Jatin Pant Trading options can be a very lucrative business, but it also carries a lot of risks, especially when it comes to deep in-the-money options. These options have the potential for enormous gains but also carry hidden dangers that most traders don’t take into consideration. While deep in-the-money options can give the highest leverage, their challenges … Read more
Investors who aim to build wealth need to be aware of how various asset classes perform over the long run. That said, too many of them fail to recognize or factor in historical trends and/or diversification into their allocation. The following five-asset class analysis outlines the performance history of stocks, bonds, gold, real estate, and … Read more
The ultimate goal in trading is to come up with a strategy that would constantly yield profits. However, many traders succumb to the temptation of curve fitting—a practice that fits a strategy perfectly to historical data but fails in live markets. This common pitfall leads to failed trades, wasted time, and emotional distress. Curve fitting … Read more
Short-term momentum versus reversals of large-cap stocks are very controversial and debatable topics within financial research. Traditional theories of momentum and reversals basically explain them as sequential phenomena that take place within different horizons of time. However, they really do not talk about these phenomena being combined within one asset category in comparable periods of … Read more
Until now, traditional currency trading strategies have been mainly dependent on approaches related to carry trade that focus on differences in the short-term interest rates between countries. However, they very often cannot duly capture valuable information which can be embedded in yield curves, and hence overlook much more profitable opportunities. Furthermore, there are risks in … Read more
One of the most important parts of trading involves backtesting strategies. Unfortunately, most traders have little or no idea how far to test a strategy. Testing on too brief of a time frame—or one with too few trades—can lead to misleading results. Conversely, using a very wide time frame might miss significant changes within a … Read more
Traditional trading strategies use the CBOE Volatility Index, or the VIX, to help pinpoint upcoming moves in the S&P 500 Index, known as the SPX. This always seemed to be a somewhat operating theory as, logically, one would think that the implied volatility precedes market volatility movements, given the perceived role of the VIX as … Read more
Most traders often remain focused on short-term trading strategies, while the long-term trading rules may also prove to be highly effective for profitability. This prevents the trader from exploiting market directions over a longer period of time. Ducan Isakov and Didier Marty have written a research paper on the long-term efficiency of technical analysis and … Read more
A trading journal is where the trader documents each trade taken, often used in spreadsheet or software format. Consider it your database of trade entries – a location where you are consistently keeping track of statistics you find important and relevant. Key features of a trading journal include: Why do you need a Trading journal? … Read more
The RVI is a technical indicator of the momentum of prices by comparing the closing price of an asset to its trading range. It reflects the strength of a trend because it analyzes if the price closes higher or lower than it opens. In an uptrend, for example, prices tend to close higher than they … Read more