Probability and statistics have supplanted shouting and scalping The phrase “active trading” might suggest a wild-eyed investor screaming “Buy! Sell! Buy! Sell!” But now that most stock and options trading has moved online, the tension has eased and the pace has slowed. Along the way, the very meaning of active trading has changed. While it … Continued
Get serious about investing by attaching a numerical probability to every trade It’s fun to speculate about cultural, political or economic events that might happen in 2023. But when it comes to investing, it’s preferable to keep entertaining guesses out and quantifiable outcomes in. That means attaching a probability number—between 0% and 100%—to where a … Continued
Voters can interpret the true meaning of a poll if they understand the importance of the margin of error, confidence interval and sample size. A poll’s margin of error can inspire hope or panic among candidates and the voters rooting for them. It begins with the fact that election season turns every political junkie into … Continued
Going long on one cryptocurrency and short on another tends to cancel out the wild price fluctuations When it comes to crypto volatility, fight fire with fire. Remember when bitcoin was under $5 back in 2011? Or when it was over $50,000 back in 2021? How about this year when it lost half that value? That trip … Continued
Sure, there’s a possibility the price of college might come down, but the high growth rate and low volatility say the odds are against it If Ben Franklin were alive today, he might revise his maxim about death and taxes to include the rising cost of college. It’s uncertain which one people dread the most. … Continued
They’re not the same, and knowing the difference
could lead to successful investing
Low-priced stocks and short put strategies are essential ingredients for active investors, but challenges arrive when mixing them A contrarian options trader might see a bullish opportunity when a stock gets pummeled to a low price. It’s a Pavlovian reaction, but there’s nothing wrong with that. There’s money to be made by taking on risk. When … Continued
Fortunately, there’s a formula for that. Let Poisson help you decide. Humans function like pattern-recognition machines, and that’s generally a helpful trait. For example, they learn early on that cheeseburgers are delicious and don’t kill them, so they save time by zeroing in on cheeseburgers when they’re hungry. There’s a high probability that the cheeseburger … Continued
Many seasoned traders were not taken in by the meme stock hype It’s not opposable thumbs, extra cranial capacity or the ability to walk on two feet that separates humanity from animals. It’s hype. OK, maybe bees and ants let their friends know about the picnic. But humans have the unusual anti-competitive quality that spurs … Continued
… and Other Essential Trading Advice A pro trader dissects the three pillars to successful active investing Everyone who trades options wants to make money doing it. But how does someone reach that goal? A lot of strategies, techniques and products might work. Or not. Yet, three ideas can tilt the odds in favor of … Continued
