Bingo. I don't think this can be done. I also don't think you guys are doing the math correctly. All that's being talked about is 135% profit, profit factor of 2, etc (basically all the nice and exciting things when it all goes well). Well what's the math like when you blow up your account? What happens when you get 2 losses within 20 trades? What if a third loss occurs while you're making up the losses?
Balls or no balls the math in the long run says this is not a smart way of trading. I mean just think about it... Margin call 95 pips away for...
Small example from post #50:
You withdraw profit every time, so You gain a 90% statistical long term average on the amount that you risk every month. You have a 5% chance of losing a trade. This means that you have a 5%^6 = 0.0000016% chance of losing 6 trades in a row (this is way less than the chance of winning the lotery
) If you trade this system and risk an amount that you can stand to loose 6 times (this worst case scenario will probably never happen) you can effectively gain a long term 90% profit on this amount every month.By the way.. nobody forces you to take high risks with this system. You can also use a low amount of risk, fact remains that you will gain on average 90% on the risked amount every month.
Very important to note:
As cubby mentioned before, people tend to look at the risk reward ratio like it's all that matters.. this is a wrong type of reasoning. If you have a "good" risk/reward ratio but a bad win % you still loose money in the long run.
The two system parameters that matter the most are the profit factor and the possible drawdown.
Profit factor (gross profits versus gross losses): Cubby's system has a profit factor of 2 ( (95%*10TP)/(5%*95SL), wich means that you gain twice as much as you will loose in the long run. Not many systems achieve this kind of profit factor. The system just looks scary because all the "gross losses" occur in one big losing trade.. BUT keep in mind that you slowly accumulate twice at much gross profits for every one of these big losers
Possible drawdown: Again, the system just looks scary because you can loose large chunks in one trade. However, it is important to see that the
chance of loosing a few big trades in this system (eg: the 6-loss loosing number from above) is no more than the chance of loosing A LOT of small trades in a row for a "normal" system; This is because of Cubby's high win %. Those small losing trades of the normal system would accumulate to the same amount of drawdown in comparison with the few big consecutive losses of cubby's system.. I believe that the high win % would even result in a lower drawdawn in comparison to normal systems with the same profit factor.
I think it's Cubby's own choice wether or not to sell his system, he's the one who made it and nobody can force him to tell us the system rules. However, maybe the topic should be moved to the commercial section?
