TheRiskBlog

It is common knowledge that sometimes we lose and sometimes we win as traders. That’s what happens and the only important thing is the result at the end. Did you earn more or did you lose more?

Sometimes you get carried away by a moving stock and since you want to participate you add it to your portfolio. Most of the times you have watched the stock for a long time but didn´t have the guts to invest in it. Or you did invest in it only to find out that it turned south the very next moment. The market had just waited for you to jump in. Once in a time though you find that magic stock, you invest in it and to your surprise it goes on and makes money, lots of it. Shouldn´t you be a bit suspicious? Here is such a stock

The SEC said last Friday that it wants to charge Goldman with fraud. This has caused quite some turbulence in the markets. But what is the SEC’s charge against Goldman Sachs actually telling us?

I stumbled over a very interesting project today. The guys at the Planet Money Blog recently bought  their own Toxic Asset to visualize the financial crisis the best way. And we, the readers, can track what happens with it. So we can see, if this Toxic Asset dies or if they even make money with their investment.

It’s all explained in this article, which features a very nice cartoon. And after you know how the project of Planet Money works you are able to track the destiny of this Toxic Asset right here.

And by the way, they are still searching for a name for that Toxic Asset.

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Overtrading is one of the most overlooked mistakes you can make while trading. As a trader you want to make money any minute the market is open, this is understandable, but it doesn`t mean that you need to trade every opportunity that comes across your screen. Trade the most profitable ones and forget the rest. Here are 5 tips on how to spot and avoid overtrading.

A While ago Brett Steenbarger posted a quite interesting questionaire at his Blog that helps you to define your curent attitude.

There is always a tendency to make mistakes, especially while trading or investing. They are just not avoidable. We need to learn that we make them and we need to learn how to minimize negative outcome from those mistakes. You can start by

It needs time, till you can make proper market decisions. You need a good portion of experience for this and you have to know what is going on in the markets. But the problem is, that even if you are theoretically right with your interpretation of market events, you still have to remain flexible.

Every trader who wants to be successful needs a set of rules he acts on – a system. Most build their system over years with growing experience, others buy one. To discover what works and what doesn’t most traders test different systems during their trading career, till they find or develop one that fits them and brings the consistent success they searched for. But it is not easy to test a system, because there is one problematic factor involved in it – the trader himself.

There is quite a bit math involved with risk management. To be on the safe side we have to cope with ratios, P&L equations, risk engines, no trade zones, beta, volatility and so on. Most of this stuff is straight forward though and can be done with only a little knowledge of the formulas behind it. But here is an article about something that has not yet found its way into risk management.