Probabilities not timing!

Discussion in 'Strategy Building' started by jonnysharp, May 6, 2004.

  1. hey guys,

    heres food for thought;

    yahoo has pretty good pre-market commentary on the likely DIRECTION of the broader indices, i was thinking of a strategy that is based on probabilities of WHERE the market is going to go not WHEN.

    So setup would be;

    Bullish sentiment -> long -> no stops -> 5pts limit profit
    Bearish sentiment -> short -> no stops -> 5pts limit profit
    close position at end of day if limit profit has not been hit.

    I am aware that a loss would be huge, but wouldn't consistent forecasting outweigh the occasional loss.

    What does everyone think about this and is there someone out there that currently uses a strategy similar to this, please discuss.

  2. lindq


    Premarket "sentiment" is never a good indicator of market direction, and a strategy based on trading subjective market "forecasts" is a loser's game. In fact you are better off fading a market open that is strong or weak based on premarket sentiment.
  3. Jonnysharp,

    I cannot give you facts like the more sophisticated ones here on ET that have more experience. Just run the numbers to see if it makes sense. Here is a handy site to help you with the winrate and the Avg Win: Avg Loss Ratio. Paper trade you methodology forward and make a spreadsheet, before committing real money.

    Michael B.

    P.S. be smart and not jonnynotsosmart :)

    P.S.S. if your into "ranking" try this low cost little program to get a consensus of picks throughout the internet besides yahoo:

    or sector ranking here (you can trade ETF's with your idea):