Math Archives - New Trader U

People Who Build Wealth Understand the Exponential Function in Math

The difference between those who build lasting wealth and those who struggle financially often comes down to a single mathematical concept: the exponential function. While most people understand basic arithmetic, wealthy individuals grasp something far more powerful. They know that money doesn’t just accumulate over time; it multiplies. This fundamental insight transforms how they think […]

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The 10 Formulas for Profitable Trading

Math, Profitable trading, Trading / Steve Burns

Trading success isn’t about finding a secret strategy or following hot tips. It’s about understanding the mathematics behind every decision you make. While no formula guarantees profits, these ten mathematical concepts form the foundation of sustainable trading performance. Mastering them can mean the difference between consistent growth and watching your account slowly drain away. 1.

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Applied Mathematics For Profitable Trading

Math, Trading / Steve Burns

1. Moving Beyond Surface-Level Math Most traders think that mathematics in trading begins and ends with moving averages, Fibonacci retracements, or technical indicators. Those tools, while helpful, only scratch the surface of how deeply math can explain and structure financial markets. They smooth price data or highlight potential retracement zones, but they don’t reveal the

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10 Math Rules That Made Warren Buffett a Billionaire

Investing, Math, Warren Buffett / Steve Burns

Warren Buffett’s legendary investment success stems from his disciplined application of mathematical principles to stock market investing. While he famously stated that complex math isn’t necessary for successful investing, his wealth-building strategy consistently relies on simple fundamental mathematical concepts that provide a systematic framework for evaluating opportunities and managing risk. Here are the ten math

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Why Luck Isn’t Real

Math / Steve Burns

In a world where the idea of luck often clouds our perception of success and failure, it’s time to unravel the truth behind this commonly held belief. Is luck a real force shaping our lives, or is it merely a convenient excuse for the unexplained twists of fate? This article dives deep into why the

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How Much is a Penny Doubled Every Day for a Month

Math / Holly Burns

A penny doubled every day for a month is $5,368,709.12 after 30 days. The concept of doubling a penny every day may seem simple, but it demonstrates the powerful principle of exponential growth. The idea is to start with a penny and double it every day for a month, which leads to a surprising final

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The Simplest Math Problem No One Can Solve (Collatz Conjecture)

Math / Steve Burns

3x+1 Concerning the above math problem, Paul Erdös said that “Mathematics is not yet ripe for such questions.” He also offered $500 USD for its solution. Jeffrey Lagarias said in 2010 that this math problem: “Is an extraordinarily difficult problem, completely out of reach of present day mathematics.” Richard Guy has this on his list

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Math Cheat Sheet For Traders

Math, Trading / Steve Burns

Understanding the mathematical principles of profitable trading can help a trader understand how to create a positive expectancy trading system with an edge. The understanding of the underlying math can change how you look at your own trading and see what really matters: risk per trade, win rate, losing streaks, drawdowns, positive expectancy, and growth

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Qualitative vs Quantitative Trading

Math, Trading / Steve Burns

Qualitative analysis seeks to understand human behavior from the perspective of the researcher of information. It looks for the dynamic in an integrated reality. Information can be gathered through observation, historical research, and interviews of human behavior. Data is analyzed through descriptions and themes. Data is translated and reported through the perspective of the researcher’s

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The Normal Distribution Formula

Math / Steve Burns

In probability theory a normal distribution is a kind of probability distribution with a set value of random variables. The normal distribution formula is: Normal distributions are valuable in statistical analysis and is used a lot in trading to set values on random variables of future distributions that are not known. Normal distribution states that under market conditions over many average

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The Sortino Ratio Formula

Investing, Math, Trading / Steve Burns

The Sortino ratio is a way to measure the risk adjusted return of an asset, investment portfolio, or trading strategy. The Sortino ratio is an adjustment to the Sharpe Ratio that filters volatility from upside moves from downside moves. The Sortino ratio only measures downside moves that are below a specified volatility target or return

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The Simple Interest Formula

Investing, Math / Steve Burns

Simple interest is only calculated on the original amount of capital inside a set time period. It does not include the compounding effect of returns on new money accrued. Simple interest can be used over any time period but annual returns is the one that is most commonly used. Simple interest is calculated on original principle alone. Compound interest includes the additional

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The Rule Of 72 Formula

Investing, Math / Steve Burns

The rule of 72 is a process for quickly projecting how long it will take for a rate of investment return to make capital double. The number 72 is used in figuring out the answer by dividing the rate of return percentage per period to get an approximation of the number of years in most

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The Return On Equity Formula

Investing, Math / Steve Burns

For publicly traded companies and in investment terms the return on equity (Also abbreviated as ‘ROE’) is a way to measure the amount of net profits from a business as it relates to the total value of the equity of the enterprise. ROE is a measurement of how efficiently a business uses its asset value

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Probabilities Of Price Action Inside Standard Deviations

Math, Technical Indicators / Steve Burns

Standard deviations are used to measure current price action in relation to the average price of a chosen time frame. The assumption in the use of a standard deviation is that over the long term historical prices are distributed inside a bell curve. Although at times there are ‘fat tales’ or ‘black swans’ in prices

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What Is Opportunity Cost?

Math / Steve Burns

Opportunity cost expresses the expense of a chosen option among other alternatives in contrast to enjoying the benefit of the other possible choices. The ‘cost’ is the difference in one reward versus another. The opportunity cost is the reward that is not received due to not choosing the other better option. If the second best

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What Is A Cost Benefit Analysis?

Math / Steve Burns

A cost benefit analysis is a systematic process for trying to measure the pros and cons of different options to determine the best path to achieving goals with the maximum return and at the minimum cost in business, trading, investing, economic transactions, and any other activity. It is commonly used when their are multiple things

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How To Calculate ROI

Math / Steve Burns

The ROI (return on investment) is the ratio between net profit and the cost of an investment. This is measured over a specific period of time by the results of investment returns on money over a point in time. A good ROI is defined by an investment’s positive returns compared to the cost, risk, and

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The Top 10 Mathematics of Trading

Math, Trading / Steve Burns

Profitable trading is not about opinions, not about a prediction, or even great stock tips or picks. Profitable trading is all about math, making more money on profitable trades than you lose on unprofitable trades. How you do this is the details. Trading without understanding the math creates randomness and luck in your process. Understanding

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