About the Presentation
Risk
is the primary limitation to trading profits. In the development of
trading systems and management of trading, risk appears in four
situations: 
- Personal risk tolerance.
Each trader -- person or trading company -- has a risk tolerance. It is
the amount of drawdown in the trading account where the trader loses
confidence in the system and takes it off line.
- Risk inherent in the price series.
Each primary data series -- the price series of the issue being traded
-- has risk inherent in it. That risk can be measured and used to
determine the suitability of an issue for trading
- Risk of a trading system.
The trading system -- the model (the combination of indicators,
parameters, and rules) together with the data -- has both risk and
profit potential. Risk of the system can be measured, maximum position
size determined, and profit potential estimated.
- Risk management as conditions change.
As trading conditions change, risk changes. Risk can be assessed
trade-by-trade, enabling the trader to determine the current maximum
safe position size, and to compare alternative trading opportunities.
Each of these four aspects of risk is defined, quantified, and discussed.
A question and answer period follows the presentation.
Dr. Bandy is uniquely
qualified in technical analysis, with education including university
degrees in mathematics, physics, engineering, and computer science. His
graduate work focused on modeling and simulation, artificial
intelligence, and statistics.
While in graduate school, he began
applying quantitative techniques to financial markets in the late
1960s. He continued
his academic work, becoming a tenured full professor of mathematics and
computer science and university dean. Dr. Bandy has real-world
experience as a software developer, including the design and
implementation of a program to select stocks and issue buy and sell
orders. Additionally, he was a senior research analyst at a Commodity
Trading Advisor (CTA) firm, where he held a Series 3 license.
He
consults with and assists individual traders and trading companies in
the design, testing, validation, and analysis of trading systems.
Dr. Bandy is the author of four recently published and best-selling books on technical analysis, including Quantitative Trading Systems, Mean Reversion Trading Systems, and Modeling Trading System Performance.
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