DislikedAssuming a completely random market, when I enter a trade I have a 50:50 chance of that trading gaining 10 pips, or hitting my 10 pip stop loss. If it hits my stop, the game is over. However, if it moves in my favour then it now has a 50:50 chance of either moving back to break even or moving to +20 pips. And so it continues. But if it ever hits -10 then the game ends, The losing side is limited. However, the laws of statistics dictate that many trades will move in a positive direction and as we never end the game when the direction is positive,...Ignored
Comparing trading to the coin toss scenario: (something Graeme suggested we all do earlier on - here is my documented coin toss and emotional thinking along with it)
Cost: 10 pips per coin toss
if the coin is heads up, the trade is a winner (+10 pips - Locked in at B/E) If it is tails = -10 pips
1st trade= heads (+10 pips)
2nd trade = heads up again - (+20 pips in first trade/ 10 pips 2nd trade)
3rd trade= heads up again - (+10 in 3rd, +20 in 2nd/ +30 in 3rd)
4th trade = heads again (+10, +20, +30, +40)
5th trade = heads again (+10, +20, +30, +40, +50)
Note: Im thinking, "YAY! Winning Streak! Close it out and quit for the day!"
6th trade = tails - (-10, b/e, +10, +20, +30, +40)
7th trade = tails (-10, b/e, +10, +20, 30)
8th trade = tails (- 10, b/e, +10, +20)
9th trade = tails (-10, b/e, +10)
Note: thinking I need to quit for day and take my remaining 10 pips!
10th trade = tails (-10, b/e)
Total ten trades so far: - 50 pips, one trade left at B/E
11th trade = heads (+10 pips, +10 pips)
12th trade = tails (-10 pips, b/e, b/e)
13th trade = heads (+10, +10, +10)
14th trade = heads (+10, +20, +20)
15th trade = heads (+10, +20, +30, +30)
16th trade = heads (+10, +30, +40 +40)
i'd want to quit for day right here and take the wins
17th trade = tails (-10, b/e, +20, +30, +30)
18th trade = tails (-10, +10, +20, +20)
19th trade = heads (+10, +20, +30, +30)
20th trade = heads (+10, +30, +40, + 40)
total 20 trades: = - 80 with +120 floating profit
21st trade = heads (+10, +20, +40, +50, + 50)
22nd trade= heads (+10, +20, +30, +50, +50, +60)
(right now, I want to take my money and go on...but for the sake of this experiment... I stick with it)
23rd trade = tails (-10, b/e, +10, +20, +40, +40, + 50)
24th trade = heads (+10, +10, +20, +30, +50, +50, +60)
25th trade = tails (-10, b/e, b/e, +10, +20, +40, +40. +50)
26th trade = heads (+10, +10, +10, +20, +30, +50, +50, +60)
(I'm noticing its taking more and more to knock out the "legs" I've established, plus with each trade, I have more legs starting)
27th trade = heads (+10, +20, +20, +20, +30, +40, +60, +60, +70)
(so many going in the right direction now I'm amazed)
28th trade = tails (-10, b/e, +10, +10, +10, +20, +30, +50, +50, +60)
29th trade = heads (+10, +20, +20, +20, +30, +40, +60, +60, +70)
30th trade = tails (-10, b/e, +10, +10, +10, +20, +30, +50, +50, +60)
total 30 trades: -120 pips +240 pips in floating profit
31st trade - tails (-10, b/e, b/e, b/e, +10, +20, +40, +40, +50)
(I want to stop it out now ... but continuing on)
32nd trade - heads (+10, +10, +10, +10, +20, +30, + 50, +50, +60)
33rd trade = heads (+10, +20, +20, +20, +30, +40, +60, +60, +70)
34th trade = tails (-10, b/e, +10, +10, +10, +20, +30, +50, +50, +60)
35th trade = tails (-10, x, , b/e, b/e, b/e,+10, +20, +40, +40, +50)
36th trade = tails (-10, b/e , +10, +30, +30, +40)
37th trade = tails (-10, b/e, +20, +20, +30)
38th trade = heads (+10, +10, +30, +30, +40)
39th trade = heads (+10, +20, +20, +40, +40, +50)
40th trade = tails (-10, b/e, +10, +10, +30, +30, +40)
total 40 trades: -180 pips, +120 pips floating profit
(thinking what a lot of wasted time, this is not working....)
