TEST YOUR TRADING KNOWLEDGE !
Hi Traders and Analysts.
Here are some basic questions to test your technical analysis knowledge and trading prowess ! I hope you enjoy answering the questions as much as I did writing them out ! There are a total of 336 questions available so far. I will think up more in time.....!
Good luck and have fun ! Or at least try to !
1) Give 2 scenarios where joining the 'Herd' is useful to you as a trader.
2) Explain why backtesting may be misleading. Then explain how you can adapt it in such a manner as to make it realistically useful in trading.
3) What is the ‘link’ between Position Sizing & Stoploss Placement?
4) The use of Volume Spread Analysis (VSA) by Tom William's gives another dimension to the forecast of potential future price action. What is the biggest weakness of VSA that can undermine its usefulness ?
5) Can you name 4 market characteristics that puts probability of winning on your side ?
6) Explain how Entries based on breakout of previous day's (or week's) High & Low may be ineffective.
7) How is FPI (Fractional Product Inefficiency, by Kreslik) fundamentally different from 'Basket Trading' by Figueroa ? Explain how one is based on pure arbitrage of market ineffiency and the other on capture of a simple aggregated group trend component. If you can, explain why the trend component exists !
8) 'Past performance is no indication of future results. ' Does this mean all trading and analysis is pointless ?
9) Trading with a Renko chart involves having to suffer a two brick reversal entry. Many traders therefore use a 2, 3 or even 4 brick filter for entry to reduce ranging losses, or either opt to trade longer term, like on daily charts, to avoid much of the noise that normally accompanies shorter term trading. Is there a better way to improve the Renko based trading performance besides using these conventional approaches ?
10) You have a consistent win ratio of 50% and a Reward/Risk Ratio of 2:1. Explain why you may still lose in the end, even if your win ratio stays, and never drops below at 50%.
11) Which is worst: Not achieving your profit target or getting stopped out ? Explain why.
12) R/R ratio is an over-rated concept. Do you agree ? Explain.
13) ''My winning percentage is 40%.'' Explain why such a statement is meaningless. (Explain why such a statement needs to be based or referenced with respect to the period in question.)
14) Which do you consider more serious: paper losses or realised losses ? Explain.
15) In what way are the standard deviation settings for the bollinger bands 'misleading' ?
16) Explain why high leverage is not hazardous to your trading. Then explain how it can be.
17) Give 4 reasons why is a technical trader is always disadvantaged when trading the charts.
18) Joe DiNapoli described simple trading system in his famous book 'Trading DiNapoli Levels' whereby a trade is entered when the stochastic crosses its signal line, but only if there is an established trend, which is confirmed by the longer term MACD. The stochastic need not be at the oversold or overbought levels. Just as long as there is a stochastic crossing, and the MACD is confirming the trend, that will be a sufficient entry signal. A pair of moving averages are also used to further define the trend. Now, explain how you would use this method for pyramiding or scaling in more positions ?
19) Explain why there is no such thing as an 'agressive' or 'conservative' trader.
20) Explain why a simple moving average may not in fact be considered 'lagging' ! Then explain why the Coppock Indicator which is normally used for longer term Futures and Currency trading may be useful only if the proper money management is applied.
21) From Qn.13 above, now explain why the following statement is still meaningless: ''My average monthly return is 30%'' (after all, we did provide th e period in question!)
22) Dr. Alexander Elder introduced the idea of the 'Triple Screen Trading' technique using a combination of indicators and oscillators, spread across 3 timeframes. Even though it is a powerful technique, it has some drawbacks. Name at least 8, if you can !
23) When is trend trading in reality counter-trend trading ?
24) What is the 'real' Reward to Risk Ratio of a Buy & Hold strategy ? (Hint: Click Here!)
25) Robert trades using technical analysis. Robert's winning percentage is consistently 50%. He finally decides to flip a coin instead of using technical analysis to trade the markets. Explain to Robert why it is still better to use Technical Analysis rather than entering the market using the coin flip method, even if he is only right half of the time.
