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  • #9,841
  • Jan 1, 2011 4:59pm Jan 1, 2011 4:59pm
Quoting Custos
yeah, the strategy on this thread was amongst the strategies I tested. All of them showed similar results regarding intrade management.
I think the similarities are because all these strategies have positiove expectancy.
so, what is your conclusion? regarding Hit Rate and R:R?
  • #9,842
  • Jan 1, 2011 5:11pm Jan 1, 2011 5:11pm
Quoting shiko
I think the similarities are because all these strategies have positiove expectancy.
so, what is your conclusion? regarding Hit Rate and R:R?
I go for R:R over hit-rate.

Counter-intuitive, I know. Cause when we begin with trading, we search normally for a high hit-rate strategy. Yes, it's better for compounding purposes.
But as I mentioned, accuracy is such a big point with high win-rate and low R:R strategies. And try being accurate over thousands of trades. It's pretty hard to do. Psychologically high win-rate strategies are easier since you have many more winners than losses, but let's say it is so much more intense, since you have to fight over every pip so to speak and have to try fighting slippage on every trade.

Now, high R:Rs and low win-rate is psychologically very hard. One of my strategies just has a win-rate of 20 - 30% but with very high R:Rs. Here I don't have to be accurate at all. I can even have a 10 pip slippage on EVERY trade over thousands of trades and still be profitable over the long-term.
It's just less stressful trading and not fighting over every pip. You just have to stomach the constant losers and wait for the occasional winners to occur.

Of course, the best would be high win-rate and high R:R. But I have not found a strategy yet that provides both. And I honestly don't expect that such a thing exists.

By the way, high R:R for me is anything above 10:1 and high win-rate anything above 60%.
  • #9,843
  • Jan 1, 2011 5:30pm Jan 1, 2011 5:30pm
Quoting Custos
I go for R:R over hit-rate.

Counter-intuitive, I know. Cause when we begin with trading, we search normally for a high hit-rate strategy. Yes, it's better for compounding purposes.
But as I mentioned, accuracy is such a big point with high win-rate and low R:R strategies. And try being accurate over thousands of trades. It's pretty hard to do. Psychologically high win-rate strategies are easier since you have many more winners than losses, but let's say it is so much more intense, since you have to fight over every pip so to speak and have to try...

what if Risk to Reward from 1:1 up to 1:2 ? What is still the probability to have hit rate higher than 60%?
I understand you mean very high R;R probably 1:10, right?>
  • #9,844
  • Jan 1, 2011 5:31pm Jan 1, 2011 5:31pm
I actually want to start compounding and adding more funds. I want 5 years plan.
  • #9,845
  • Jan 1, 2011 5:40pm Jan 1, 2011 5:40pm
Quoting shiko
what if Risk to Reward from 1:1 up to 1:2 ? What is still the probability to have hit rate higher than 60%?
I understand you mean very high R;R probably 1:10, right?>
The probability of having a high hit rate while increasing R:R depends on the edge you found. It depends on the pattern you trade. Each pattern has its own probabilities. So for some edges (which I have not discovered yet), there might be a 90% probability of reaching a target of 2:1. Some other edges / patterns might have a lower probability. All depends really on the edge you found.

Yes, very high R:R is 10:1 for me.
  • #9,846
  • Edited 6:03pm Jan 1, 2011 5:48pm | Edited 6:03pm
By the way, I read a very interesting post recently in the newbie section about pyramiding.

This short post just showed me how we accept everything without questioning or verifying anything, especially in trading.

Basically, he says that pyramiding just works because of the nature of the markets. He gives a good example where pyramiding doesn't work in roulette with black and red, cause trends are completely random in the casino.

But, in my opinion, such a realization is gold. Why certain things work and why they don't. If human nature were a bit different, then pyramiding might not work at all. We, or at least I, just accepted that pyramiding is a way of doing trading, but I never even bothered about the why. We gotta even question the most fundamental things we learned about trading and the markets. That's the point I wanna make.

