well, it's a starting point heads you go long tails you go short like the title of the thread...50% so that is something to work off of now, how to improve those odds and overcome the spread and commish? there are many advocates some say through money management, averaging down, varying position sizing, adding to winners others say by reading the market, buying when the ma crosses over, or a new five minute high takes out something but the foundation is always thinking like a gambler and understanding the odds The house provides the odds which are always against you but they allow you to bet on what others will probably do
it's really not about money management 1st it's about making a profit. then it's about seeing if the risk is acceptable or not and what if anything you can do about it. i have never seen a 50% system that didn't implode after it was leveraged up. it's like flipping a coin when to double up, do it long enough it reverts to the mean and causes you as much pain as it does jubilation 50/50. the fire provides heat and comfort and the fire also destroys. ~m
I would agree, at some point you have to ask yourself, "Am I really doing any better than just betting on a coin toss, heads or tails?" There were times in my ES trading career I could have got much better costs at the roulette table in Las Vegas than what I was paying at globex for the same odds. but 50/50 is a good place to start I would guess many would be better running their money management systems on a backtest of a coin toss and choosing the one that comes closest to breaking even over time then you have a money management strategy to build on
of course, the best bet on a long series of coin tosses is just to always bet heads and that is the way most investors buy stocks always buy 100 shares long before each toss of the coin
We have not looked at draw downs and such. For now Money management has been limited to R:R ratios and win rate. To differentiate, Ill call this R:R WRate. Changing R:R inversely changes WRate the relationship is such that playing with the numbers LEADS TO THE SAME END RESULTS over many runs. This means it is USELESS and throwing it out of the window would save us allot of time. If some say that money management is their edge, we will assume that: A) They are nut jobs, and will eat up the thread with no proof,or B) They are referring to something other then R:R and WRate or C) That I am wrong and R:RWRate actually is our holy grail. Other ideas brought to the subject thus far are : 1. money management, averaging down, varying position sizing, adding to winners 2. "reading the market, buying when the ma crosses over, or a new five minute high takes out something" 3. "1st it's about making a profit" 4. "then it's about seeing if the risk is acceptable" 5. "Eliminating" bad trades. 6. Having a an "edge" 7. Volume Yes many of these are concepts used in gambling, So I guess we are thinking like gamblers. But we are not Gamblers, We are looking to differentiate trading from gambling in a productive manner instead of going down the traditional route of talking about randomness. We eliminate useless ideas, at a glance, all the above seems to have no effect on trading to me. Possibly volume is a place where we see something different then gambling. Also if trading is zero sum game, then there must be other ideas that work only on zero sum games. Its a given that it is going to get very quiet in here or very loud. Maybe there is actually some people here that want answers.
Yes there are 2 other systems that can be implemented though. 1. Don't bet. 2. Blindly Compound Bet What you are willing to loose once every 10-30 years.
well, first of all, you have to learn how to break even on a coin toss aint that hard if you are playing with cash can be darn near impossible if you are out on margin and if you ever get over that hurdle then you need to guess what the guy you are playing against is probably going to bet on A good trader can guess if I am going to bet on heads or tails on the next toss
To break even on a toss is to bet heads all the time as long as there is no fees. So now we are left with "guessing". Guessing means that the out come is unknown.
we already covered that man, go back and read the posts but yes, after you get the mm together, then you need to guess right perhaps you'd be happier with a job where they pay you if the company makes money or not