26) Under what circumstances is discipline extremely hazardous to your trading ?
27) Historically, a certain commodity futures has shown a rise in price every single year, on the very same day, without fail ! Explain how data snooping techniques may be used to mislead traders into believing that a correlation actually exist, when it may well just be a chance artifact !
28) Give 8 weaknesses of Money Management.
29) In traditional Japanese Candlestick trading, a Marubozu candle is considered bullish. Give 5 situations where this is completely untrue.
30) Why are stoplosses not usually used when spread trading in futures ? What is the rationale ?
31) When is it better to time cycles from the peaks instead of the bases ?
32) If ''A chart is a chart is a chart'' is true, then why is ''A pip is a pip is a pip'' untrue ?
33) How can we use GARCH (1,1) analysis to help us better time options trades ?
34) What is the main weakness of VAR modeling ?
35) Describe one way we can do away with all risk in VAR modelling.
36) Give one example of 'fat tail' trading.
37) When is diversification hazardous to your trading ?
38) Explain how you may 'buy at the bid' and 'sell at the ask'.
39) At what level are you considered to be at the 'risk of ruin' ?
40) How is the ATR, Pivot Points & Commodity Channel Index Indicator considered similar ?
41) Give 2 scenarios where contrarian trading may be hazardous to your trading account.
42) Why is trading a 'negative sum' game ?
43) ''In the long run, we are all dead'' is a famous quote by JM Keynes. Explain how this relates to trading.
44) Which strategy would still allow you to profit from the market even if the market is 100% efficient ?
45) What does it actually mean when the CCI crosses the zero line ?
46) Many traders prefer to trade only when the RSI crosses the 50% line. Under which scenario can this be misleading ?
47) Is it better to follow the trading rules and lose money, or break the rules and make money ?
48) When does demand drive price, and when does price drive demand ?
49) Does Volume preceed price ?
50) Many traders raise the 'oversold' stochastic up to the 30% line, instead of the traditional 20%. When do they normally do this adjustment ?
51) Assume that two currency pairs are 'perfectly' inverse correlated. You go long on both with 1 standard lot each. Is your net position 'perfectly' hedged ?
52) What is an 'inside day' called in Japanese Candlesticks ? Explain why this may be misleading.
53) There are 25 candlesticks in a row, all with the same highs and lows, but with steadily increasing close prices. Is there an uptrend ?
54) There are 5 trades and you are guaranteed to win only one. You are not told which trade will be the winning one. How would you place your bets to make sure you fully maximise your profit ?
55) What is meant by 'delta neutral' trading ?
56) What is meant by gamma trading or scalping ?
57) Why are leveraged funds ultimately 'bearish' ?
58) Is 'front running' by brokers illegal in Forex OTC trading ?
59) A stock is now trading at $4.50. You now place a buy limit order at $4.80. What would most likely occur ?
60) Explain the reason why there is usually a widening of the bid-ask spread when the market is illiquid, fearful or volatile.
61) From question 60, explain how this widening actually occurs.
62) Explain why volume analysis is not easily applicable to ETFs.
63) Is it true that a wider stop loss means a higher winning percentage ?
64) What are 'weak hands' ?
65) Hedge fund diversification is most effective in falling markets. True or False ?
66) Is volatility a 'change in price', or a 'change in a change' in price ?
67) Many traders nowadays prefer to use stop-limit orders to trade an economic news release. What is the advantage of using these orders ?
68) Explain why 'trading with the trend' makes perfect sense in technical analysis but is totally meaningless in trading.
69) Which trader introduced the GMMA indicator ?
70) Give one reason why 'trade expectancy' may be totally misleading.
71) How do you find the optimum setting for a moving average or oscillator ?
72) How can you make an 80-period moving average similar to a 160-period moving average, on the same time frame chart ?
73) Give 5 disadvantages of using the stochastic oscillator.
74) How did Fischer make Elliot Wave trading more objective ?
