Essential reading / Risk
A loss and its recovery are not equal.
A 20% drawdown requires a 25% gain to return to the starting balance. The difference is in the denominator.
$10,000Starting equity
$8,000After a 20% loss
+25%To recover
The trading reference
Understand the market.
Know what you trade.
Definitions, worked examples and practical explanations of trading, market structure and risk.
Explore the subjects
View all articles01 /
Trading foundations
Start with the language of orders, prices and exposure.
2 articles02 /Markets & instruments
Understand what a contract or security actually represents.
5 articles03 /Technical analysis
Read price measurements and understand their limits.
1 article04 /Fundamental analysis
Understand economic releases and policy instruments.
2 articles05 /Market mechanics
Follow the relationship between quotes and execution.
1 article06 /Risk management
Measure exposure, losses and recovery requirements.
3 articles07 /Trading psychology
Keep a record of decisions before judging their outcomes.
1 article08 /Strategies & testing
Evaluate an idea using explicit rules and honest accounting.
2 articlesRead the drawdown guide
Build your understanding
- Market, limit and stop orders
Market orders seek execution at available prices, limit orders constrain the execution price, and stop orders activate after a trigger. The choice determines which risks remain when a trade reaches the market.
- Bid-ask spread: quotes, costs and market depth
The bid-ask spread is the difference between the best buying and selling quotes. Measuring it alongside available quantity helps explain the cost of entering and leaving a position.
- Expectancy and win rate
Win rate counts successful trades. Expectancy also accounts for the size of wins, losses and costs.
Good explanations show their working.
Reference entries link to their sources. Calculations state their assumptions. Working methods explain their limits.