How To Convert Investment Returns

Usually, we look at investment returns in terms of annual returns. However, your numbers may be expressed as daily, weekly, or monthly returns. Here’s how to convert them. The idea is that you compound to use the general formula for returns and compound them to an annual period. \[r_a = (1 + r)^n - 1\] Where \(r_a\) is the annual return, \(r\) is the return (in decimal) and \(n\) is the number of periods in a year. …

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Trading Technical Analysis - A Refreshing Take

There’s some controversy on whether technical analysis and chart reading are better than fundamental analysis and intrinsic valuation. I personally don’t have a dog in the fight. However, scanning reddit, I found a couple of interesting answers to a thread called “Change my mind: Technical Analysis is a complete nonsense” on r/CryptoCurrency Card And the original post on r/Bitcoin Card

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Cumulative & Annualized Returns

The cumulative return of an investment is the aggregate return that an investment has gained or lost over time (it can be both positive or negative). If you have Open-High-Low-Close stock data, you can compute cumulative returns on its adjusted price as dividends, and stock splits will lead to incorrect results. \[R_c = \frac{P_c}{P_i} - 1\] where \(R_c\) is the cumulative return, \(P_c\) is the current price, and \(P_i\) is the initial price. …

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Notes on Trading #2

Stop-Losses and Take-Profits Having Stop-Loss Orders (S/L) and Take-Profit Orders (T/P) allows you to compute a Risk/Reward Ratio for you trades. If you’re trading at the weekly level, these types of orders might let you ride upward trends more reliably than if you did it intraday. Volatile assets might hit a T/P target way earlier than you’d hope, which might be a good thing if you want to dip in and out. …

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Notes on Trading

Over the past few months, I’ve been listening to a podcast called Chat with Traders where you get to listen to professional traders share how they work. Having no experience in the trading world, I thought it would be a good idea to try and pick up the topic by listening to conversations about it, rather than books. I’m not sure I’ll listen to all episodes but here are some lessons I’ve picked up from the podcast so far. …

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