Here is the post: http://www.forexfactory.com/showpost...45&postcount=4
  • #9,847
  • Jan 1, 2011 5:56pm Jan 1, 2011 5:56pm
Quoting Custos
By the way, I read a very interesting post recently in the newbie section about pyramiding.

This short post just showed me how we accept everything without questioning or verifying anything, especially in trading.

Basically, he says that pyramiding just works because of the nature of the markets. He gives a good example where pyramiding doesn't work, in roulette with black and red, cause trends are completely random in the casino.

But, in my opinion, such a realization is gold. Why certain things work and why they don't. If human nature were...


I do not like compounding on unrealized profit. After profit is bagged we can compound. I think with compounding same MM rules must apply to keep it safe.if I made 2% week. Next week I increase my risk per trade +1.02% with matching take profits. in this case especially if set ups are on high time frames we do not face much danger of catastrophic DD.
Patience is very important here. Human nature is mostly about getting results quickly, but playing compounding needs time.
  • #9,848
  • Jan 1, 2011 6:01pm Jan 1, 2011 6:01pm
Quoting shiko
I do not like compounding on unrealized profit. After profit is bagged we can compound. I think with compounding same MM rules must apply to keep it safe.if I made 2% week. Next week I increase my risk per trade +1.02% with matching take profits. in this case especially if set ups are on high time frames we do not face much danger of catastrophic DD.
Patience is very important here. Human nature is mostly about getting results quickly, but playing compounding needs time.
I was more just trying to make a point that we learned so many things about trading, but we never really questioned the things we learned. As you know I am now a lot into statistics.
I rarely see any statistics for example about price patterns traded here on this forum. Or statistics about strategies.
Everybody just tries teaching stuff which may not even be true (anymore), since almost nobody really makes the effort to verify the stuff they learned.

Human nature is quite interesting.
  • #9,849
  • Jan 1, 2011 6:07pm Jan 1, 2011 6:07pm
Quoting Custos
I was more just trying to make a point that we learned so many things about trading, but we never really questioned the things we learned. As you know I am now a lot into statistics.
I rarely see any statistics for example about price patterns traded here on this forum. Or statistics about strategies.
Everybody just tries teaching stuff which may not even be true (anymore), since almost nobody really makes the effort to verify the stuff they learned.

Human nature is quite interesting.

Reminds me of Jacko thread No one was asking him to show his trading history.
I think there are two way, one is to work through statistics another is to develop real good feeling about price action. Brain is amazing thing.
I cannot do statistics as I have no right skills to do so. So, I am learning to get a better feeling about price action and direction.
10:1 R;R is just not for me at least now but I am looking for higher R:R and preferably higher hit rate.
  • #9,850
  • Jan 1, 2011 6:09pm Jan 1, 2011 6:09pm
I also think that guys who open their threads with goal to teach should at least post their own myfxbook results over some period. It would clean this forum quite a bit
  • #9,851
  • Jan 1, 2011 6:12pm Jan 1, 2011 6:12pm
when I was going to prop shop learning to trade stocks, we had one guy who came and claimed he was doing great in Forex. we never seen his results but he looked really self confident even too much so. However, he lost trading stocks a way more than I did. few times more and than he quit within month and a half. Now I learned from another person who used to trade at the same office that he offered to teach price action trading in Forex $1500.....
3 month mentoring and that person paid him without even asking for proof of that gy Forex success.
The whole prop shop was scam as well. I am very suspicious of anyone who asks for money either for teaching or participating in any prop firms.
  • #9,852
  • Jan 1, 2011 6:14pm Jan 1, 2011 6:14pm
Quoting shiko
I also think that guys who open their threads with goal to teach should at least post their own myfxbook results over some period. It would clean this forum quite a bit
I honestly think that the 95% losers to 5% winners figure also applies to this forum.

