daily lives and in financial decisions.
Kids playing with a MMORPG (in case you do not know what that is – it is the kind of game Wikipedia founder Jimmy Wales played and probably obsessed with many years ago) found a mini-game within the game that essentially plays like bingo. Each player can get a game board with 5X5 grid filled […]
I wrote many articles on statistics over the years (Teaching a Grade 4 on Probability, Understanding the Market in a Statistical Way, etc.) and advocate traders to pay more attention to proper application of statistics in trading and model development. I came across this educational video by Peter Donnelly from TED that explains several basic […]
|A collection of the time based statistical biases often mentioned in the daily commentary section on trading S&P 500 related instruments (e.g. e-mini S&P, SPY, etc.). Volume 2 focuses on weekly bias and strategic planning.|
|by Lawrence Chan||Price: $25||Member: $20|
On a day when Nasdaq 100 is down 2% from its previous day close, something very interesting is likely to happen within a day or two. Following is a table of Nasdaq 100 emini from September 2003 to March 2011 showing the statistics related to the 2% drop phenomenon.
After I posted the breadth bias warning last week. Someone asked for some samples of the potential outcomes from history. Here they are. First one, the one that simply go sideway for a month. Second one, if there is a turn, it should happen quickly in first 2 weeks of May.