Discussion in 'Trading' started by Commisso, Jan 22, 2002.

  1. ddefina, precisely. well put.
    #31     Jan 23, 2002
  2. Commisso

    Commisso Guest

    So let me ask you Pro... Is this a false statement?????

    No, the odds remain 50%. You are just as likely to get either a win or loss. each successive outcome (trade result) is independent of the previous trade result. The pattern has no "memory" of previous outcomes and cannot influence future outcomes. However, the chances of getting 99 wins in a row is very improbable.

    PEACE and good trading,

    PS; this calm and interesting discussion with is making me feel a lil odd....can you please tear into me a lil

    #32     Jan 23, 2002
  3. Come on guys, this is simple probability theory... its perfectly ok to be right only 50% of the time so long as when you are right you average more than when you are wrong...

    Suppose you are right 50% of the time and get stopped out 50% of the time... suppose when you are right you make $2 and when you are wrong you lose $1.. also suppose commissions are $0.2

    Then on a per trade basis, you are gonna make:
    (50% of $2) minus (50% of $1) minus 20 cents = 30 cents
    #33     Jan 23, 2002
  4. Commisso

    Commisso Guest


    I completely understand expectancy :)
    Your looking at it with a macro view, which i dont think has anything to do with the micro view...

    PEACE and good trading,
    #34     Jan 23, 2002
  5. Threei


    Actually in case with market it could be not as simple as with coins. If market movements are result of trader's actions, opinions etc, then there is some kind of "memory". For instance if certain pattern failed several times in a row traders are likely to start fading it more often resulting in further pattern deterioration, up until the moment when too many of participants take fading side, and then the balance shifts again... etc :)

    #35     Jan 23, 2002
  6. Commisso

    Commisso Guest


    If I have pattern that worked 60 times out of the last 100, then what would the odds be on the very next trade that I take?????

    And great reply, you are absolutely right....

    PEACE and good trading,
    #36     Jan 23, 2002
  7. 60% you idiot! (feel better now :)
    #37     Jan 23, 2002
  8. Commisso

    Commisso Guest

    Thanks Pro!!!!!!!! :D
    #38     Jan 23, 2002
  9. Threei


    it's been really long time since I've studied odds theory... :)

    I guess there is distinction between odds and their distribution. While odds are not random if there is an edge, their disctibutiuon is, so outcome of each given trade is not predictable.

    Despite this trading results over a long run are not random, as it was outlined earlier, thanks to edge and risk management. One more nesessary condition: trading capital should be big enough to handle loss cluster, otherwise even with edge and proper risk management there are chances to blow it...

    Not sure if it makes sense, like I said it's been a while :)

    #39     Jan 23, 2002
  10. Commisso

    Commisso Guest

    So if it is not predictable than is safe to say it is 50/50????

    PEACE and good trading,
    #40     Jan 23, 2002