Risk Management

Peter came to me years ago. He had traded for over 15 years, and was producing good results. He is one of the more stable traders I have ever met with an extreme discipline, and I have met many traders over the years, including all the guys I managed while working as head of trading…

By now you should know that trading is an extremely complex and demanding ”profession”. Done properly, it brings out the best in you, done poorly, it will not only bring out negative p/l, but also make you low and depressed. Personally, I have experienced all phases of trading during my life, and the biggest conclusion…

Options and greeks An option is a derivative representing a contract sold by one counterpart (writer, also called short the contract) to another counterpart (holder, also called long the contract). The buyer has the right, but not the obligation to use the option (buy or sell the underlying, depending if the option is a call or put contract). The…

Divide your capital into segments. Don’t put all the eggs into the same basket. Capital can be divided into; various assets, time frames, sectors, stocks etc. Most people know how to be long the market, but it is worth thinking about what happens should the market turn down violently. Know what products you are trading.…

The below table is self explanatory and takes us back to the argument of limiting the downside to our portfolio. Risk management is a vital part of successful trading! Most people realize this but very few understand what risk is, nor do they have the tools to properly manage the risk in their portfolio. You…

What if I told you that even experienced traders fall for the most classical pitfalls of trading? You would probably get discouraged from even thinking about trading. IN order to trade successfully, you need to study a lot, be up to date with information etc, but even more important is understanding the psychology of both…