Low risk entries and picking tops or bottoms are usually totally different animals! Time to start thinking!
To continue: I am actually getting a bit interested in this author, as he knows what he is talking about, but he does not know the "obvious", nor will he ever know it! "Expectancy is sometimes recommended as a predictor of profitability. It is the probable return or profit for the next trade. It applies to a single trade. For a series of trades expectancy must be extended in ways that are not always obvious. The way in which expectancy is extended to a series of trades depends on the risk strategy being used for that series of trades. If fixed risk is being used then the extension is quite simple and straightforward. However if a percent of equity is being used as a risk strategy extending expectancy is more difficult. Expectancy is sometimes considered to be a figure of merit for a trading method. A high expectancy suggests that one method will be better than one with a lower expectancy. This is only roughly true. All measures of expectancy have problems because they forecast only the average expected profit. They say nothing about drawdown, nor are they predictive of the range of profit that might occur. Monte Carlo simulation shows the range of profit and drawdown that can be expected from a series of trades."
You can not see the top of a mountain when you are standing on it! I said I would not post analogies and the such, but in some cases they can explain the meaning in a few words, what otherwise might take a paragraph, or more!
Nysestocks, thanks for the thread. I am enojying it! I will be honest and admit that I have no idea what the obvious is that you refer to. That said, I am making money. So I ask myself, perhaps I am doing the 'obvious' unwittingly and if I am then my percentage returns should roughly equal those one a trader who knows what the 'obvious' is and exploits is correctly. So my question is, what would be an aproximate percentage of growth on the account of such a trader who is knowlingly exploiting the 'obvious'?
Of course one should not sell a swing high. There is still too much risk. Price is in the process of establishing or confirming a resistance. Too choppy and unpredictable here. Waiting for the roll-over to become relatively 'irresistible' (~5%-10% off the top) then jumping ahead of the pack right before the break is the better bet. This would constitute one SHABL strategy, and is (to me) 'obvious'. Auto-bots set these up all over the place these days. (Another 'obvious'?) So is "The Obvious" then just a collection of littler obviouses?
traderbigt, THANKS! nysestocks, This thread is providing me with some good "exercise" that cleanses one from all the "toxins" that have been taken in. I need that. It is appreciated. rc
Not correct. Expectancy is the edge of a trading system - in the traditional gambling sense - assuming a large enough sample of trades has been used to calculate it and profits and losses are normally distributed. Expectancy is NOT "the probable return or profit for the next trade". It is the expected return calculated from a sample of trades. You should learn the difference. There is no such thing as "probable return". It is only in the mind of the person who wrote that piece. In probability theory, there are event spaces and probability of events. In statistics, there is expected value and deviations from it, amongst other things. Whoever mixes probabilities and statistics is in the best case scenario, a loser.
Maybe you are right, and maybe you are wrong! It will become "obvious" to some what it is they need to know, and what it is they do not need to know!
If you are making money, then you are of course on the right track! In relation to your % question, and depending on available capital, and depending on the level of opportunity in the market traded, and depending on the mental state of the trader, the % growth compared with what the "experts" teach should be somewhere in the region of say 50% PA return for a good trader using the "experts" way and anywhere from 500% to 1000% for the few that are fully aware of what the "obvious" can, and does, deliver! Now, before people get all hyped up, one must remember than all people are different, and for one person 1000% might be a reality, while for another it may be very hard to keep even 10% of what they made! So, even when the "obvious" is known by someone, it still does not guarantee continued success!
Sir, Contrary to popular opinion â oneâs P/L is the absolute best trading indicator there is â follow it ardently for it will lead you to success... And eliminate all others as they are worthless - IMHO Sir Redneck