41st trade= tails (-10, b/e, b/e, +20, +20, +30)
42nd trade = heads (+10, +10, +10, +30, +30, +40)
43rd trade = tails (-10, b/e, b/e, b/e, +20, +20, +30)
44th trade = tails (-10, +10, +10, +20)
45th trade = heads (+10, +20, +20,+30)
46th trade=tails (-10, b/e, +10, +10, +20)
(thinking I need a new strategy!)
47th trade = heads (+10, +10, +20, +20, +30)
48th trade = heads (+10, +20, +20, +30, +30, +40)
49th trade = tails (-10, b/e, +10, +10, +20, +20, +30)
50th trade tails (-10, b/e, b/e, +10, +10, +20)
50th trade = -240 pips, +40 pips in floating profit
(thinking seriously... why am I doing this? but will keep on till I get to 100 trades/ tosses just for the sake of this experiment)
51st trade: heads (+10, +10, +10, +20, +20, +30)
52nd trade: tails (-10, b/e, b/e, b/e, +10, +10, +20)
53rd trade: tails (-10, b/e, b/e, +10)
54th trade: heads (+10, +10, +10, +20)
55th trade: heads (+10, +20, +20, +20, +30)
56th trade: heads (+10, +20, +30, +30, +30, +40)
57th trade: tails (-10, b/e, +10, +20, +20, +20, +30)
58th trade: heads (+10, +10, +20, +30, +30, +30, +40)
59th trade: tails (-10, b/e, b/e, +10, +20, +20, +20, +30)
60th trade: heads (+10, +10, +10, +20, +30, +30, +30, +40)
total 60 trades: -280 pips, 180 pips floating profit
61st trade: heads (+10, +20, +20, +20, +30, +40, +40, +40, +50)
62nd trade: heads (+10, +20, +30, +30, +30, +40, +50, +50, +50, +60)
63rd trade: heads (+10, +20, +30, +40, +40, +40, +50, +60, +60, +70)
64th trade: heads (+10, +20, +30, +40, +50, +50, +50, +60, +70, +70, +80)
65th trade: tails (-10, b/e, +10, +20, +30, +40, +40, +40, +50, +60, +60, +70)
66th trade: heads (+10, +10, +20, +30, +40, +50, +50, +50, +60, +70, +70, +80)
67th trade: tails (-10, b/e, b/e, +10, +20, +30, +40, +40, +40, +50, +60, +60, +70)
68th trade: heads (+10, +10, +10, +20, +30, +40, +50, +50, +50, +60, +70, +70. +80)
69th trade: heads (+10, +20, +20, +20, +30, +40, +50, +60, +60, +60, +70, +80, +80, +90)
70th trade: tails (-10, b/e, +10, +10, +10, +20, +30, +40, +50, +50, +50, +60, +70, +70, +80)
70 trades total: -310 pips, 550 pips profit
71st trade: tails (-10, 3 b/e, +10, +20, +30, +40, +40, +40, +50, +60, +60, +70)
72nd trade: heads (+10, +10, +10, +10, +20, +30, +40, +50, +50, +50, +60, +70, +70, +80)
73rd trade: tails (-10, 4 b/e, +10, +20, +30, +40, +40, +40
+50, +60, +60. +80)
74th trade: heads (+10, +10, +10, +10, +10, +10, +20, +30, +40, +50, +50, +50, 70, +70, +90)
75th trade: tails (-10, 6 b/e, +10, +20, +30, +40, +40, +40, +60, +60, +80)
76th trade: heads (+10, 6 x 10, +20, +30, +40, 3 x 50, 2 x 70, +90)
(numbers are starting to get crazy! )
77th trade: heads (+10, 7 x20, +30, +40, +50, 3 x 60, 2 x 80, +100)
78th trade: tails (-10, b/e, 7x10, +20, +30, +40, 3x50, 2x70, +90)
79th trade: tails, (-10, 7x BE, +10, +20, +30, 3x40, 2x60, +80)
80th trade: tails (-10, BE, +10, +20, 3 x 30, 2x50, +70)
80 trades total: -370 pips, 290 pips floating profit
81st trade: heads (+10, +10, +20, +30, 3 x 40, 2 x 60, +80)
82nd trade: heads (+10, 2x20, +30, +40, 3 x 50, 2 x 70, +90)
83rd trade: heads (+10, +20, 2 x 30, +40, +50, 3 x 60, 2 x 80, +100)
84th trade: heads (+10, +20, +30, 2 x 40, +50, +60, 3 x 70, 2 x 90, +110)
(thinking I may just take this experiment to 200 to see what happens!)
