How often have you heard someone say, “I use a stop loss to manage downside risk”? You see this repeated so often that you could be forgiven for thinking it was some inviolable universal law. But do stop losses really do what people think? Let’s think this through together. And fair warning – what I’m …
Someone recently asked me if I have a checklist for adopting new trading strategies. You know, a neat little formula like “if backtested Sharpe > 1.8, trade it” or “if drawdown < 15%, green light.” I get the appeal. We all want clear, objective criteria to make these decisions easier. But strategy adoption just doesn’t …
In this webinar, James explores a simple seasonality effect and finds that there’s more to the story than an upwardly sloping equity curve. Watch the video to see how you can use Excel to explore market phenomena efficiently and gather evidence that you can use to make practical trading decisions. If you’d like to master …
In Trade Like a Quant Bootcamp, we talk about win-win risk premia harvesting. It’s a game where no one’s really competing for the edge. Think about VTI (Vanguard’s Total Stock Market ETF). You expect to make more than implied by the stock market’s cash flows (a risk premium) because holding these stocks is uncomfortable. They’re …
I don’t need to tell you that the stock market’s been on a wild ride these last few weeks. But going back even further, since about mid-2024, the VIX has been regularly popping up into the 20s, in contrast to the sleepy teens we saw in the first half of that year. So what’s happening …
With GLD up 40-something percent since early 2024, I’ve been thinking about gold’s place in a risk premia harvesting portfolio. It’s a fascinating rabbit hole and there’s plenty of disagreement. Let’s break this down from two perspectives – the academic one (yawn) and the practical one (which is what actually matters if you want to …
Here’s something that might shock you: Engineers make the worst traders. I’m speaking from experience here. As an engineer who transitioned to trading, it wasn’t until I stopped thinking like an engineer that I started to make progress. You can read all about this in my case study, by the way. Engineers like me are …
What’s a Fallen Angel Bond? It’s a bond that’s been kicked out of investment-grade paradise. Once upon a time, it was rubbing shoulders with the blue-chip elite. But then something happened – maybe the company took on too much debt, or the industry hit a rough patch – and next minute, the bond gets downgraded …
With the recent sell-off in pretty much everything, it’s a good time to talk about managing your expectations of trading. The essential thing is to understand and embrace the mayhem of the markets. And to understand what you can control and can’t control so that you don’t send yourself crazy worrying about things that there …
It was my absolute pleasure to chat with Kris Abdelmessih about markets and life. Kris was an options market maker who started out in the trading pits of New York and later flipped the script to set up the commodity options business for hedge fund Parallax Advisory. Today, Kris writes the Moontower newsletter on Substack …
