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The best way to trade is one trade a day

  • #21
  • Apr 3, 2010 8:46am Apr 3, 2010 8:46am
Quoting Sim
no because as i said, if u have some sense

u have a 70% strike rate

what would u do? how much would u risk per position?

don't stray from this question hereafter either plz
The 70% strike rate doesn't mean anything if you don't know what you are striking (% or pip gain) or how often.

You can have a 100% strike rate but it doesn't mean anything.
100% strike rate, on a 1 year period for a 2 pip gain with a 1:1 leverage won't make you a 100% gain anytime soon.


Conclusion : you need more info than a 1:1 70% system. You even said so yourself
  • #22
  • Apr 3, 2010 8:48am Apr 3, 2010 8:48am
Decent chance of blowing your account at 5% per trade with 70% strike rate.

I would go for about 1%. Hanover has some good posts about the probability of having X amount of losses with different positive expectancies.
The greatest force on earth is compound interest.
  • #23
  • Apr 3, 2010 8:48am Apr 3, 2010 8:48am
70% strike rate and 1:1 RR means everything, it means 7 out of 10 trades win with the same risk:reward

not sure if you're just misunderstanding the posters' intentions bro but no worries
  • #24
  • Apr 3, 2010 8:49am Apr 3, 2010 8:49am
Take a look at the table here http://www.forexfactory.com/showthre...593#post188593 shows the probabilities

I get what you mean, but because of randomness you would be surprised at how likely it is for you to have a big string of losses even with a high win rate like 70%

Not trying to catch you out mate, its just when you know a system wins 7/10 it still has a 1% chance of loosing 7 times in a row in 50 trades.

Its something ill be looking into more in the future, would be interesting to know what the probabilities would be for 221 trades.
The greatest force on earth is compound interest.
  • #25
  • Apr 3, 2010 8:51am Apr 3, 2010 8:51am
Quoting sebastionay
Decent chance of blowing your account at 5% per trade with 70% strike rate.

I would go for about 1%. Hanover has some good posts about the probability of having X amount of losses with different positive expectancies.
hehehe seb i do wanna make a joke about our previous blow ups on a certain previous account

but tbh that is also irrelevant. anything about probabilities doesn't really help too much because then u can look into account size relative to your wealth..

i.e. i would rather risk 5% of my $1k account than 1% of my 5k...same gains yet i can free 4k up right?

this is why fx was developed for that sort of leverage

so in any case with fixed 70% odds of winning mate i would use a small account and higher relative risk...
  • #26
  • Apr 3, 2010 8:54am Apr 3, 2010 8:54am
that table is still too casino-type seb...i already said i dont believe trading is mimicked by fixed odds at all

this discussion about the 70% thing was just to help explain to intensity..totally impractical with regards to trading
  • #27
  • Apr 3, 2010 9:03am Apr 3, 2010 9:03am
Yeah that's been the reason for my previous blow up, under estimating the probability for a string of losses and for not being interested enough to use lower risk because it was such a small account.

I don't do that anymore though and I would still avoid using 5% account balance per trade because the longer the account would last and the bigger it got, the higher probability for that string of losses increases and wipe out the account altogether.
The greatest force on earth is compound interest.
  • #28
  • Apr 3, 2010 9:12am Apr 3, 2010 9:12am
Quoting Sim
70% strike rate and 1:1 RR means everything, it means 7 out of 10 trades win with the same risk:reward

not sure if you're just misunderstanding the posters' intentions bro but no worries
Exactly, but if the risk:reward = 50%, 2 losses in a row and you're almost wiped out.

I'll say it again : 70% strike rate and 1:1 RR isn't enough info.
  • #29
  • Apr 3, 2010 9:15am Apr 3, 2010 9:15am
Your talking madness now, loosing 10% is awful i agree but you can't say that its the same as being 'nearly wiped out'
The greatest force on earth is compound interest.
  • #30
  • Apr 3, 2010 9:16am Apr 3, 2010 9:16am
Quoting sebastionay
Your talking madness now, loosing 10% is awful i agree but you can't say that its the same as being 'nearly wiped out'
No, I said 2 50% loss in a row. a 75% loss. That's being almost wiped out.
  • #31
  • Apr 3, 2010 9:18am Apr 3, 2010 9:18am
seb i think he doesnt understand concept of R:R

bro risk:reward is the ratio of one trade's potential risk, in pips or %equity whatever, to the potential gain

1:1 therefore is you risking 20pips to gain 20

or 10% to gain 10%

or 1pip to gain 1pip
  • #32
  • Apr 3, 2010 9:22am Apr 3, 2010 9:22am
Quoting Sim
seb i think he doesnt understand concept of R:R

bro risk:reward is the ratio of one trade's potential risk, in pips or %equity whatever, to the potential gain

1:1 therefore is you risking 20pips to gain 20

or 10% to gain 10%

or 1pip to gain 1pip
I understand, but R:R doesn't mean anything if you don't have a max value.
The R:R can be 1:1, but if it means it's as likely to lose 100% or gain 100% it's a useless system.

Same conclusion : you need more data than 70% 1:1 RR.
  • #33
  • Apr 3, 2010 9:24am Apr 3, 2010 9:24am
well dont say to people to learn basic math when u urself are a lost cause..
  • #34
  • Apr 3, 2010 9:27am Apr 3, 2010 9:27am
Quoting Sim
well dont say to people to learn basic math when u urself are a lost cause..
Good Lord....


I'm just saying that R:R + Strike Ratio aren't sufficient to determine if a system is profitable or not because factors like money management aren't included.

I feel like I'm talking to people who never traded or never backtested a system...
  • #35
  • Edited 10:00am Apr 3, 2010 9:34am | Edited 10:00am
Intensity I just got the wrong impression with the way you answered. I thought you were talking about Risk:Reward instead of Risk and I agree with what your saying anyway.

wasn't disagreeing with sim either just wanted to highlight why its easier than most people would think it is to blow an account by using 5% per trade for example.
The greatest force on earth is compound interest.
  • #36
  • Apr 3, 2010 9:39am Apr 3, 2010 9:39am
Quoting sebastionay
Intensity I just got the wrong impression with the way you answered. I thought you were talking about Risk:Reward instead of Risk and I agree with what your saying anyway.
Thanks Sebastionay
Sorry for the wrong impression, I'm french, my english isn't that good and I try to make the shortest answers even if it might make me sound rude
  • #37
  • Apr 3, 2010 10:28am Apr 3, 2010 10:28am
I also aim for one trade a day. It has worked well for me. I risk about 2% per trade and I think it works well because the spread cost is a small % of my win.
  • #38
  • Apr 3, 2010 12:47pm Apr 3, 2010 12:47pm
Quoting yunielescaz
all this talk about overtrading has no base of justification.
I think the real meaning of the term "overtrading" is that you are deviating from your system and your rules to get more trades. Your system won't give you a valid signal right now but you want to (or must) trade *now* at all costs, so you are bending your rules (lower timeframes, other sessions, unfamiliar instruments) until you have your "signal".
  • #39
  • Apr 3, 2010 12:58pm Apr 3, 2010 12:58pm
Quoting Intensity
I'm just saying that R:R + Strike Ratio aren't sufficient to determine if a system is profitable
R:R and strike ratio are all that is needed to describe the profitability of a system. It can be directly translated into the profit factor, which is sum(profit)/sum(loss). The above mentioned 1:1 with 70% would be an extraordinary profitable system with a profit factor of 7/3 = 2.333

If I had such a system i would be millionaire already.
  • #40
  • Apr 3, 2010 1:32pm Apr 3, 2010 1:32pm
^^^^

agreed
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