Losing Streaks / Chain Losers -_-'''

Discussion in 'Trading' started by Remiraz, Aug 3, 2005.

  1. Ricter

    Ricter

    You're not superstitious are you? : )
     
    #21     Aug 5, 2005
  2. I am now.
     
    #22     Aug 5, 2005
  3. If you can incur 12 losses in a row with equanimity, then I admire your resolve if not your method.
     
    #23     Aug 5, 2005
  4. Ricter

    Ricter

    Well, I haven't worked out a better edge for myself, so I'm stuck with what I have now. A streak of 8 losers I probably get every month. A streak of 12 I may see every 3 months. But overall I can't complain because I'm averaging a quarter point return on my capital per day. But yeah, it does take some resolve to keep going after 10 or 12 straight losses. The emotional control is very tough at those times, just as it is when I have a dozen winning trades in a row, truth be told.
     
    #24     Aug 5, 2005
  5. Remiraz

    Remiraz

    i'm starting to believe that LUCK is a very big part of trading.

    say you design and backtested a system with 70% winners and 30% losers at 1:1 risk:reward ratio. a positive expectancy system no doubt.

    your theoretical max losers would be 4 losers. (0.3 ^ 4 < 0.01) what this means is that your chances of having more than 4 losers are less than 1%.

    however, your chances of having of say 20 losers in a row is: 0.3^20 = 0.00000000034 or 0.0000000034%.

    This is STILL a positive percentage! Meaning it could happen! So do we actually have to be lucky enough to avoid having 20 losers in a row?
     
    #25     Aug 6, 2005
  6. I'm sorry that I cannot get into specifics, but that is where the "edge" part comes in, for lack of a better term. That is where your unique powers of observation come in to systematically discern between "better" and "weaker" setups in order to treat them accordingly. What I have developed myself for ES does not work in currencies, and I am disinclined to share it anyway. In any event, this is the point where you test (and even develop) your own spices in various combinations to arrive at your own family meatloaf recipe. Bon apetit.
    :)
     
    #26     Aug 6, 2005
  7. Ricter

    Ricter

    Go back and take another look at Mike805's reply. His point is central. You're only looking at your win %.
     
    #27     Aug 6, 2005