Disliked"Hahaha....I like this bit. For a start feel free to look up the random probability formula in Dans private forum... it will help you understand the math behind the points you are trying to make. (The formula is accurate in its random probability calculation - for comparitive analysis). I accept that it does not factor in the daily ADR... but I do not see the ADR as big a contributor to the risk as you do."
Tim... I already understand the math behind the points I make, "mate". I have been calculating probabilities in real world situations for over 20 years quite successfully. In fact, I sometimes use my abilities as a consultant in areas like the gaming and insurance industries. The reason I don't post all of the calculations is this is a forum for forex traders... not a forum for differential or integral calculus. I think it benefits the reader if I use general terminology and explanations that won't put them to sleep. If I remember, you're the one who didn't understand how to figure how much of a winning percentage an entry method of a system would need to reach a certain progression level. I had to help you see this about your own system you're considering developing... so please don't lecture me about math by pointing me toward a high school algebra formula.
While I'm glad to see that you're applying your knowledge of math to your trading, and even questioning the answers that I'm giving you, you must understand that your insistance to ignore certain variables of the trade that can affect its outcome will quickly be your demise. If you can not accept that the pair with the lowest pip spread is not automatically the best pair to trade in a stop and reverse progression, then there is nothing I can tell you and no calculation I can perform that will make any difference. Your "failure probability" calculation is only a way of showing a stop loss will be hit faster because the spread is larger. It's only one small part of an analysis, not the complete analysis. It CAN help rule out whether a spread can be too large to be successful in Dan's method, but it CAN'T tell you how a given currency pair may perform. It's a fine first step in deciding whether a pair is worth investigating further or eliminating as a choice to trade... but that's it... nothing more. Let's be responsible... your treating it like it's the answer to which pairs to trade could cause someone reading these posts to rush to judgement and lose A LOT of money.
And finally... any practical application of a mathematical progression (not just the one we're discussing here in this method) is NOT a closed system (and by system I mean "universe", not "trading system" so there are no more misunderstandings about terminology). If they were, then companies wouldn't need mathematicians and statisticians to perform risk assesments. Even something as simple as a coin toss isn't without variable risk. Is the coin unfairly weighted? Does it have two heads or two tails instead of one of each? Without using your ability to think and consider the variables you are heading for disaster. And the ADR is one of the first variables that needs to be considered when selecting a currency pair to trade so that you can be sure your intended trading method even has the slightest chance to succeed. This goes not just for Dan's progression component, but for any complete technical trading system too. What do you think banks and other institutional traders are doing when they trade pivots???
To put yourself in the best position to benefit from Dan's method in the short term, you have to start thinking very carefully about what else may affect the "universe" of the trade... some of which I've described in my previous posts. There are far too many besides the entry method and you shouldn't be so quick to discount them. The more you take into account, the better your odds of still having a profit once you reach ruin with this progression. Otherwise, just save your time and enter randomly and let the math catch up with you... in other words, take your chances.
I hope you'll consider what I've written in this post to be for your own (and your money's) best interest. If not, go back and read post #528 and see what got me involved in this discussion in the first place. I'm not trying to get into a p!ssing contest with you here... that's why in my last post I offered to answer your questions through email... just trying to help a fellow trader. Best of luck (and skill) to you in your quest to refine Dan's method to fit your trading.
Look, I am sure your 20 years of statistical consulting puts you in good stead to make the statements you do. I have been trading for nearly as long and for a number of these years I have lived full time off my trading income. I have learnt never to treat this game as black and white.
So again your assumptions about how I treat this progression system are incorrect - I do not ignore other variables, I just look at them differently from you.
For a person who obviously has a lot to offer - you are too wrapped up in your own sense of superiority, arrogance, and your patronising approach to the discussion makes it difficult to learn anything from you.
It's a shame because as this is the way I make my living - I am always interested in learning more.