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Reading Paths

Enter the course by subject rather than by difficulty

The four tier pages order the course by difficulty and the eleven modules order it by sequence. Neither helps a reader who arrived for one subject, because the subjects cut across both: risk is taught in three separate modules and the lessons on evidence are spread across three more. Each path below gathers one subject into a reading order and states what that subject turns out to say.

Nine routes through the course, reaching 75 of its 90 lessons. A path is a reading order, not a separate course: every lesson on one is a lesson in the curriculum, and the four tier pages remain the complete listing.

Risk and Ruin

What a loss costs, how deep an ordinary bad run goes, and the fraction that decides whether you survive it.

Risking three per cent a trade rather than one turns a one-in-twenty bad run from 15 per cent of the account into 39.5, which needs a 65 per cent gain to undo.

9 lessons
  1. Expectancy Lesson 17
  2. What an Edge Feels Like Lesson 18
  3. Position Sizing Lesson 20
  4. Where the Stop Goes Lesson 21
  5. Risk of Ruin Lesson 22
  6. When the Drawdown Arrives Lesson 24
  7. The Drawdown You Should Expect Lesson 67
  8. The Day Every Stop Hits Lesson 72
  9. Which Limit Binds First Lesson 75

The Cost of Trading

Everything charged whether the trade works or not, from the spread to the tax, and what each is as a share of your edge.

An index ETF hands over a fifth of one per cent of a typical day’s movement for the right to trade it. A $1.50 micro-cap hands over 52 per cent.

13 lessons
  1. The Spread Is the Price of Immediacy Lesson 4
  2. Every Trade Starts Negative Lesson 10
  3. Slippage and Impact at Retail Size Lesson 11
  4. What Should You Actually Trade Lesson 12
  5. What You Are Actually Buying Lesson 13
  6. Margin and Leverage Lesson 14
  7. When Your Broker Acts Without You Lesson 15
  8. What the Spread Is Paying For Lesson 53
  9. The Fee That Routes Your Order Lesson 54
  10. What Hurry Costs Lesson 59
  11. The Deduction That Changes Nothing Lesson 78
  12. The Cost That Does Not Scale Lesson 80
  13. The Same Thing in Two Places Lesson 83

Evidence and Proof

How many trades it takes before a record means anything, and what a backtest is evidence of.

Fifty trades cannot tell a method making 0.35R a trade apart from one with no edge at all. An edge that has halved needs 571.

9 lessons
  1. How Long Until You Know Lesson 19
  2. Keeping the Record Lesson 23
  3. What Would Have to Happen Lesson 62
  4. Backtesting as Evidence Lesson 63
  5. The Price of Looking Lesson 64
  6. The Horizon You Fix First Lesson 65
  7. The Benchmark You Chose Lesson 66
  8. The Share That Is Real Lesson 84
  9. The Unit That Moved Lesson 85

Reading the Book

What the order book, the tape and the volume actually record, and which parts of them are inferred.

On an ordinary book the quote describes 900 shares out of 7,300, and the aggressor side beside a print is inferred rather than reported.

13 lessons
  1. The Order Book Lesson 2
  2. What a Fill Actually Is Lesson 3
  3. Time and Sales Lesson 7
  4. Volume and Delta Lesson 8
  5. Where Liquidity Rests Lesson 25
  6. The Order Book Is Theater Lesson 26
  7. Volume at Price Lesson 29
  8. Hidden Size Lesson 31
  9. What a Millisecond Is Worth Lesson 55
  10. The Side the Tape Leaves Out Lesson 56
  11. What a Million Shares Takes Lesson 57
  12. What an Order Type Gives Away Lesson 58
  13. The Flow With No Opinion Lesson 60

Indicators, Honestly

What an indicator can and cannot add, how late it is, and what happens when you add a second one.

Three indicators at four lookbacks is twelve configurations and 1.71 independent opinions, and on 20 of 39 bars one reads bullish while another reads bearish.

8 lessons
  1. What an Indicator Is Lesson 48
  2. Repainting Lesson 49
  3. Moving Averages as Support Lesson 50
  4. Oscillators Under Regime Lesson 51
  5. Divergence Lesson 34
  6. Markets Have Modes Lesson 36
  7. Trading More Than One Lesson 39
  8. Confirmation Bias, Measured Lesson 52

Portfolio and Correlation

How many independent bets a book of rules is really carrying, and which limit binds before the others.

Two rules on one instrument at the measured correlation carry 1.03 independent bets rather than two, and however many you add the total tops out at 1.06.

8 lessons
  1. Volatility as a Quantity Lesson 44
  2. Correlation Lesson 45
  3. How Many Bets You Are Carrying Lesson 71
  4. The Day Every Stop Hits Lesson 72
  5. The Weights You Can Hold Lesson 73
  6. The Window Decides Lesson 74
  7. Which Limit Binds First Lesson 75
  8. The Second Way to Disagree Lesson 82

Trading as a Business

The pace you actually trade at, the machinery behind it, and the capital a wage requires.

The capital a wage requires is 11.40 years of that wage, and the verdict on whether the edge exists is 10.07 years away at the same pace.

7 lessons
  1. Sim Against Live Lesson 16
  2. The Pace You Actually Trade At Lesson 76
  3. The Link You Do Not Own Lesson 77
  4. The Deduction That Changes Nothing Lesson 78
  5. Paying Yourself Before You Know Lesson 79
  6. The Cost That Does Not Scale Lesson 80
  7. What the Book Clears Lesson 81

Claims Under Test

The stories the internet tells about charts, each one weighed against what can actually be shown.

On twenty bars the same prices give eight structure events, or two, or none, and the setting that decides is one nobody quotes.

9 lessons
  1. The Order Book Is Theater Lesson 26
  2. The Liquidity Lie Lesson 27
  3. Hidden Size Lesson 31
  4. Market Structure Lesson 32
  5. Order Blocks and Displacement Lesson 33
  6. Divergence Lesson 34
  7. Sweeps, Beyond the First Lesson 35
  8. Moving Averages as Support Lesson 50
  9. Confirmation Bias, Measured Lesson 52

Time and the Calendar

What a bar is a choice about, when the day concentrates its activity, and which of the patterns people hang on the clock survive being measured.

Cut one sixty-bar series into three consecutive twenties and its efficiency ratio reads 0.021, then 0.067, then 0.333 — a sixteenfold spread on a series with no clock, no sessions and one generating rule.

10 lessons
  1. The Candle Is a Summary Lesson 6
  2. What a Timeframe Is Lesson 38
  3. Markets Have Modes Lesson 36
  4. Detecting a Regime Change Lesson 37
  5. Multi-Day Structure Lesson 40
  6. The Session Cycle Lesson 41
  7. Opening and Closing Auctions Lesson 42
  8. Scheduled Events Lesson 43
  9. The Macro Cycle Lesson 47
  10. The Pace You Actually Trade At Lesson 76
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Educational only. Trading involves substantial risk of loss. Not financial advice. Past performance does not guarantee future results.