Risk of Ruin: The Math That Decides Whether You Survive
A profitable trader and a blown-up account can run the same strategy. Risk of ruin is the math that decides which one you become, computed from first principles.
Otrai
Online Trading, Clarified
Risk Management
14 articles
Market Regimes: Why the Same Strategy Wins in One Market and Fails in Another
Two traders run the exact same strategy. One doubles their account, the other slowly bleeds it away. Same rules, same instrument, same discipline. The difference is not skill or luck. It is the market regime each of them happened to be trading in.
Correlation and Diversification: Why 10 Tech Stocks Aren't a Diversified Portfolio
Diversification is not about how many positions you hold — it is about how differently they behave. Ten tech stocks that move together are one big bet, not ten independent ones. Here is what correlation actually measures and why it decides your real risk.
Why Backtests Lie: Survivorship, Look-Ahead, and Fake Edges
A backtest is the most persuasive lie in trading. The equity curve slopes up and to the right, and then you trade it live and the edge quietly evaporates. Here are the systematic reasons why.
Short Selling Explained: Borrowing, Costs, and Why Squeezes Happen
Short selling means borrowing shares, selling them, and buying them back later. Here's the mechanic, the borrow fees, and the asymmetric risk profile that makes it fundamentally riskier than owning stock.
Bollinger Bands and ATR: How to Measure Volatility Instead of Guessing
Moving averages, RSI, and chart patterns all read direction. Bollinger Bands and ATR measure something different: how much a security is actually moving, and how to size stops around it.
What Is a Futures Contract? Specs, Expiry, Rollover, and Margin
A futures contract is a standardized, exchange-traded agreement to buy or sell an asset at a set price on a set date. Here's how tick size, expiry, rollover, and margin actually work.
Covered Calls, Protective Puts, and Cash-Secured Puts Explained
Covered calls, protective puts, and cash-secured puts are not free money. Each trades away something specific in exchange for income, a loss floor, or a paid limit order.
Pips, Lots, and Pip Value: The Forex Math Every Trader Needs Before Their First Trade
Before you place a single forex trade, you need to know how much you lose per pip. Here is the plumbing of forex — pips, lots, and pip value — worked out with real numbers.
How to Backtest a Trading Strategy: Methods, Pitfalls, and What the Results Actually Mean
Every trader has a strategy that looks great in their head. Backtesting is how you find out whether it actually works. Here is how to test strategies properly, what metrics matter, and why most backtest results are too good to be true.
Risk-Reward Ratios: How to Set Targets That Make Your Strategy Profitable
A risk-reward ratio compares how much you stand to lose on a trade to how much you stand to gain. It is arguably the most important number in your trading plan, because it determines whether your strategy can survive a normal losing streak.
How Leverage and Margin Actually Work: Calculations, Risks, and Margin Calls
Leverage lets you control a larger position than your account balance would normally allow. A $10,000 account with 10:1 leverage can open a $100,000 position. That sounds powerful, and it is — in both directions.