Discussion in 'Trading' started by learn&earn, Jan 23, 2011.

  1. Stocks can only go two ways: Up or Down. So why couldn't a person trade the most active (i.e big price swings) stocks like the top 10 Advance/Declines and just use a mid range stop and be profitable. These stocks usually have HUGE volume and move 10% up or down after the open so you have a decent chance of catching a big move. Yes, you are going to get whipsawed often and maybe even stopped out 3 of 5 times but your 2 profitable trades will be huge winners. Is this a valid idea? Just a thought.
  2. Visaria


    Yes, will probably work if you let the profits run and cut short the losses. Test it out.
  3. I have been but im only 3 trades in. 2 stop outs and an 11% gain. so far so good.
  4. Visaria


    Can you not test it historically over, say, 500 (non-correlated) trades?
  5. nLepwa


    Expectancy = zero.

    But test it anyway. You will surely learn something.

    However if your stocks are very volatile and loosely correlated, you might be successful at pumping volatility out of them.

  6. Visaria


    Why do you think expectancy would be zero?
  7. Respectfully how do you figure the expectancy is zero when the winners are so much larger than the losing trades? You may be correct just wondering how you got the conclusion?
  8. nLepwa


    Because I tested it.

    However trading costs were a big factors. If you can better manage these costs than I can (probability is low seeing how much I invest in it) then you might get slightly positive expectancy.

  9. how were you cherry picking your trades? I have been waiting till about 10am (height of the bubble) and then getting in either short or long. Seems possible.
  10. nLepwa


    Let me give you an example.
    We play a game several times. If you give me a correct answer, I give you $85. if you give me the wrong answer you give me $15.
    You get the answer right about 1 time out of 100.
    What's the expectancy of your wealth?

    #10     Jan 23, 2011