DT,
I don't think we have to go that far, initally. Let's try this:
1) Every trade begins life with negative ticket balance--- we must pay the spread before we play.
2) The market price is, at any given moment, what the market says it is.
3) You place a trade with some knowledge you believe the market does not have or does not recognize. If the market had digested that knowledge and your assumptions were correct, the price would not be where it presently is.
4) What made you sure enough about that knowledge that it caused you to take the trade? Let's analyize that and see if it holds up to logical reasoning. If so, we can proceed with testing and attempt to measure expectancy. I am afraid that most traders would fall apart at this step because they could not give a clear logical reason for entering a trade.
For example: When price approaches a "00" number, it will bounce at least once off that number and retrace at least 10 pips. Not everytime, of course, but enough times to be statistically significant. Now that is a perfectly good market assumption that would be worthy of further testing. As it turns out, this assumption would be wrong and you would get your lunch eaten if you employed it. As you would with every other market assumption I have tested (except for a couple I am still working with). I do admit, however, that my work is not exhaustive. There may well be some methods that I am not aware of that work... hell, I hope there are or all my work is in vain. Alot of posters seem to think that just becuause their equity balance is positive at the moment then all of the work has been done and they are on their way to a life of freedom as a daytrader. This is dangerous thinking and has hurt a lot of people. I hope my little thread gives a few of them a reason to analyize exactly WHY their balance is positive and if those reasons give them hope to stay that way.
Regards
I don't think we have to go that far, initally. Let's try this:
1) Every trade begins life with negative ticket balance--- we must pay the spread before we play.
2) The market price is, at any given moment, what the market says it is.
3) You place a trade with some knowledge you believe the market does not have or does not recognize. If the market had digested that knowledge and your assumptions were correct, the price would not be where it presently is.
4) What made you sure enough about that knowledge that it caused you to take the trade? Let's analyize that and see if it holds up to logical reasoning. If so, we can proceed with testing and attempt to measure expectancy. I am afraid that most traders would fall apart at this step because they could not give a clear logical reason for entering a trade.
For example: When price approaches a "00" number, it will bounce at least once off that number and retrace at least 10 pips. Not everytime, of course, but enough times to be statistically significant. Now that is a perfectly good market assumption that would be worthy of further testing. As it turns out, this assumption would be wrong and you would get your lunch eaten if you employed it. As you would with every other market assumption I have tested (except for a couple I am still working with). I do admit, however, that my work is not exhaustive. There may well be some methods that I am not aware of that work... hell, I hope there are or all my work is in vain. Alot of posters seem to think that just becuause their equity balance is positive at the moment then all of the work has been done and they are on their way to a life of freedom as a daytrader. This is dangerous thinking and has hurt a lot of people. I hope my little thread gives a few of them a reason to analyize exactly WHY their balance is positive and if those reasons give them hope to stay that way.
Regards