Thank you for your answers!
The concept of probability comes from empirical results. If a coin is symmetrical you have 50:50 chance (large sample of tosses) but if it is not you can have 70(head):30 (tail) (large sample of tosses) for example.
So the question is: if you toss flawed one what will be the chance=probability that there will be a tail?
And the second one: is fx comparable with first or second?
and why?
Drawdown on this stage of analysis is not taken into account.
The strangth of this model lies in fact that it adjustes volume of entry to expected )probable) market conditions, and drawdown is a step further in mm. In fact (if we can prove it by backtest) that his method actually works good it gives an additional edge: decreases risk and increases gains (yes - geometrically by compounding or linerarry or whatever). But ASai asked in his first post what we think about it as a tool to mitigate risk.
have a nice weekend!!!!
Hello Dottore,
2) The model concerns his AR with respect to RRR. No matter what % of account he is trading,, his next trade probability is always 50%. And if it turns right, its due to the system's probability (win/loss ratio)which can be 60or70% or whatever.
So the question is: if you toss flawed one what will be the chance=probability that there will be a tail?
And the second one: is fx comparable with first or second?
and why?
3) The model does not concern the drawdown on the system. No matter what the system, you will at some point suffer drawdown in your account and hit a losing streak. The losing streak of any system is a variable. It can be say 4 trades in a row. so suppose the model tells you to trade 4% of the account on the trade and you hit a losing streak 4 times in a row, thats 16% down already. Very possible scenario.
The strength of any MM model is not only in containing risk but also to cause geometric growth which is only possible in leveraged instruments.
If only risk was the criteria, might as well put money in the bank and earn interest.
Just some of my thoughts to put things in perspective from what little I know about MM. Its a vast subject and open to debate for ever.
The strangth of this model lies in fact that it adjustes volume of entry to expected )probable) market conditions, and drawdown is a step further in mm. In fact (if we can prove it by backtest) that his method actually works good it gives an additional edge: decreases risk and increases gains (yes - geometrically by compounding or linerarry or whatever). But ASai asked in his first post what we think about it as a tool to mitigate risk.
have a nice weekend!!!!
Quidquid latine dictum sit altum viditur