75) What kind of order will not protect you from an adversely large move in price ?
76) 'Spread trading is safe.' Explain how this statement may be false.
77) Explain why there is a discrepancy in price between the quote screen and charts especially when prices are changing very rapidly.
78) Name 5 ways that a broker can renege on a trade should a trader manage to secure a risk free trade where the bid was momentarily higher than the ask price.
79) What does 'catching a falling knife' mean ?
80) When does OHLC data paint a completely ambiguous presentation of Candlesticks ?
81) When is divergence in the MACD oscillator 'misleading' ?
82) Why are speculators useful to the proper functioning of the markets ?
83) Peter uses the Turtle Trading (Donchian) technique to trade the EURUSD. What is he doing wrong ?
84) What is 'stop hunting' ?
85) Describe 4 ways to circumvent 'stop hunting'.
86) Name one chart pattern that usually means that there is total and utter confusion in the market.
87) What is the name of the Japanese Candlestick in which price does not move at all ?
88) What does it really mean if your ECN broker 'requotes' you on a nano lot in forex trading ?
89) On what basis does the interbank market work ? Give a one word answer.
90) Will brokers 'stop hunt' on your demo accounts ?
91) Explain why it is not possible to trade a double top pattern by shorting from the second top !
92) Name 3 advantages of using a triple-smoothed (TRIX) indicator.
93) A 'Guru' tries to impress his prospective students with an amazing real live trading account track record. Unfortunately, the guru had earlier opened two live accounts with perfectly opposite positions. One had a large loss but the other a large win. So overall, the guru sufferred no loss except for a little commision. He has decided to show the winning account instead, and since it is a 'real' account, it is very convincing. Now, since there is no way to ascertain the real performance from just displaying an account, how can the real performance be proven, beyond any shadow of a doubt ?
94) Descibe, in detail, the 6 functions of a stop order.
95) Explain how exchange traded spot Forex could better than OTC spot Forex trading.
96) What is an R-Multiple ?
97) Which are trend traders: reversal traders or breakout traders ? Explain your answer.
98) 'Buy and hold is dead.' Why?
99) What is 'bottom fishing' ?
100) Explain why 'you can never go broke by taking a profit' may be false.
101) Give 5 disadvantages of using Trend lines. Now, give 5 advantages for it.
102) What is the 2B method about ?
103) What is the A-B-C method ?
104) The best time to trade Forex is during the US-UK overlap session. Give 5 reasons for and against trading the overlap.
105) Give 5 disadvantages of using Candlesticks.
106) The Head & Shoulders pattern is not a reversal pattern. Explain why this may be.
107) What else do you need besides positive expectancy in trading ? (11 letters)
108) When will you know if you are finally consistently profitable ? Is it after 5, 10, 20 , 100, 1000 or more trades ?
109) ''The market is an expensive place to find out if you can trade.'' Give 5 arguments for and against this statement.
110) According to Elliot, what is the most important aspect of Elliot Waves: ratio, pattern or size of the waves ?
111) Explain the difference between the 'Bullish Upside Gap 3 Method' and the 'Bullish Upside Tasuki Gap'.
112) What is a Takuri Line ?
113) Name 5 disadvantages of filtering entries. Now name 5 advantages for it.
114) What does 'volume' on most FX market makers platform really represent ?
115) What is the biggest problem in using the OBV oscillator ?
116) How can you fix the problem in Qn. 115 ?
117) In Chaos Trading, where can you see new information in the charts ?
118) Which is more advantageous to a directional trader: homoskedasticity or heteroskedasticity ?
119) Explain why when the markets falls, not every 'long' position loses money.
120) Explain why the 'greater fool' theory may be flawed.
121) Give 3 scenarios where your personal 'fear and greed' is actually beneficial to your trading !
122) If you kept losing money in trading, will reading your charts upside down help ?
123) Explain how you can actually make money trading on your demo account.
124) Expain the disadvantages of trading cash Forex via commercial money changers.
125) How can you minimise the effects of the spread cost in trading ?
