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Daily Archives: May 10, 2011

Learning to Love the Fat Tail

May 10, 2011
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Learning to Love the Fat Tail

I’ve written a lot about the importance of keeping track of your past trades and calculating key metrics such as batting average and slugging percentage.  I won’t rehash all that here, but I do want to touch on something that occurred to me when reviewing a few of my trades this week. Aside from all the customary statistical analysis, I also plot a histogram of my trade results. I create a dozen or so columns on the chart, each one measuring the number of trades that resulted in X amount of profit (or loss). One column in the middle...

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