Enter at your own risk

Discussion in 'Trading' started by xtrhvydty, Jan 21, 2006.

  1. Here it is - an estimate of the risk of ignoring system signals.

    In a 5 number lotto draw with 36 possible numbers, the odds of getting 5 out of 5 are
    P5/5=1:376,992
    while the odds of getting 4/5 are
    P4/5=1:2432

    So, if for example's sake, say there are 36 criteria for trade selection and 5 criteria must be met based on testing. Then, by ignoring one of the 5 signals and going with
    [only 4 of 5 signals] + [my marvelous judgment to violate the 5th signal] I then have a 1:376,992/2432=1:155 chance of conforming to the system I actually tested.

    So, by ignoring one simple system criteria, my marvelous judgment must sort out the 154 wrong trades from the right one, resulting in (yes, again) overtrading, losing, whining, complaining, failing, screaming, and dropping yet another pathetic post in the psychology section.

    Enter at your own risk!

    "What is good? All that heightens the feeling of power in man, the will to power, power itself. What is bad? All that is born of weakness. What is happiness? The feeling that power is growing, that resistance is overcome. " -Friedrich Nietzsche

    http://www.flalottery.com/inet/downloads/f5oddscalc.pdf[/url]