ALL Traders Are Impacted by Market Probabilities

Andrew FaldeTrading Lesson

Discretionary traders, systems traders, neutral, mean reversion, momentum, swing, and day traders… ALL of these trading styles and niches rely, to one extent or another, on using probabilities. Discretionary traders keep probabilities in mind when making trading decisions. Systems traders rely heavily on many aspect of probabilities to create automated or nearly-automated systems. Neutral traders need to understand tail risks … Read More

Duration: The Sixth Step to Systems Success

Andrew FaldeSystems TradingLeave a Comment

Number six in our seven steps is Duration. Duration represents the expected length of time in winning trades, losing trades, and all trades. Almost without exception we find that trend- and momentum-oriented signals have a shorter duration for losing signals and a longer duration for winning signals. The reverse is true for mean-reversion trades. Knowing your expected duration is important … Read More

What is Your Idea of Back Testing?

Andrew FaldeSystems Trading4 Comments

Trade decisions are often based on what a trader observes on the chart. The thought process often starts with something like this: “The last time this happened ABC moved 5%” “Last year at this time the market stayed in a 2% range” “If I had bought the last three breakouts, then I would be up $5k right now!” “The MACD … Read More