126) When can you break all the rules in trading and lose your entire account and still be profitable ?
127) Emotion can be a great advantage in trading. Explain.
128) Explain when it is not true that you must work twice as hard to recoup a 50% loss in capital.
129) Explain when it is true that you must work twice as hard to recoup a 50% loss in capital.
130) Explain the pros and cons of an anti-martingale trading system.
131) What kind of analysis is concerned with 'intrinsic value' ?
132) How do you read 'acceleration' in a 'momentum' oscillator ?
133) ETNs differ from ETFs in what major way ?
134) Why do Merrill Lynch Holders tend to be ultimately more volatile ?
135) What is systematic risk ?
136) Are gold stocks a leading indicator for gold prices ?
137) When is the discount rate lower than the fed funds rate ?
138) Under what conditions will a deflationary policy be accompanied by a rise in the greenback ?
139) Which country has recently banned the use of all foreign currency within its borders ?
140) How are forex candlesticks different from normal candlesticks ?
141) How is a pit trader in a more advantageous position compared to online traders ?
142) A moving average acts as a low pass filter. True or false ?
143) Explain why option credit spreads have a very low reward to risk ratio.
144) Explain why many traders buy very far OTM options.
145) Is there any advantage in selling deep ITM put options when the stock price is very low ?
146) Do you incur a daily cost for being long in gold when trading CFDs ?
147) Name 3 reversal indicators.
148) What is Currenex ?
149) Explain why currency futures trading may be very much more liquid than trading through an OTC spot forex broker on the interbank system.
150) What is the NBBO ?
151) What is a Fund of Funds ?
152) State one way that the COT report could mislead traders.
153) How does trading multiple time frames affect position sizing ?
154) How does trading multiple timeframes affect money management ?
155) ''Always trade with the trend''. Does that mean that trading a bearish engulfing pattern after an extended rally is going against this well accepted maxim ?
156) What is a 'fat finger' event ?
157) Explain why the trend may not be your friend.
158) Give 5 reasons against using the ATR as a basis for stop loss placement.
159) How can you profit from price slippage ?
160) What is the difference between the Rising 3 Method and the Mat Hold in Candlesticks ?
161) Why would you use a MIT buy order instead of a Buy Limit order ?
162) How do you normalised your risk per stock, across a portfolio of stocks with very diverse volatility ?
163) What is 'implied volatility' ?
164) What is the rationale behind trading the 'Dogs of the Dow' ?
165) What offsets the expense ratio in the FXE fund ?
166) What is meant by the 'uptick rule' ?
167) Which is more hazardous to your trading: averaging down or up ?
168) Accumulation and Distribution represents what type of market action ? (13 letters)
169) Name 3 different ways of 'over-trading'.
170) Under what scenario is the 'carry trade' completely riskless ?
171) What is the main difference between profit optimisation and profit maximisation ?
172) What is the advantage of Portfolio Margining ?
173) What is the connection between a prime broker and a hedge fund ?
174) What is 'AUM' in hedge fund speak ?
175) Explain the difference between hedge fund's Global Macro & Long/Short Strategies ?
176) What is a swap ?
177) Which countries require brokers to segregate customer accounts ?
178) What do hedge funds actually 'hedge' ?
179) Who is Albert Winston Jones ?
180) Can you participate in hedge fund diversification via an ETF ?
181) Are Floor Trader's Pivot Points a Trend Following or a Volatility Indicator ?
182) What caused the collapse of LTCM ?
183) Give one example of how you could actually lose money if the underlying stock in a covered call got assigned.
184) What options are the synthetic equivalent to stock ?
185) What is the best option strategy to use if the implied volatility is well below its historical volatility ?
186) Why is buying options just before an earnings release an innefficient strategy ?
187) When is a call option equivalent to stock ?
188) When is an uptrend not really an uptrend, even though it has higher highs and higher lows ?
189) The EURUSD rate is rising. Does that mean that the EURO is strong or does it mean that the USD is weaker ? (Pick only one answer)
190) Is an option still an option if it has no more extrinsic value ?
