Pabst article hits the press: http://www.tradingmarkets.com/.site/stocks/how_to/articles/-76549.cfm surf
asap is absolutely correct there. The probability of hitting equidistant levels (providing those levels are not too huge) for S&P 500 is roughly 51/49 with the slight upward BIAS. It means that 8:1 payoff ratio is about 12% probable.
At any point in time and as of any point on a price chart? If so, then what would be the point of entry timing? Do you enter the markets indiscriminately and focus exclusively on your exits?
Yes, unfortunately. You are probably mixing two things here: statistical probability and the level of anticipation. I am not disputing at all the fact that a trader could time the entry/exits better than their relative probabilities. I simply state the fact that from the statistical point of view it is 50/50.
If a trader can time his entries/exits "better than their relative probabilities," then presumably some traders' timing would be worse. What, then, is the value of the 50/50 observation to the individual trader and his specific trading strategy, which may either be better or worse? Which brings us back to: P.S. If a trader has a method that has a reliability of better than 50% win rate and a reward-to-risk ratio that averages better than 1:1, then does such performance not invalidate the 50/50 studies that we are discussing, insofar as "any point on the chart" is concerned? Is such performance necessarily a flash in the pan?
Meh..seems like too much work just buy: MOS MON POT GOOG AAPL FSLR BIDU MA EWZ EEM GLD DBA FWLT V RIMM ISRG on dips and hold for awhile... EEM or EWZ will net you above market returns with less risk than individual stocks and you'll beat most daytraders, too.
that's right. when analyzing expectancy one has to rely on all possible outcomes. in the very long run, results will be always converge to the statistical mean (zero). he who has a solid edge should be aware that his edge will fade away sooner or later. in that sense, some of my associates use to say that trading is a long road to ruin. the successful ones are those that quit while they're way up.
Price action never changes. While some markets will run while others may chop and still others will ping-pong back and forth in a trading range, the fundamentals of price action exist in a Euclidean universe and they will always remain the same. Up is UP and Down is DOWN By varying the markets I sincerly doubt one will ruin their edge as you say asap. We traders DO NOT have a finite amount of opportunities the way a woman has a finite amount of eggs to reproduce with. To think so is a fallacy and is like living with self-imposed limitations. Good trading