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 RangeTrader   Registered: Mar 2012 Posts: 705 08-25-12 07:38 AM Excellent post. That guy knows what he is talking about!!! Edit/Delete • Quote • Complain
 intradaybill   Registered: Feb 2008 Posts: 2962 09-01-12 10:47 AM "Victorious market wizards can pinpoint high probability and low risk entries: Winning trading methods enable speculators to enter the markets at better prices." Generalities for the most part. Jim Rogers has been saying the same for years. Risk is known only after the fact. Probability is unknown. What are these people talking about? Edit/Delete • Quote • Complain
 logic_man   Registered: Oct 2010 Posts: 1489 09-01-12 01:35 PM Quote from intradaybill: "Victorious market wizards can pinpoint high probability and low risk entries: Winning trading methods enable speculators to enter the markets at better prices." Generalities for the most part. Jim Rogers has been saying the same for years. Risk is known only after the fact. Probability is unknown. What are these people talking about? I don't know that risk is only known "after the fact". Consider a trading strategy where items A,B,C and D must be present in order to trigger a trade and, if they are present, they require that an initial stop be set at "Price X" because if price reaches "Price X" in the course of that trade, then the signal given by the simultaneous existence of items A,B,C and D was false. In that case, isn't the risk exactly the distance between the entry price and "Price X"? So, the probability of "Price X" being hit is unknown, but the amount of risk associated with that probability is known. This assumes a certain amount of liquidity and the absence of a gap over "Price X", but there are many markets that meet these criteria. Then, what if you have thousands of examples of this scenario and know from them that "Price X" gets hit 40% of the time? Can you say that it is likely that the probability of "Price X" getting hit is 40%? Or, at least can you say that it is not 100%? And is it really possible that a scenario which has failed at a 40% rate over 1000 or more iterations can fail at a 75% rate, or even a 60% rate, for the next 1000? Are the probabilities in the market really that unstable? Edit/Delete • Quote • Complain
 intradaybill   Registered: Feb 2008 Posts: 2962 09-01-12 02:54 PM Quote from logic_man: I don't know that risk is only known "after the fact". There is a difference between expected risk and real risk. If the market crashes at the open below your stop, then you get a taste of what real risk is. Small account traders and paper traders do not have a real feeling of what is like to expect 1% risk and end up with a 5% loss on a 100 million account in just one day. When you get to trade big money you will understand that you can only hope and pray you know your risk. Edit/Delete • Quote • Complain
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