191) What the difference between correlation, cointegration, collinearity and covariance ?
192) Does correlation imply causation ?
193) Is Regression Analysis a part of technical analysis ?
194) In what way are humans emotionally wired to fail in trading ? Name 3 ways.
195) Is using the Bollinger Band as a stop loss a good idea ? Explain your answer.
196) When does Recession become Depression ?
197) How are Elliot Waves different from the Goodman Waves ?
198) How do you gauge the ETA and EPA of a Wolfe Wave Pattern ?
199) What kind of trader activity may disrupt the effects of a Self Fulfilling Prophecy ?
200) What kind of test is required to determine the true effectiveness of an indicator ? (Hint: It is not Backtesting)
201) If margin is 1.5%, then what is your leverage ?
202) The margin required was $50. He risked $25 per trade. Peter made only one trade and his return on margin was 25%. He had $12500 in his trading account. How much money did he make ?
203) From Qn 202, what percentage was Peter's return on capital ?
204) From Qn 202, what percentage was Peter's return on risk per trade ?
205) If your average earning per trade was +1%, and average earning's standard deviation was 1.5%, do you believe that you have a fairly robust trading system ? Explain your answer.
206) Explain the difference between trading the Triple Moving Average Crossover and the Triple Smoothed Moving Average Crossover ?
207) What does MESA stand for ?
208) Explain why traders believe that 'price is king'.
209) Could you 'reverse engineer' the Stochastic Oscillator to give you a price target ? Explain.
210) There is a StochRSI oscillator. Why is there not a RSIStoch oscillator too ?
211) What is the 'multicollinearity trap' in using indicators ?
212) If you divide the sum of the R-multiples of all trades by the total number of trades, what does that number represent ? (10 letters)
213) What is meant by 'analysis paralysis' in trading ?
214) From Qn 213, does this mean we should discard most of our analyses ? If so, which ones ?
215) How do you know when to ignore an overbought signal ?
216) What is Yoder's 'Liquidity Pools Theory' ?
217) What is the Cambridge Hook in trading ?
218) What is the difference between kurtosis and skew ?
219) How do you trade Larry's 'Oops' Pattern ?
220) A triangle can also be part of which other chart pattern ?
221) When is a confirmed head & shoulders pattern not a head & shoulders pattern ?
222) Many educators, like Dr. Tharp are against the idea of scaling out a position as it encourages larger losses and smaller profits, and yet many others, like Douglas, recommend using that technique. Note that Dr. Tharp actually agrees that scaling out may be used especially on very short term trading. Explain how you can reconcile this opposing views.
223) A finance researcher backtested a channel breakout strategy to see if it was truly profitable. He ran the backtest over 600 trades. He found that it was profitable. He then started trading the strategy live but eventually lost. He never broke any entry or exit rules, and traded with complete discipline. Give 3 reasons for the adverse outcome.
224) What kind of traders would benefit from having knowledge about a strategy's maximum favourable excursion, or MFE ?
225) A reward to risk ratio of 30:1 may result in losses. Why ?
226) A reward to risk ratio of 1:30 may also result in losses. Why ?
227) How do you lock in your profits without rolling up your stop losses ?
228) Switching between two position sizing methodologies may be more advantageous. Why ?
229) Why is selling naked puts less risky than selling naked calls ?
230) Non-directional option strategies are not really non-directional. Why is that ?
231) If your risk per trade is 2% of your capital, how do you decide the maximum number of trades that you can open at the same time ? Explain how you calculate this figure.
232) How do execute a triangular arbitrage trade ?
233) If the USDJPY exchange rate is 100.00, then how much is a pip worth in USD for a standard lot ?
234) From Qn. 233, how much is that same pip worth in JPY ?
235) How is credit risk different from default risk ?
236) What is meant by fiat currency ?
237) Who is BIS ?