Most strategies posted in this forum won't work, and most people on this forum also won't ever be profitable, because they ask the wrong questions.
  • #9,853
  • Jan 1, 2011 6:18pm Jan 1, 2011 6:18pm
Quoting shiko
when I was going to prop shop learning to trade stocks, we had one guy who came and claimed he was doing great in Forex. we never seen his results but he looked really self confident even too much so. However, he lost trading stocks a way more than I did. few times more and than he quit within month and a half. Now I learned from another person who used to trade at the same office that he offered to teach price action trading in Forex $1500.....
3 month mentoring and that person paid him without even asking for proof of that gy Forex success.
The...
yeah, in my first 2 years of trading I also left quite a lot of money at mentoring places. At that time I thought they can actually teach me stuff, but all they did was to make me realize that only I can find the pieces for winning at this game.
Well, and for me statistics is a kind of organized fashion for finding the pieces
  • #9,854
  • Jan 1, 2011 6:19pm Jan 1, 2011 6:19pm
Quoting Custos
I honestly think that the 95% losers to 5% winners figure also applies to this forum.

Most strategies posted in this forum won't work, and most people on this forum also won't ever be profitable, because they ask the wrong questions.
Most of strategies posted have no sense at all. Even I can say it without backtesting. I also always have arguments when i meet strategy that uses no stops. I know some guys who are very successful trading with no stops from Oanda forum, but I believe sooner or later they will get caught big time.
when trading with stop and proper MM I see not much risk as long as I do not over trade.
  • #9,855
  • Jan 1, 2011 6:27pm Jan 1, 2011 6:27pm
The good thing about my trading so far is that I am learning on the cheap.
All my losses happened at first 6 months and I my original deposit was not large. so, it did not cost me much at all. Now as I feel I can add some funds it is already after I at least have understanding of how to control risk and manage money plus I have statistics which says that if I control risk I will not lose my money.
So, far I have been learning myself and from few worthy threads here including this one.
  • #9,856
  • Jan 1, 2011 6:36pm Jan 1, 2011 6:36pm
Quoting Custos
I go for R:R over hit-rate.

Counter-intuitive, I know. Cause when we begin with trading, we search normally for a high hit-rate strategy. Yes, it's better for compounding purposes.
But as I mentioned, accuracy is such a big point with high win-rate and low R:R strategies. And try being accurate over thousands of trades. It's pretty hard to do. Psychologically high win-rate strategies are easier since you have many more winners than losses, but let's say it is so much more intense, since you have to fight over every pip so to speak and have to try...
i have the opposite view: i think low win-rate with high R:R is tougher. Here is my reasoning why: we are human. When we conduct these backtest cases, there is an underlying assumption that every trade will be taken. That is not the case in reality, unless you are using a trading robot.(and trading robots are no, no.)

Personally, my daily existence of life/work interferes with trading a lot, as such, i prefer high win rate with lower r/r. Why? because i am going to miss a couple of trade because of tiredness, work, alcohol, etc.as such, whenever i am taking a trade, it is nice to know that will likely result in success due to high win rate. So, that even if i miss 4 trades out of 10; with a 70% hit rate, i can still come out at breakeven. I dont have to worry too much. And if those trades that i miss where the loser trades, well, even better for me. Yippeee!

However, if i am making my bread with a 1:10 r/r that only comes once in a blue moon after strings of breakevens or losses, NOW, WHAT IF I MISS THAT HUGE RUNNER? What happens then? Because, if that 1:10 r/r strategy is only right 30% of the time, what if i miss those 3 trades out of 10. then what? You will have 7 straight losses.

And the thing is: you dont know what the next trade will be bring. It could be the huge winner or not. Nobody can prognosticate that.

This increases my stress levels. I prefer a high hit rate with a lower r/r because that high hit rates compensates for a host of things: missed trades, stupid entry points, stupid intra-trade management decisions, etcetera. ESSENTIALLY: i can make mistakes and still come out ahead.

