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The Coin Trade System aka Flip The Coin

  • #61
  • Jul 30, 2009 7:24pm Jul 30, 2009 7:24pm
Quoting seeit
then using a coin toss.....
Ahhh, I don't think that is right. It's been awhile since I took probability (I'm sure if you want to know the math of why your wrong, we can look it up), but for now I ran a simulation of coin tosses. Ran both cases 10,000 times.

If you flip a coin 10,000 times and stay with heads you win ~50% of the time. If you flip two coins 10,000 times, they match ~50% of the time.
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  • #62
  • Jul 30, 2009 9:01pm Jul 30, 2009 9:01pm
Quoting redpine
Ahhh, I don't think that is right. It's been awhile since I took probability (I'm sure if you want to know the math of why your wrong, we can look it up), but for now I ran a simulation of coin tosses. Ran both cases 10,000 times.

If you flip a coin 10,000 times and stay with heads you win ~50% of the time. If you flip two coins 10,000 times, they match ~50% of the time.
If you flip 2 coins the possible outcomes are HH, HT, TH, and TT.

Now think about trading.

If you only pick heads, you will be right half the time OVER THE LONG HAUL.

If you flip a coin to pick heads or tails, you could have one heck of a losing streak or miss out on one heck of a win streak.

I believe you proved my point. The odds do not improve by choosing random entries.


Attached Image (click to enlarge)
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Trading is a game of survival.

Pick the worse possible starting bar for long entries. SL = 10 pips. How many losers in a row? 4? 5?

How many winners did it take to break even? 1? 2? 3?

Remember, you do not trade 24 hours a day, 5 days a week.
  • #63
  • Jul 31, 2009 3:14am Jul 31, 2009 3:14am
Quoting gbppip
If you flip 2 coins the possible outcomes are HH, HT, TH, and TT.

Now think about trading.

If you only pick heads, you will be right half the time OVER THE LONG HAUL.

If you flip a coin to pick heads or tails, you could have one heck of a losing streak or miss out on one heck of a win streak.

I believe you proved my point....
Depends if you think the moves in the market are random. If moves are random, then again, it doesn't matter whether you stay long or flip a coin. By picking heads consistently, if the answer is a run of tails, you hit the same long losing streak.

BTW, another experiment I ran is what are the chances on the daily time frame that an up day will be followed by another up day or a down day. The answer is that for all major pairs its about the same odds, with a slightly better chance for a reverse in direction.
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  • #64
  • Edited 5:40pm Aug 2, 2009 1:11pm | Edited 5:40pm
Quoting seeit
If you were to stick with on direction for the rest of your life...lets say Long , Everytrade you made the rest of your life would have a 50/50 chance.

But if you go back and forth in your mind between long and short....and the market is going back and forth... guess what...it is not 50/50 its 25%

If in vegas , you sit a table that has a red or black choice...baring luck over x trials...you should be @ 25 % right.

If you sit at that same table ..and pick just one color, lets say red...over the same period as above , you should be closer...
If it is true that trading in one direction makes the odds 50/50, then maybe the best thing to do is for someone to test out that theory by trading in only one direction. You could have at least a 2:1 risk-reward ratio and let the odds play themselves out.

Does this sound like a good plan?


Topgun

(edit: Hey, I just noticed this is my 100th post. Time to celebrate! lol)
"Success is not a fantasy, it's a formula." - MTI
  • #65
  • Aug 2, 2009 8:10pm Aug 2, 2009 8:10pm
There is a serious flaw in this idea and that is, it is not the entry but the exit that makes or breaks a trade.
Starting to see instead of just looking.
  • #66
  • Aug 3, 2009 9:55am Aug 3, 2009 9:55am
Quote
There is a serious flaw in this idea and that is, it is not the entry but the exit that makes or breaks a trade.

Yeh but you won't get as many good exits if your entry blows .
  • #67
  • Aug 5, 2009 4:36pm Aug 5, 2009 4:36pm
I happened to come across this interesting article that was published over a week ago regarding the odds of a coin toss. This thread came to mind when I read the article, as the article fits in quite nicely with this thread.

http://www.thebigmoney.com/articles/...ipping-out?g=1
"Success is not a fantasy, it's a formula." - MTI
  • #68
  • Last Post: Aug 8, 2009 7:51am Aug 8, 2009 7:51am
with the exception of spreads, in a true textbook-efficient, ranging market, with no trend and equal distance between s/l and t/p, the odds of finding a winning trade are not 25%. the odds would be 50/50.

if it were the case that the odds were 25%, then we would simply use the "flip the coin" model as a contra indicator, where we take the opposite trade to the signal given, as our odds of each trade bein a winning trade, by definition, would have to be 75%.
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