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Trend Following
Trend following or trend trading is a trading strategy according to which one should buy an asset when its price trend goes up, and sell when its trend goes down, expecting price movements to continue. There are a number of different techniques, calculations and time-frames that may be used to determine the general direction of the market to generate a trade signal, including the current market price calculation, moving averages and channel breakouts. Traders who employ this strategy do not aim to forecast or predict specific price levels; they simply jump on the trend and ride it. Due to the different techniques and time frames employed by trend followers to identify trends, trend followers as a group are not always strongly correlated to one another. Trend following is used by commodity trading advisors (CTAs) as the predominant strategy of technical traders. Research done by Galen Burghardt has shown that between 2000-2009 there was a very high correlation (.97) between tr ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Trading Strategy
In finance, a trading strategy is a fixed plan that is designed to achieve a profitable return by going long or short in markets. The difference between short trading and long-term investing is in the opposite approach and principles. Going short trading would mean to research and pick stocks for future fast trading activity on one's accounts with a rather speculative attitude. While going into long-term investing would mean contrasting activity to short one. Low turnover, principles of time-tested investment approaches, returns with risk-adjusted actions, and diversification are the key features of investing in a long-term manner. For every trading strategy one needs to define assets to trade, entry/exit points and money management rules. Bad money management can make a potentially profitable strategy unprofitable.Nekrasov, V. Knowledge rather than Hope: A Book for Retail Investors and Mathematical Finance Students''. 2014pages 24-26 '' Trading strategies are based on fundame ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Saying
A saying is any concise expression that is especially memorable because of its meaning or style. A saying often shows a wisdom or cultural standard, having different meanings than just the words themselves. Sayings are categorized as follows: * Aphorism: a general, observational truth; "a pithy expression of wisdom or truth". ** Proverb, adage or saw: a widely known or popular aphorism that has gained credibility by long use or tradition. ** Apothegm/Apophthegm: "an edgy, more cynical aphorism; such as, 'Men are generally more careful of the breed of their horses and dogs than of their children.'" * Axiom: a proposition that commends itself to general acceptance; a well-established or universally conceded principle; a maxim, rule, or law.''Oxford English Dictionary'' Online, accessed 2012-04-28 * Cliché or bromide: an unoriginal and overused saying. ** Platitude: a cliché that is unsuccessfully presented as though it were meaningful, original, or effective. * Epigram: a cle ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Algorithmic Trading
Algorithmic trading is a method of executing orders using automated pre-programmed trading instructions accounting for variables such as time, price, and volume. This type of trading attempts to leverage the speed and computational resources of computers relative to human traders. In the twenty-first century, algorithmic trading has been gaining traction with both retail and institutional traders. A study in 2019 showed that around 92% of trading in the Forex market was performed by trading algorithms rather than humans. It is widely used by investment banks, pension funds, mutual funds, and hedge funds that may need to spread out the execution of a larger order or perform trades too fast for human traders to react to. However, it is also available to private traders using simple retail tools. The term algorithmic trading is often used synonymously with automated trading system. These encompass a variety of trading strategies, some of which are based on formulas and results ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Swing Trading
Swing trading is a speculative trading strategy in financial markets where a tradable asset is held for one or more days in an effort to profit from price changes or 'swings'. A swing trading position is typically held longer than a day trading position, but shorter than buy and hold investment strategies that can be held for months or years. Profits can be sought by either buying an asset or short selling. Momentum signals (e.g., 52-week high/low) have been shown to be used by financial analysts in their buy and sell recommendations that can be applied in swing trading. Swing trading methods Using a set of mathematically-based objective rules for buying and selling is a common method for swing traders to eliminate the subjectivity, emotional aspects, and labor-intensive analysis of swing trading. The trading rules can be used to create a trading algorithm or "trading system" using technical analysis or fundamental analysis to give buy-and-sell signals. Simpler rule-based t ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Drawdown (economics)
The drawdown is the measure of the decline from a historical peak in some variable (typically the cumulative profit or total open equity of a financial trading strategy). Somewhat more formally, if X(t), \; t \ge 0 is a stochastic process with X(0) = 0, the drawdown at time T, denoted D(T), is defined as: D(T) = \max_X(t)-X(T) The average drawdown (AvDD) up to time T is the time average of drawdowns that have occurred up to time T:\operatorname(T) = \int_0^T D(t) \, dtThe maximum drawdown (MDD) up to time T is the maximum of the drawdown over the history of the variable. More formally, the MDD is defined as: \operatorname(T)=\max_D(\tau)=\max_\left max_ X(t)- X(\tau) \right/math> Pseudocode The following pseudocode computes the Drawdown ("DD") and Max Drawdown ("MDD") of the variable "NAV", the Net Asset Value of an investment. Drawdown and Max Drawdown are calculated as percentages: MDD = 0 peak = -99999 for i = 1 to N step 1 do # peak will be the maximum value seen so fa ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Backtest
