Dear Trader, in the last days i found out something VERY interessting i would like to discuss and get some other opinions about it...
If you set a trade with 1:1 ratio for example
TP: 30
SL: 30
and enter trades randomly just... after 1000 trades you will have won about 50% and lost about 50%. (Maybe 49% 51%)
I backtested that as good as possible.
Now what if you set a strategy.
For example engulfing patter...
Everytime you find an bullish engulfing patter you go buy with 30 pipps tp and 30 pipps sl.
You do this a 1000 times for example in 4h chart.
Now lets image the result... for example its 45 % win and 55 % losses.
Now you would only have reversed the strategy to profitable?
If you got what im writing, we should find all possible strategies, and set a r:r ratio of 1:1 tp/sl to them.
It has only 2 outcomes from the A or B (win or loss) if you do it a lot of times statistic will prove if its a rentable pattern before you enter a trade or its not!
All trade that end up not to be approximatle 50% 50% (or 49% 51%) must be profitable cause you can reverse them!! If you backtest it long enough and get for example 45% to 55% or 40% 60% and you continue to trade like that and statistic was done on 1000 trades it should continue to be profitable.
Before you enter a trade, you have to set up a pattern, and then trade with risk reward 1:1 you will ether get 50:50% or you will be profitable, the idea is to force the trades to get a decision! If you try out 1000 different patterns you should find one that is more spreading then 49% to 51% so you will be profitable in long run.
If you agree with my idea which should be logic to you and you would like to join this discussion and add your thinking on it lets try this together here to write ideas of patterns and backtest them with time.
I would love people to join who have experience with precise backtesting so we can see further. Please comment if you can relate.
Kr
Facts for new people maybe:
If you have risk reward ratio of 1:1 and you win more then 50 percent of your trade you make profit.
If you have 55% to 45 % win rate with 1:1 ratio - means out of 100 trades you won 55 and lost 45 trades. Lets say sl and tp was 10 pipps (spread not consider) lot size was 1.00 you would have won 55 ×lot 1.00× 10pipps tp = 5500$ - loss 45 x lot 1.00 x 10 pipps sl 4500$ = 1000 win
So you can play with that numbers.
If you set a trade with 1:1 ratio for example
TP: 30
SL: 30
and enter trades randomly just... after 1000 trades you will have won about 50% and lost about 50%. (Maybe 49% 51%)
I backtested that as good as possible.
Now what if you set a strategy.
For example engulfing patter...
Everytime you find an bullish engulfing patter you go buy with 30 pipps tp and 30 pipps sl.
You do this a 1000 times for example in 4h chart.
Now lets image the result... for example its 45 % win and 55 % losses.
Now you would only have reversed the strategy to profitable?
If you got what im writing, we should find all possible strategies, and set a r:r ratio of 1:1 tp/sl to them.
It has only 2 outcomes from the A or B (win or loss) if you do it a lot of times statistic will prove if its a rentable pattern before you enter a trade or its not!
All trade that end up not to be approximatle 50% 50% (or 49% 51%) must be profitable cause you can reverse them!! If you backtest it long enough and get for example 45% to 55% or 40% 60% and you continue to trade like that and statistic was done on 1000 trades it should continue to be profitable.
Before you enter a trade, you have to set up a pattern, and then trade with risk reward 1:1 you will ether get 50:50% or you will be profitable, the idea is to force the trades to get a decision! If you try out 1000 different patterns you should find one that is more spreading then 49% to 51% so you will be profitable in long run.
If you agree with my idea which should be logic to you and you would like to join this discussion and add your thinking on it lets try this together here to write ideas of patterns and backtest them with time.
I would love people to join who have experience with precise backtesting so we can see further. Please comment if you can relate.
Kr
Facts for new people maybe:
If you have risk reward ratio of 1:1 and you win more then 50 percent of your trade you make profit.
If you have 55% to 45 % win rate with 1:1 ratio - means out of 100 trades you won 55 and lost 45 trades. Lets say sl and tp was 10 pipps (spread not consider) lot size was 1.00 you would have won 55 ×lot 1.00× 10pipps tp = 5500$ - loss 45 x lot 1.00 x 10 pipps sl 4500$ = 1000 win
So you can play with that numbers.