tailieunhanh - How to Win the Stock Market Game

This publication is for short-term traders, . for traders who hold stocks for one to eight days. Short-term trading assumes buying and selling stocks often. After two to four months a trader will have good statistics and he or she can start an analysis of trading results. What are the main questions, which should be answered from this analysis? | 1 How to Win the Stock Market Game Developing Short-Term Stock Trading Strategies by Vladimir Daragan PART 1 Table of Contents 1. Introduction 2. Comparison of trading strategies 3. Return per trade 4. Average return per trade 5. More about average return 6. Growth coefficient 7. Distribution of returns 8. Risk of trading 9. More about risk of trading 10. Correlation coefficient 11. Efficient trading portfolio Introduction This publication is for short-term traders . for traders who hold stocks for one to eight days. Short-term trading assumes buying and selling stocks often. After two to four months a trader will have good statistics and he or she can start an analysis of trading results. What are the main questions which should be answered from this analysis - Is my trading strategy profitable - Is my trading strategy safe - How can I increase the profitability of my strategy and decrease the risk of trading No doubt it is better to ask these questions before using any trading strategy. We will consider methods of estimating profitability and risk of trading strategies optimally dividing trading capital using stop and limit orders and many other problems related to stock trading. Comparison of Trading Strategies Consider two hypothetical trading strategies. Suppose you use half of your trading capital to buy stocks selected by your secret system and sell them on the next day. The other half of your capital you use to sell short some specific stocks and close positions on the next day. 2 In the course of one month you make 20 trades using the first method let us call it strategy 1 and 20 trades using the second method strategy 2 . You decide to analyze your trading results and make a table which shows the returns in for every trade you made. Return per trade in Strategy 1 Return per trade in Strategy 2 1 3 4 2 2 -5 3 3 6 4 -5 9 5 6 -16 6 8 15 7 -9 4 8 5 -19 9 6 14 10 9 2 11 1 9 12 -5 -10 13 -2 8 14 0 15 15 -3 -16 16 4 8 17 7 -9 18 2 8 19 -4 16 20 3 -5 The next