238) If a stock starts to fall drastically, what is the biggest disadvantage that a covered call trader would have by trying to 'repair' the situation by selling a leap to hedge some of the losses ?
239) Since most Technical tools are lagging price, technical analysis is not primarily a forecasting tool. It is more suitable for trying to determine if a new trend has begun. Discuss for and against this statement.
240) How do you trade a 'pitchfork' ?
241) The biggest risk is the risk of not taking an opportunity. How does this relate to trading ?
242) What is meant by 'typical price' ?
243) You can control your losses but you cannot control losing. Which performance metric is this refering to in trading ?
244) How else can you tell if the market is sideways, without looking at price directly ?
245) Stock prices do not reflect its true value. True or False ? Explain.
246) Trading costs and slippage affect the short term traders much more than longer term traders. Why ?
247) Explain the pros and cons of the RFQ facility ?
248) Can a moving average be plotted on a PnF Chart ?
249) How do you use Open Interest for channel trading ?
250) Is volume leading price is more reliable than price leading volume ?
251) Name 5 ways to use volume information.
252) What is market breadth ?
253) Is Dow Theory more inclined towards technical analysis or stock value ?
254) What did Robert Rhea do ?
255) Trading with a martingale strategy is like 'picking up pennies in front of a steam roller'. Explain.
256) In some backtests, the adaptive moving average, AMA, was found to be less profitable than most other types of moving average trades. Explain why you think this was the case.
257) All entries & exits are ultimately subjective. Explain why this is so.
258) All mechanical trading is ultimately subjective too. Explain why.
259) The markets are 'efficiently inefficient'. Discuss.
260) The Black-Scholes Option pricing model does not take into account market correlations, market friction, trader biases, irrationalities and broker front running. Explain why it is still usefull.
261) Monte Carlo Testing does not take into account market correlations, trader biases and irrationalities and broker front running. Explain why it is still usefull.
262) Volatility studies are only useful for short term trading. Discuss.
263) Many investment Funds, including Mutual and Hedge Funds, are usually 90 to 100% invested. What are the disadvantages of being fully invested in the market ?
264) In Reflexivity, markets tend towards disequilibrium. Explain.
265) Are the rules for appplying Elliot Waves objective or subjective ?
266) From Qn. 264, what was the basis for many of the rules ?
267) What does KST stand for in technical analysis ?
268) Can we build a more responsive Parabolic SAR indicator by incorporating some form of volatility into the acceleration factor ?
269) Reflexivity is more applicable to boom - bust scenarios rather than to general market cycles. Discuss.
270) The MACD indicator is actually a form of a Butterworth Filter. True or False ?
271) The MACD functions as a high pass filter. True or False ?
272) If traders cannot fully rely on predicting price direction to make a profit, what else can they do ?
273) Give 2 instances where a stop loss could be called a stop profit instead.
274) Many backtests have proven that the Fibonacci 61.8% and 38. 2% levels have actually very little or no predictive power whatsoever. Even if the results were true and statistically accurate, how can we still make it work ?
275) If we analyse randomly generated price charts, we find that we are able to locate and recognise many chart patterns. Does that mean that chart patterns have, in reality, no predictive power ?
276) From Qn. 275, if so, how can we still make chart patterns work ?
277) Name the 2 types of intermarket decoupling. Explain the differences.
278) Name the 2 types of market correlation. Explain the differences.
279) The Gambler's Fallacy assumes a causal relationship between successive events. Is fading a parabolic blow off a form of trading based on this fallacy ?
280) From, Qn. 279, how would this effect the Black-Scholes underlying basis for option pricing ?
281) Give 3 reasons why they say that brokers make you broke.
282) Name one derivative of a derivative.
283) Explain the differences between initial and maintainence margin.
284) Why are discount brokers less service orientated ?
285) What does no debit balance mean ?
286) Elaborate on how a market maker hedges his or her positions.
289) Why do Commodity Futures have an inherently bearish bias ?
290) Assume Technical Analysis is ineffective. How else can you use a chart profitably ?
