TheRiskBlog

Volatility can be really bad for your long time performance. Before you can think, the market hits your stop only to bounce back a few minutes later.
The flash crash on May 6th was an awful example for this.
If your stop is close, you will surely get kicked out in one volatile move. But if you enlarge your stop too much, you hurt your Riskmanagement. A loss that’s too high for your account.
But how can our positions survive a volatile phase?

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

Very often a customer wants to learn all there is about the futures markets. He is not interested in the opportunity to make money in equities, all he wants is to trade futures. Now, there are a few things to know about these markets and how to deal with risk when trading futures. Here are things you really need to know…

When people start out as traders they always have one goal. And that is to make money - preferably lots of it. People have different ideas but most often we hear something along the line: “..i want to be able to make a living trading…”, and “…i have this amount x right now but at the end of the year i would like to have doubled it…”.

Now this is all fine but how do you reach such a lofty goal? Let´s have a look at a few ways:

Maybe you know those days, when you start with positive expectations and a big portion of optimism into the trading day. The news are good, the futures pre-market are in the green and some of your favourite stocks gained some points overnight. And you can’t wait to hear the opening bell.

If there was one big news this week, it was surely Warren Buffetts acquisition of Burlington Northern Santa Fe (BNI) railroad. But although the deal itself is interesting, another thing caught my attention.

Today I want to show you how I create overnight positions in trending stocks. Like in every investment you first have to choose an initial risk stop that doesn’t threaten your account, but unlike intraday trades it is important for overnight positions to stretch the trading range.

Phil Town reminded us in his last post about an important market fact:

“The price of a business is all about the buyer and seller’s joint agreement on the near term future. If it looks rosy to both, the price will be high. If not, not so much.”