Position sizing, risk-reward ratios, drawdown management and long-term capital preservation.
The Sharpe ratio has one flaw that everybody notices within about ten seconds of understanding it: it treats your best month as a problem. Standard deviation counts distance from the average in both directions. A +11% month and a −11%…
There is one number that decides where hundreds of billions of dollars get allocated every year, and almost every retail trader who quotes it is quoting noise. The Sharpe ratio is the closest thing finance has to a universal scorecard.…
UPDATE · 4 AUGUST 2026 Date one has resolved. SpaceX reported Q2 revenue of $7.81 billion against consensus near $6.9 billion, adjusted EBITDA of $3.5 billion against $2.0 billion expected, and a net loss of 9 cents a share. Every…
The Kelly Criterion answers a question exactly. Given an edge, what fraction of your capital maximises long-run growth? For a system winning forty percent of the time with 2R winners, the answer is ten percent of the account per trade.…
You risk one percent per trade. You are disciplined about it. And you have no idea what you are actually risking, because you are measuring the wrong thing. A position size is a number of contracts. Risk is a number…
Trader’s Library · Book Review The New Trading for a Living by Alexander Elder Explore all 80 books in the Trader’s Library → Most trading books pick a lane. They teach you setups, or they teach you psychology, or they…
This site has fifty-four articles on risk management and not one on the trailing stop. That is an accurate reflection of the industry, and it is embarrassing, because your trailing rule shapes your results more than your entry does. Here…
MONEY MYTHS – EPISODE 09 Always Diversify? The myth: more positions always means less risk. The math disagrees. Diversification distributes ignorance more evenly. Here is the Kelly Criterion proof. Tuesday 21 July 2026 – Available on Spotify, Apple Podcasts, YouTube,…
The most expensive sentence in trading is “I was right, just early.” It is offered as consolation. It should be read as a confession, because in a market with a clock and a financing rate, early and wrong are the…
At fourteen, Persi Diaconis ran away from home to become a magician. He told no one, walked out of a New York high school, and spent the next decade touring with the sleight-of-hand legend Dai Vernon and working card tables…
Morgan Housel makes a distinction that took me a decade of trading to understand and about ninety seconds to read. A fee is what you pay to get something. A fine is a punishment for doing something wrong. They cost…
Here is a bet. I flip a fair coin. Heads, your stake grows by fifty percent. Tails, it falls by forty percent. Work out the expected value. Half the time you multiply by 1.5, half the time by 0.6. The…
Subscribe and get the 8-page Trading Plan Template free — includes pre-session checklist, trade journal, risk rules, and weekly review system. Plus weekly insights on psychology, strategy, and risk management.
No spam. Unsubscribe anytime. Free forever.