Financial Concepts to Help with Crypto Trading
Financial Concepts to Help with Crypto Trading

Financial Concepts to Help with Crypto Trading

A roll of primers and explainers to get you familiar with how traditional trading methods work in crypto.

What Is an All Weather Investment Portfolio?

21 Feb 2023 6 minute read 0 comments Todd Mei PhD

Images from Pixabay The All Weather Portfolio (AWP, hereafter) was created by Ray Dalio’s hedge fund Bridgewater Associates to “perform well across all environments, be it a devaluation or something completely different.” It was researched and dev...

What Is Execution Risk?

17 Feb 2023 4 minute read 3 comments Todd Mei PhD

Image by Sibya on Pixabay “The best laid plans of mice and men often go awry . . .” (“The best-laid schemes o’ mice an’ men / Gang aft agley . . .”) — Robbie Burns (1759–1796) When things go poorly or even fail with respect to defined goals, then on...

2 Sigmas: Risk Mitigation Strategy

11 Feb 2023 2 minute read 0 comments Todd Mei PhD

In statistics jargon, sigma (σ) is “The unit of measurement usually given when talking about statistical significance is the standard deviation. . . The term refers to the amount of variability in a given set of data: whether the data points are all...

What Is “Store of Value” Risk?

8 Feb 2023 3 minute read 1 comment Todd Mei PhD

Image by Soufiene goucha from Pixabay “Store of value” is the feature of a currency or commodity to act as a stable, or non-volatile, measure of price. An ideal store of value would act as the center by which the prices of all other goods and serv...

What Is the Monte Carlo Simulation?

5 Feb 2023 4 minute read 1 comment Todd Mei PhD

Image from Paramount at Hagerty The Monte Carlo simulation (MCS, hereafter) was a method developed by scientists during WWII to test for possible outcomes involving the use of the atom bomb. When used in the realm of investing, MCS is akin to a...

What Is Risk Mitigation in Finance?

29 Jan 2023 4 minute read 0 comments Todd Mei PhD

mit·i·ga·tion /ˌmidəˈɡāSH(ə)n/ noun the action of reducing the severity, seriousness, or painfulness of something.   * * * * * With financial markets, there are generally two categories of risk: Systematic risk Non-systematic or uns...

How to Use Relative Valuation for Cryptocurrencies

16 Jan 2023 5 minute read 1 comment Todd Mei PhD

Photo by Traxer on Unsplash Similar to absolute valuation, we find that because cryptocurrencies are not assets that generate their own cash flow, we cannot rely on traditional methods to arrive at a relative valuation. This makes intra- and i...

What Is a Financial Swap?

13 Jan 2023 2 minute read 1 comment Todd Mei PhD

Photo by Ashim D’Silva on Unsplash Although the term “swap” might seem to denote a pretty straightforward exchange of assets, in financial parlance the term is a bit different from the everyday notion of exchanging one item for another. Financ...

What Is Relative Valuation?

11 Jan 2023 5 minute read 0 comments Todd Mei PhD

If we could know the value of an asset in and of itself, we’d be able to derive its absolute value — which I likened in a previous article to a God’s eye view or a view from nowhere. Perhaps an easier task is comparing an asset’s value relative to i...

What Is Delta Neutral? Bet Them All, Let God Sort Them Out

10 Jan 2023 7 minute read 2 comments Todd Mei PhD

“Delta neutral” describes a trading position with respect to options. The names for the letters of the Greek alphabet have been used traditionally by finance to describe quantities representing the price of derivatives and assets. For example, you m...