85th trade: heads!!!! (+10, +20, +30, +40, 2 x 50, +60, +70, 3 x 80, 2 x 100, +120)
86th trade: Heads!!!!! (+10, +20, +30, +40, +50, 2 x 60, +70, +80, 3 x 90, 2 x 110, +130)
87th trade: tails (-10, be, +10, +20, +30, +40, 2 x50, +60, +70, 3x80, 2x100, +120)
88th trade: heads (+10, +10, +20, +30, +40, +50, 2x60, +70, +80, 3x90, 2x110, +130)
89th trade: heads (+10, 2x20, +30, +40, +50, +60, 2x70, +80, +90, 3x100, 2x120, +140)
WOW!
90th trade: HEADS! (+10, +20, 2x30, +40, +50, +60, +70, 2x80, +90, +100, 3x110, 2x120, +140)
90 trades total: -380 pips, 1370 pips in floating profit
91st trade: heads (+10, +20, +30, 2x40, +50, +60, +70, +80, 2x90, +100, +110, 3x120, 2x130, +150)
92nd trade: heads (+10, +20, +30, +40, 2x50, +60, +70, +80, +90, 2x100, +110, +120, 3x130, 2x140, +160)
noticing a snowball effect going on here!!!
93rd trade: heads (doubting my coin tossing abilities right now!)
(+10, +20, +30, +40, +50, 2x60, +70, +80, +90, +100, 2x110, +120, +130, 3x140, 2x150, +170)
94th trade: heads! (shook it realllllly good that time!)
(+10, +20, +30, +40, +50, +60, 2x70, +80, +90, +100, 2x120, +130, +140, 3x150, 2x160, +180)
95th trade: heads (seriously..... im not rigging it....) (+10, +20, +30, +40, +50, +60, +70, 2x80, +90, +100,+110, 2x130, +140, +150, 3 x 160, 2x170, +190)
wondering if this is realllllly realistic?????
96th trade: tails (-10, be, +10, +20, +30, +40, 50, 60, 2x70, 80, 90, 100, 2x120, 130, 140, 3x150, 2x160, 180)
97th trade: heads (+10, +10, +20, +30, +40, +50, +60, +70, 2x80, +90, +100, 110, 2x130, 140, 150, 3x160, 2x170, 190)
98th trade: heads (+10, 2x20, +30, +40, +50, +60, +70, +80, 2x90, +100, +110, +120, 2x140, 150, 160, 3x170, 2x180, 200)
noticing the compounded effect of a winning streak. It will take quite a bit now to knock these out.
99th trade: heads (+10, +20, 2x30, +40, +50, +60, +70, +80, +90, 2x100, +110, +120, +130, 2x150, 160, 170, 3x180, 2x190, 210)
100th trade: heads again! (+10, +20, +30, 2x40, +50, +60, +70, +80, +90, +100, 2x110, +120, +130, +140, 2x160, 170, 180, 3x190, 2x200, 220)
100 trades total: -390 pips, 3060 pips in floating profit
Everyone should really try doing this. If loss is at a set point, but reward is infinite... the results are truly amazing. I had a hard time wrapping my mind around all these "legs" going. Also, all the wins I doubted, but - if we were able to catch a long term trend, that is truly possible.