Why do people try to pick tops and bottoms? Do tops and bottoms have a better risk/reward profile? people are anticipating accelerated price change counter trend. tops and bottoms are only retrospective. And they do offer a better risk/reward because of the accelerated price change, but its post print. The risk/reward is higher when anticipating a top or bottom before it actually prints. The risk is less after it prints.
Most win:loss ratios being used are unrealistic for the price action or based upon some backtest theory. Simply, during real trading, the price action requires a different win:loss ratio. Example, maybe the pattern signal that appeared at 0945am est needs a win:loss ratio of 1.5 to 1. In comparison, the same pattern signal that appears at 1:15pm est needs a win:loss ratio of 2 to 1. Later, the same pattern signal that appears at 3:07pm est needs a win:loss ratio of 0.5 to 1.2 (this trade would require the trader to stay on the sidelines or reduce the position size to better manage the risk exposure). Summary, price action changes through out the trading day and win:loss ratios should do the same. Therefore, fixed win:loss ratios being applied all day have a flaw in that they assume the price action never changes. Another possible answer (answers to all your other rhetorical questions)... Untested trading plan and I'm not just talking about the pattern signal. Mark
Put all the Q'a on a Word landscape sheet and add five columns to the right. Label the columns: fear, anxiety, anger, other and remarks. The other column will have several answers and most will be negative in context. The gambling/probability based trading approach is a tough situation to begin with. Once it becomes a belief system it affects everything psychologically and physiologically. The main effort of newbies is learning failure and it is a tough experience until most of them fail completely as a result of their chioce of learning approaches. The seasoned traders who have set their performance limitations in stone. Still get the same answers as those who fail to become traders. Check out Lo, Repin, Le Doux, Goleman, R. Peterson and Shull for the answersheet to the Q's that have been posted. There are many many books on trading. They often focus on how traders trade the way your Q's state in their query. A tradition permeates the financial industry and gets the results of the topics of your Q's. A lot of ET people will confirm how these things work for the convnentional orthodoxy. Go for it. It will help entrain the newbies into the CW orientation.