And i know that i am going to make mistakes....
  • #9,857
  • Jan 1, 2011 6:46pm Jan 1, 2011 6:46pm
Quoting dddd
i have the opposite view: i think low win-rate with high R:R is tougher. Here is my reasoning why: we are human. When we conduct these backtest cases, there is an underlying assumption that every trade will be taken. That is not the case in reality, unless you are using a trading robot.(and trading robots are no, no.)

Personally, my daily existence of life/work interferes with trading a lot, as such, i prefer high win rate with lower r/r....

dddd, You have the point. I wonder , what do you mean by lower R:R? Let's say you risk 40 pips to get how many pips?
I also tjhink that Custos is mostly monitoring daily charts to get that R:R. It means that there is not much opportunities of the kind and it is easier to monitor and enter such trades as not much accuracy needed.
  • #9,858
  • Jan 1, 2011 6:54pm Jan 1, 2011 6:54pm
Quoting Custos
The probability of having a high hit rate while increasing R:R depends on the edge you found. It depends on the pattern you trade. Each pattern has its own probabilities. So for some edges (which I have not discovered yet), there might be a 90% probability of reaching a target of 2:1. Some other edges / patterns might have a lower probability. All depends really on the edge you found.

Yes, very high R:R is 10:1 for me.
I remember my earlier days of trading, i got soo fed up that i decided to trade with a stop of 50 to 100 stops and price target of 10pips.
I rigorously avoided all news, etc, choose what i considered solid S/R levels with a sweet round number, etc.. What happened?

I had a very, very high win rate, with max leverage of 1:400; i was doubling my account every a week...yeah, you are reading that correctly: i was doubling it every week. My reaction to this sudden fortune? First i was scared because i know i was playing russian roulette with my account, then, after doubling my account again and again, i became confident,....soon enough i started feeling invincible--as if i can walk on water....as if the laws of probabilities/statistics doesnt apply to me. Guess what followed? .....WHAM! BAM! i took a USD/CAD trade that brought me back to reality. That one trade drained my account like a hungry vampire. Not just that alone; it was also a psychological blow. All this russian roulette stress, all the doubling after doubling, gone down the drain. Never tried such thing again. It was russian roulette with my account really. Still funny when i think about it though.

We all have our war stories, i guess.

My point? Well, I agree that each pattern or strategy has a different win rate and r/r. I think the time frame for trading also considerably alters that statistics. E.G. i find triangle breakouts to be incredibly reliable on daily, weekly or monthly time frames. Very reliable.
I cannot say the same for 1hr or 30mins, or 15mins.
  • #9,859
  • Jan 1, 2011 7:01pm Jan 1, 2011 7:01pm
Quoting shiko
dddd, You have the point. I wonder , what do you mean by lower R:R? Let's say you risk 40 pips to get how many pips?
I also tjhink that Custos is mostly monitoring daily charts to get that R:R. It means that there is not much opportunities of the kind and it is easier to monitor and enter such trades as not much accuracy needed.
Low R/R, in my view, is anything between 1:1 to 1:3. High R/R in my book is anything between 1:4 to 1:12. Very high R/R is 1:12 or 1:13 and above. I dont believe in negative R/R, that is, something like 2:1. or 1:5 to 1. Sorry, i have been psychologically scarred from such foolishness.

I trade the dailies too...i still miss trades...but then, i track over 30 pairs....
  • #9,860
  • Jan 1, 2011 7:12pm Jan 1, 2011 7:12pm
Quoting dddd
Low R/R, in my view, is anything between 1:1 to 1:3. High R/R in my book is anything between 1:4 to 1:12. Very high R/R is 1:12 or 1:13 and above. I dont believe in negative R/R, that is, something like 2:1. or 1:5 to 1. Sorry, i have been psychologically scarred from such foolishness.

I trade the dailies too...i still miss trades...but then, i track over 30 pairs....

I think 1:1 to 1:3 is what i am looking for.
I do not think we must be very particularly super accurate for this kind of trades, but I always try to enter at certain prices as I have got that habit from trading No Brainer method.
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