291) What is mean-variance all about ?
292) What is the best way to trade Chaos Theory ?
293) State the 6 data fields available to technical analysts.
294) Many successful traders are of the opinion that trading is a pure art form, and as such, it cannot be taught to another, even though we can still teach traders how to use the tools of the trade. Discuss.
295) Even if every entry is based on pure luck, explain how can we still profit in the long run.
296) Explain how a pullback entry also be a breakout entry at the same time.
297) Describe one trading strategy where you will have a perfect 100% winning percentage. Also, explain the problems associated with such a strategy.
298) Is there any advantage in having an exponentially averaged true range ?
299) Explain how you can use a triangular moving average to predict a new cycle.
300) What does left translation mean when describing cycles ?
301) Explain how we can create a diversified, normalized & averaged indicator to reflect an industry, sector or basket of component stocks.
302) When is the opening price 'deemed' more important than closing price ?
303) State 3 serious problems in using the VIX to time entries and exits on the Emini S&P Futures contract, and give their solutions.
304) Describe one possible scenario where the the maximum loss is more than the price of the premium paid for buying a call. (Impossible ? Think hard ! This is a tricky one !)
305) Does gamma increase when vega increases for ATM calls ?
306) When backtesting a trading system, a system having more 'degrees of freedom' associated with it is preferable. True or False ? Elaborate.
307) Name as many outcomes and parameters as possible that you cannot control in trading.
308) How is the efficient frontier formed ?
309)What is the meaning of Sovereign default ? Explain why Argentina, Greece, Iceland & Dubai are relevant to this discussion.
310) Explain clearly and in detail on how the process of 'stop hunting' is executed.
311) From Qn. 310, explain how we could use this information to our advantage.
312) If past results are truly no indication of future prices, give 3 good reasons for still doing a backtest.
313) What is a Stick Sandwich ?
314) How do Barrier Options work ?
315) In Candlesticks, which of the Sakata Methods corresponds closely to an Elliot impulse wave ?
316) Even when Pyramiding with the market's money, it may still be very risky especially in illiquid markets. Explain.
317) What kind of feedback loop does a ‘bubble’ market have ?
318) Volume Spread Analysis by Tom Williams tries to decipher the underlying forces ''behind'' price. Discuss.
319) Explain why trend lines fail in many circumstances. When are they most useful ?
320) Explain how you can design a capital guaranteed trading system whereby the client is guaranteed no loss beyond the invested capital. (Structured Products)
321) Name the 3 most important risks in trading.
322) Trading a basic Donchian Channel Breakout is not the same as what the Turtles did while 'Turtle Trading'. Why is the distinguishing factor ?
323) What is the difference between Regret Bias and Prospect Bias ?
324) From (Qn) 323: In an upside breakout, which of the two Biases tends to kick in first ?
324) Explain why Survivorship Bias is a serious problem.
325) Bond Trading is risky. Explain why this may not be the case.
326) Is opportunity risk a real risk ?
327) Give 5 reasons why trading is better than professional gambling. Give 3 reasons why it is not.
328) Give 5 advantages and 5 disadvantages of using ETFs.
329) Explain how Equity Swaps may be used to short stocks in a country where shorting is prohibited by law.
330) What is the meaning of 'fungible' ?\
331) Why do we need the Garman-Kohlhagen Option Model rather than the Black-Scholes Option Model when dealing with Foreign Exchange options ?
332) Gives 4 reasons against ‘‘Cutting your losses short and letting your profit run’’ ! Now give 4 reasons why you should !
333) what is the best stochastic setting for gauging a trendline entry ?
334) What is the best moving average 'period' to use to locate market cycles ?
335) How can holding a long term commodity Futures position prove unprofitable even if the market rallies ?
336) There is no such thing as a trend, pullback, breakout or consolidation. Explain why this statement may be correct.
Hope all of you enjoyed these thought-provoking questions ! Many of my past graduates are quite familiar with many of these questions. Nevertheless, I will add more the questions periodically.