Sharpe RatioRisk Management
Looking at returns as a raw percentage is deceptive. A trade should not only be measured by the amount of money it made you or the percentage return you gained from the trade. The true measure of success is a high measure of Risk-Adjusted Return. The higher your risk adjusted return, the lower the amount of risk you took to make a higher return, and the more skilled you are as an investor or trader.
The Sharpe ratio is an important and common risk-adjusted return statistic. It subtracts the risk-free rate from the average return, then divides that by standard deviation of returns. It’s easily compared across multiple asset classes since it normalizes return by the standard deviation. Sharpe reveals something true: A higher standard deviation is not automatically bad, with a high average return, it can be very good. The biggest issue is it punishes assets for having extremely positive values since that increases the standard deviation. A higher Sharpe ratio is always better.
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International Economic Analysis:
- Major Currency Economic Summaries
- Performance of Major Imports and Exports
- Mandates of Central Banks versus Expectations
- Performance Indexes of Major Economies
- Economically Correlated Currency Projections
- Large Funds Currency Sentiment Readings
- List of Technical Indicators to Look For
- Occasional: Foregin Exchange Technicals Markups
American Markets Analysis:
- Summaries of American Economic Structure
- Performance of Major
- Federal Reserve Mandate versus Expectations
- Performance Indexes of U.S Economy
- Economically Correlated U.S Dollar Projections
- Large Trading Fund Index Sentiment Readings
- Market Wide Earnings Versus Valuations
- Fundamental Ranking of U.S Business Sectors
- Best and Worst Future Consensus Estimates
- Occasional: Firm Fundamental Strength Report
- List of Technicals to Look for While Trading
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