Are low prob trades the new black?

Discussion in 'Trading' started by Bogan7, Jul 12, 2007.

  1. Guys hi there just a quick question and observation. Why does it appear that most posters on here seem to opt for low prob trades. First of all I am no trading guru though have been around for a while and done alright doing basic stuff like trying to buy pullbacks to ema's, not trade against major S/R levels etc but that doesnt seem to be very popular here.

    One recent post poster was predicting a major turndown in a commodity and seemed to be getting a good contrary position on which I thought would be a low prob trade where a higher prob trade maybe to simply look to buy the pull back as the 200,100,50,22 and 8 emas were all still bullish? This is just one example there are many more out there and I find it interesting yes these trades I am sure are great when they work but how often is that?
  2. Craig66


    Being stupid never goes out of fashion.
  3. ronblack


    Because all the losers are looking for high probability trades and get killed.

    Success rate can be very low but overall profitability depends on the ratio of average win to average loss and profit factor as Michael Harris shows in details in his excellent article " Derivation of the Profitability Rule and its Application in the Discovery of Trading Systems Based on Price Patterns" available online at:

    Read the article and you will understand why some smart trend followers only need to be right 20% - 30% of the time and still make way more than day traders looking for high probability setups. Actually, that was the secret of Turtle traders.

    Something else to keep in mind: when a trader picks up a bottom or a top he is a contrarian and his entry is considered by the herd a low probability setup.

  4. Good article but Iwas refering to the posters on here I dont believe many would be part of that subset of traders (do you?)
  5. ronblack


    IMO there are several highly successful traders (and fund manages, yes!) who are members of this website. Most of them are contrarian I have noticed and use low prob settings.



    Probably because most traders on here are bullshitters