I believe that a system's profitability does not depend on the success rate of every single trade, instead, it has more to do with how much bigger its winning trades are than its losing trades. for example, a system with a 30% Win/Loss ratio can be very profitable if its winning trades are 4 times bigger than its losing trades. such a system in the long run will make a lot of money. And I believe that a random entry method can be turned into a successful trading system with a proper set of rules. such as,
1. you have to be consistent with your 'randomness'.
2. you must have a consistent exit strategy. it can be as simple as 'exit as soon as you've lost 30% of your floating profit.'
3. you can not use a fixed profit target. because the point of such a system is to capture the really big moves.
4. you have to use a stop loss.
5. don't wait for your stop loss to be hit. define rules that help you recognise when a trade is not going your way. for example, if after 2 hours you do not have 20 point floating profit, exit at market with no exception.
6. you must have consistent money management rules.
the more I learn about the market, the more I start to feel that entry is really the last thing you should worry about in your trading. I believe that when developing a trading system, only 10% of your energy should be spent on finding a good entry. the majority of your effort should be put to refine your skills on recognising when a trade is not working. and by doing that, minimising your loss for each and every trade. once you have done that, profit will take care of itself.
1. you have to be consistent with your 'randomness'.
2. you must have a consistent exit strategy. it can be as simple as 'exit as soon as you've lost 30% of your floating profit.'
3. you can not use a fixed profit target. because the point of such a system is to capture the really big moves.
4. you have to use a stop loss.
5. don't wait for your stop loss to be hit. define rules that help you recognise when a trade is not going your way. for example, if after 2 hours you do not have 20 point floating profit, exit at market with no exception.
6. you must have consistent money management rules.
the more I learn about the market, the more I start to feel that entry is really the last thing you should worry about in your trading. I believe that when developing a trading system, only 10% of your energy should be spent on finding a good entry. the majority of your effort should be put to refine your skills on recognising when a trade is not working. and by doing that, minimising your loss for each and every trade. once you have done that, profit will take care of itself.