Odds Automatically Against You

Discussion in 'Trading' started by antincedo, Oct 29, 2008.

  1. eagle

    eagle

    Fully agreed. If the success rate of a system is only 40% and the dollar amount of average win double the average loss then bingo.

     
    #21     Oct 31, 2008
  2. A price does not have to move up or down. It can also move sideways. That is why collars and spreads, especially with options, can die at a net loss without the price moving substantially. Kinda like the house advantage in Roulette... sure, most of the time it will hit black or white, but there are special numbers that render the odds less than 50/50 by default.

    The blind odd is 33% on any trade unless a stratgegy is employed.
     
    #22     Oct 31, 2008
  3. DrEvil

    DrEvil

    If it hasn't already been said in this thread, the biggest reason why you will find it so hard to even break even is that your psychology/emotions will be sabotaging you at every opportunity. In other words they will get in the way of you cutting losers and letting winners run. The commissions, and slippage are icing on the cake.
     
    #23     Oct 31, 2008
  4. Simple reality is that even if a financial instrument moves in your favor initially, it can retrace its steps quickly and move the other way decisively. There is always a question of where you are going to get out. There is also a problem of a financial instrument not moving at all, moving slowly, or moving in the "wrong" direction from the start.
     
    #24     Oct 31, 2008