Backtesting is a term used in modeling to refer to testing a predictive model on historical data. Backtesting is a type of retrodiction, and a special type of cross-validation applied to previous time period(s). Financial analysis In the economic and financial field, backtesting seeks to estimate the performance of a strategy or model if it had been employed during a past period. This requires simulating past conditions with sufficient detail, making one limitation of backtesting the need for detailed historical data. A second limitation is the inability to model strategies that would affect historic prices. Finally, backtesting, like other modeling, is limited by potential overfitting. That is, it is often possible to find a strategy that would have worked well in the past, but will not work well in the future. Despite these limitations, backtesting provides information not available when models and strategies are tested on synthetic data. Historically, backtesting was only ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Conventional Wisdom
The conventional wisdom or received opinion is the body of ideas or explanations generally accepted by the public and/or by experts in a field. History The term "conventional wisdom" dates back to at least 1838, as a synonym for "commonplace knowledge". It was used in a number of works, occasionally in a benign''E.g.,'1 Nahum Capen, ''The History of Democracy'' (1874), page 477("millions of all classes alike are equally interested and protected by the practical judgment and conventional wisdom of ages"). or neutral''E.g.,'"Shallow Theorists", ''American Educational Monthly'' 383 (Oct. 1866)("What is the result? Just what conventional wisdom assumes it would be."). sense, but more often pejoratively.''E.g.,'Joseph Warren Beach, ''The Technique of Thomas Hardy'' (1922), page 152("He has not the colorless monotony of the business man who follows sure ways to success, who has conformed to every rule of conventional wisdom, and made himself as featureless as a potato field, as tame as ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Order (exchange)
An order is an instruction to buy or sell on a trading venue such as a stock market, bond market, commodity market, financial derivative market or cryptocurrency exchange. These instructions can be simple or complicated, and can be sent to either a broker or directly to a trading venue via direct market access. There are some standard instructions for such orders. Market order A market order is a buy or sell order to be executed immediately at the ''current'' ''market'' prices. As long as there are willing sellers and buyers, market orders are filled. Market orders are used when certainty of execution is a priority over the price of execution. A market order is the simplest of the order types. This order type does not allow any control over the price received. The order is filled at the best price available at the relevant time. In fast-moving markets, the price paid or received may be quite different from the last price quoted before the order was entered. A market order may b ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Simple Moving Average
In statistics, a moving average (rolling average or running average or moving mean or rolling mean) is a calculation to analyze data points by creating a series of averages of different selections of the full data set. Variations include: simple, cumulative, or weighted forms. Mathematically, a moving average is a type of convolution. Thus in signal processing it is viewed as a low-pass finite impulse response filter. Because the boxcar function outlines its filter coefficients, it is called a boxcar filter. It is sometimes followed by downsampling. Given a series of numbers and a fixed subset size, the first element of the moving average is obtained by taking the average of the initial fixed subset of the number series. Then the subset is modified by "shifting forward"; that is, excluding the first number of the series and including the next value in the series. A moving average is commonly used with time series data to smooth out short-term fluctuations and highlight longer ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Short (finance)
In finance, being short in an asset means investing in such a way that the investor will profit if the market value of the asset falls. This is the opposite of the more common Long (finance), long Position (finance), position, where the investor will profit if the market value of the asset rises. An investor that sells an asset short is, as to that asset, a short seller. There are a number of ways of achieving a short position. The most basic is physical selling short or short-selling, by which the short seller Securities lending, borrows an asset (often a security (finance), security such as a share (finance), share of stock or a bond (finance), bond) and sells it. The short seller must later buy the same amount of the asset to return it to the lender. If the market price of the asset has fallen in the meantime, the short seller will have made a profit equal to the difference in price. Conversely, if the price has risen then the short seller will bear a loss. The short seller ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Long (finance)
In finance, a long position in a financial instrument means the holder of the position owns a positive amount of the instrument. The holder of the position has the expectation that the financial instrument will increase in value. This is known as a bullish position. The term "long position" is often used in context of buying options contracts. Ownership When an investor holds a long position in a stock they are buying a share of ownership in a company. Depending on the type of Stock purchased this can entitle the shareholder to voting rights at shareholder meetings or dividend payments. Security In terms of a security, such as a stock or a bond, or equivalently ''to be long'' in a security, means the holder of the position owns the security, on the expectation that the security will increase in value, and will profit if the price of the security goes up. ''Going long'' a security is the more conventional practice of investing. Future Going long in a future means th ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
