Probability and Trading

Discussion in 'Technical Analysis' started by sridhga, May 11, 2022.

  1. panzerman


    No, that's what this whole thread is about. Just taking your best shot is at best a 50/50 proposition at best. Smallfil is correct about positive expectancy, but that entails detailed back testing, possibly for years, before trading.

    Of course there are whole threads and web articles that go into detail about the whole back testing paradigm being bullshit. After years of trying, I'm still only breakeven, and have not found a positive expectancy methodology that fits my demeanor.

    I've tried various trend following methods, but always manage to give back the gains of a good trend when price action enters a whipsaw phase. I now use an extreme value methodology, but still have yet to "make it."
    #21     May 12, 2022
    sridhga and SimpleMeLike like this.
  2. Hello panzerman,

    And who has years?
    #22     May 12, 2022
  3. smallfil


    You do have to follow the trend and make sure your trades are aligned with the major trend. Major trend has been down. Just follow the trend and make monies like the big boys (mutual funds, banks, brokers, hedge funds). I have been sitting on my trades for a while now. As long as the stockmarket is tanking, I am a happy camper.
    #23     May 12, 2022
    tomorton, sridhga and murray t turtle like this.
  4. %%
    \SAME here\
    except i took most of my profits lately . Good day to daytrade also \ most commercial loggers stop trading i mean working when it rains/too easy to get stuck. Down trend$ are fun\ but can easy claw back profits much faster than uptrends.
    Enjoyed my old QQQ chart of half hour trends in MAY 9, 2002. Gapped up 3.33%/one day that week/ then up 10% for that day.......
    #24     May 12, 2022
    sridhga likes this.
  5. sridhga


    In my own case, there is not much wait. I generally get 20 trades a day. I am too exhausted to trade all of them. The trading day lasts 14.5 hours. I trade 3 min charts. That is 290 bars a day.

    The pattern I described is called 3 push pattern (also called 'wedge') as discussed by Al Brooks in his books. There is not always a climax. The pattern reverses sometimes with leg count. The probability issue in that case is slightly complicated since the previous trend can go for one more leg before a reversal. This can take out the SL. It will force one to re-enter after that 4th push. Further, if there is a channel forming in the previous direction, this pattern builds within a lower time frame and you then have to trade intuitively.

    In my original post, the discussion about probability is not specific to this trade. So, I did not delve into the specifics earlier.
    #25     May 12, 2022
    easymon1 likes this.
  6. sridhga


    Let me take a simpler example.

    Suppose, there is a trend in a specific direction, say in a higher time frame like daily and I take a with trend-trade once every time the scrip touches 20 ema on hourly. I use reasonable SL and 3 times the target. What are the odds?
    #26     May 12, 2022
  7. SunTrader


    Tooooo vague.
    #27     May 12, 2022
  8. sridhga


    Thank you for your detailed points.

    Point no. 1: You are right. I described that trade in the above post of mine. Sometimes it goes for one more leg in the direction of the earlier trend.
    Point no. 2: Agreed. Same as point no. 1
    Point no. 3: You are right. This happens and it results in double top/ double bottom at that extreme.
    Point no. 4: How would you suggest target setting?

    Once again, Thank you for in-depth observations.
    #28     May 12, 2022
    SimpleMeLike likes this.
  9. sridhga


    #29     May 12, 2022
  10. comagnum


    A good edge applied to a large enough number of trades will have your equity curve hitting new highs often. It takes a great deal of experience & fierce drive/persistence to do this somewhat consistently.

    Winning pro gamblers & professional traders have learned how to become the casino.

    Pro blackjack players & traders think in terms of the long run. They see it as a marathon, not a sprint. Their math edge will reward them over a large enough number of bets if they can endure the losing streaks which are certain due to variance which is the random outcome of winning bets. The focus is on playing as close to perfect as possible, as long as they do this they will grow their bankroll despite the losing periods.

    They do not make money every day, week, or month & do not try to make small gains on a daily basis and stop when ahead, this would only increase how long it takes to get to the long run - they see this as trying to trick the math edge which will not work.

    Last edited: May 12, 2022
    #30     May 12, 2022
    Jzwu2017, ondafringe and sridhga like this.