Bear or Bull? You never know...
Blog about risk taking, macro trading, and alternative investments.
The almost zero difference between long and short
Dollars or euros are the same, regardless if you make or lose them with the market going up or down. But in minds of most people – even when we consciously try to avoid it – trading on long and short side still feels different.
Permanent bulls
Some people are [...]
What delta means
Delta, the best known of the option Greeks, is a measure of directional exposure of an option. It is the first derivative of option’s market price with respect to the underlying’s price. Simply said, an option’s delta represents the dollar value by which the market price of the option changes when the underlying [...]
The common method: using closing prices
Most people calculate moving averages (or let their software calculate it) from the closing price of each bar. This has a valid reason on daily or weekly charts, because the price at which the market closes on a particular trading day or week has a big meaning.
Of course, like many [...]
What a moving average period means
The length of a moving average period, or simply moving average period, means how many bars are used for calculating the moving average. When you are selecting a moving average period length, you are deciding how far back to the history you want to look.
For example, a simple moving average [...]
What is a directional trade
In general, a directional trade is a trade in which you are betting on a particular direction (up or down) in the movement of price of a security. If you are right and the security goes in the direction you chose, you make a profit. If it goes the other way, [...]
Directional and non-directional option trades
Maybe you have already heard about an option trade being directional or non-directional. What does it mean? In short, this distinction is about how much the trade is exposed to movement in price of the underlying security. This article explains directional trades. Here you can find the second part concerning non-directional [...]
There is no perfect moving average
Like there is no “right” way to do many things in finance and trading, there is also no “right” moving average period.
Advantages of faster moving averages
Most people who like trading are naturally attracted to tools that seem to work faster and show more action. That’s why we tend to play [...]
What volatility means
Volatility is a measure of how much something tends to change. Unlike the usual way people look at prices of securities and their changes – up or down, the volatility point of view does not care about the direction so much. In fact it does not distinguish between up and down.
When you hear [...]
Trend is your friend, so they say
If you have looked for some trading advice in books or on the internet, you have probably come across the phrase “Trend is your friend”. This is one of the most widely accepted (and most widely reproduced) pieces of trading wisdom. Its core idea is that (in the long [...]
How to create a long straddle
A straddle is the simplest non-directional trade you can make with options. A straddle is a combination of a call and a put option with the same underlying asset, same expiration date, and most importantly, same strike price. In short, all the basic characteristics of both options you buy are [...]
Variance and standard deviation definition and calculation
Variance and standard deviation are widely used measures of dispersion of data or, in finance and investing, measures of volatility of asset prices.
Variance is defined and calculated as the average squared deviation from the mean. Standard deviation is calculated as the square root of variance or in full definition, [...]
